More Than Just E-Mail: Managing the Workplace Without Walls


April 7, 2003

Back to Industry Newsletters
 

By Deborah R. Schwartz
Thelen LLP

Because the information superhighway has knocked down the physical walls that once protected confidential, proprietary and trade secret information, employers doing business today need much more than a policy prohibiting scandalous e-mail -- they need a comprehensive information policy.

Such policies also are needed because there are significant differences between the way people use e-mail as contrasted with such "old" ways of communicating as letters and memoranda. Writers often are less formal - and less sensitive to others -- in e-mails than in traditional paper or face-to-face communications. E-mails already have been critical evidence in major litigation - including the Microsoft antitrust cases and the Enron litigation.

In an effort to avoid liability from unrestricted e-mail and Internet use in the workplace, many employers have adopted policies restricting employee use solely to business purposes. Such policies theoretically prevent use of e-mail to create a hostile work environment or organize a union. But, inconsistent enforcement of a business-use only policy begs litigation alleging discrimination. See, e.g., Miller v. U.S.F. & G., 65 FEP Cas. (BNA) 593 (D. Md. 1994). The general counsel of the National Labor Relations Board (NLRB) has suggested that such a policy may violate the National Labor Relations Act (NLRA) and stated that limited use of company systems for organizing purposes must be permitted. Pratt & Whitney, 1998 N.L.R.B. GCM 40 (1998). 1/

Other legal issues also must be considered in designing systems and developing policies on e-mail and Internet use. This is particularly true as the "workplace" continues to expand to include the home. Following is a summary of some of the challenging issues facing employers striving to develop workable information policies.

Record-Keeping and Retention

E-mail and intranet postings now are frequently used by employers to distribute notices required by law, such as policies against unlawful harassment and benefit plan documents. However, the same statutes that require distribution of these notices also require that employers establish the receipt of them by employees. Proof of electronic receipt generally can be achieved by using a "return receipt" utility. However, either a paper or electronic version of the "receipt" must be retained.

Posting notices on a company intranet also presents a record-keeping challenge. Employers must develop methods to save records of both the policy itself and receipt of the policy for the time periods required by law. When a policy posted on an intranet is replaced by a new version, a hard copy of the former policy should be retained.

Another common use for e-mail or an intranet is to communicate requests for vacation, family leave, training, disability accommodations, promotion, transfer and adjustments in compensation and to communicate management approval or denial of such requests. These communications typically are considered personnel records and must be retained under federal law, as well as the laws of many states, including California. For example, EEOC regulations interpreting Title VII the Civil Rights Act of 1964 require:

[A]ny personnel record made or kept by an employer (including, but not limited to requests for reasonable accommodation, application forms submitted by applicants and other records having to do with hiring, promotion, demotion, transfer, lay-off or termination, rates of pay or other terms of compensation or selection for training or apprenticeship) shall be preserved by the employer for a period of one year from the date of the making of the record or the personnel action involved, whichever occurs later. [emphasis added]

29 CFR §1602.14. 2/

Another evolving use for e-mail is tracking work hours. Some employers have found there is potential for fraudulent time entries when employees use e-mail to clock in and out. Wallace v. Brown, Equal Employment Opportunity Comm. Appeal 01940721, Agency Number 92-1819, 1994 EEO Pub Lexis 1751 (1994) [employee allegedly gave password to friend to enable friend to log-out for her]. To ensure accurate computer-generated records, employers should strictly enforce policies prohibiting employees from sharing passwords. If e-mail is used for time-keeping, employers also must maintain electronic records for the time periods required by law.

Employers running deletion procedures to make room on servers or on individual hard drives must be careful to ensure that personnel records and communications are retained as required by law. While printing out such documents is the most obvious method of complying, most employers chafe at this -- after all, minimizing paperwork is one reason for computers. With the assistance of system designers and counsel, employers can devise systems to ensure compliance with record retention laws.

The Evolving Use of Electronic Evidence

Employers should draft e-mail and document retention policies with an awareness of how e-mail may be used in litigation. E-mail has proven to be valuable (or devastating) evidence in discrimination cases as well as cases alleging the existence of employment contracts.

The popularity of e-mail largely results from its dual nature. It is as efficient and informal as a spoken conversation but with the permanence of a written letter or memorandum. Unfortunately, informality often is accompanied by inappropriateness. Employers should warn supervisors and employees to use the same care in drafting e-mail messages that they would in drafting a letter or memorandum. Employees must understand that e-mail frequently lasts longer than paper messages and is more easily forwarded to others within and outside the company.

Informal communications between supervisors and employees have allowed courts to conclude that an employer made an offer of an employment contract when none was intended and that an employer's reasons for an adverse employment decision were a pretext for discrimination. See, e.g., Wilson-Simmons v. Lake County Sheriff's Department., 982 F.Supp. 496 (N.D. Ohio 1997) [racist e-mail used to illustrate pretext]; Harley v. McCoach, 928 F.Supp. 533 (E.D. Pa. 1996) [racist e-mail used to supply evidence of hostile work environment]. 3/

Similarly, well-crafted e-mails have been used to buttress claims that an employment decision was based on legitimate, non-discriminatory concerns. Greenslade v. Chicago Sun-Times, 112 F.3d 853 (7th Cir. 1997) [e-mail messages showed plaintiff engaged in behavior warranting transfer]; Comiskey v. Automotive Industry Action Group, 40 F.Supp. 2d 877 (E.D. Mich. 1999) [citing e-mail as evidence establishing that employer terminated plaintiffs for legitimate, non-discriminatory reasons]; Duncan-Young v. Pine St. Inn, No. 95-11913-GAO, 1997 U.S. Dist. LEXIS 3435 (D. Mass. Feb. 24, 1997) [finding e-mail among supervisors established that employer terminated plaintiff because of poor job performance].

Evidentiary use of e-mails continues to increase. Employers cannot adopt a policy to delete only e-mails that cast the employer in unfavorable light in litigation. Rather, to avoid claims of spoliation of evidence, employers should consider a uniform deletion policy. Before adopting such a policy, the advice of counsel should be sought.

Prohibiting Harassment, Threats or Intimidation

Many employers have policies prohibiting messages that may constitute unlawful harassment. The dangers of such e-mails cannot be underestimated. In a case settled before trial, Owens v. Morgan Stanley & Co., Inc., 96-9747 (S.D.N.Y. Dec. 30, 1996), several employees alleged that wide distribution of a racist e-mail message and the company's failure to discipline employees involved in disseminating the message evidenced a hostile work environment.

Besides considering the content of e-mail, courts have suggested that the frequency or number of e-mails sent may provide the basis for an harassment claim. One court hypothesized that a supervisor sending a large number of annoying but not otherwise improper e-mail messages could be evidence of a hostile work environment. See, Griswold v. Fresenius USA, Inc., 978 F.Supp. 718, 728 (N.D. Ohio 1997).

Providing Web browsers on employee computers also can open the way to liability for hostile work environment actions under state and federal discrimination laws. For example, an employee could allege that the viewing of sexually explicit Web sites by other employees constituted a hostile work environment.

One unscientific poll of 38,204 adult Internet users by MSNBC revealed that:

• 30 percent had visited a sexually explicit site.
  
  
• Almost one in five persons had visited cybersex sites while at work.

MSNBC, Charlene Laino (Feb. 5, 2001).

Therefore, employers may wish to consider using utilities that can prevent employees from viewing salacious Web pages on the employer's computers.

Electronic Complaint Procedures

Employees who wish to complain about the company's practices or raise safety concerns can easily do so by e-mail. Employers must cautiously consider how and under what circumstances complaints can be raised by e-mail. For example, an employer may state as part of its information policy that employees cannot make anonymous complaints using corporate e-mail.

If an employer wishes to discuss issues related to the terms and conditions of employment by e-mail, it should recognize that this opens the door for employees to respond. See e.g., Timekeeping System, 323 N.L.R.B. 244 (1997) [NLRB ruled in favor of an employee who was fired for "misconduct" after he criticized his employer's new vacation policy via the company e-mail system]. When policy changes may cause negative reactions, e-mail probably is not the best way to announce the change.

Employers also may prefer that complaints of a highly personal or confidential nature, such as harassment, be made in person to a member of management because such complaints require immediate attention and extreme confidentiality. However, use of on-line complaint procedures that provide adequate protection for privacy can assist an employer with its obligation to respond immediately and appropriately to complaints of sexual harassment.

Sharing Systems Without Sharing Liability

Company e-mail systems often are used by contractors and temporary employees. Employers operating shared systems should review their policies to avoid claims under the Electronic Communications Privacy Act (ECPA). All users should be informed that use of the employer-provided system is subject to rules established by the employer and that no right of privacy exists on the system.

The Electronic Communications Privacy Act of 1986 was adopted to address privacy issues related to computers and other innovations in electronic communications. ECPA applies to communications by electronic mail, cellular telephone, satellite and over telephone lines. ECPA was codified in two parts. Title I (the Wiretap Act), codified at 8 USC §§2511, et seq., prohibits interception of electronic communications. Title II (the Stored Communications Act), codified 18 USC §§2701, et seq., prohibits "access" to "stored" communications.

The Wiretap Act

Until recently, courts consistently held that employer access to e-mail stored in employee mailboxes was not "interception" prohibited by the Wiretap Act but rather access to stored material. A three-judge panel of the 9th U.S. Court of Appeals briefly departed from the majority of jurisdictions in Konop v. Hawaiian Airlines, Inc., 236 F.3d 1035 (9th Cir. 2001). It held that the unauthorized monitoring of communications stored on an employee's private Web page constituted "interception" under the Wiretap Act. In so holding, the panel rejected the argument that "interception" only applied to accessing communications during transmission.

Konop was an airline pilot who posted information critical of his employer, its officers and the pilot's union on a secure Web page. A senior member of management obtained access to the page under false pretenses, using the names of two pilots (with the pilots' permission) to obtain a password. The 9th Circuit held that Hawaiian Airlines could be liable for the senior manager's conduct under the Wiretap Act and the Stored Communications Act if it could be proven that that the manager accessed the contents of messages on the site. The court held that "[t]he contents of secure websites are 'electronic communications' in intermediate storage that are protected from unauthorized interception under the Wiretap Act." It further held that "the Wiretap Act protects electronic communications from interception when stored to the same extent as when in transit." Id. at 1035.

Later, the same three-judge panel withdrew its opinion, issuing a substitute opinion. Konop v. Hawaiian Airlines, Inc., 302 F.3d 868 (9th Cir. 2002). This time, the court ruled consistently with other circuits, holding that the pilot could sue Hawaii Airlines for violating the Stored Communications Act but not the Wiretap Act. The majority found that the Wiretap Act was not applicable because it applies only to "intercepted" electronic communication. Because Hawaiian did not view Konop's Web page during "transmission," it could not be liable for interception.

The Stored Communications Act

Once an e-mail is received into "electronic storage," it can become subject to the Stored Communications Act. "Electronic storage" is defined as "any temporary, intermediate storage of a wire or electronic communication incident to the electronic transmission thereof" and "any storage of such communications by an electronic communications service for purposes of backup protection of such communication." 18 USC §2710 (17). With exceptions discussed below, the Stored Communications Act provides that a violation occurs if any person "intentionally accesses without authorization a facility through which an electronic communication service is provided, or intentionally exceeds an authorization to access that facility, and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in the system." 18 USC §2702 (a). To avoid liability, employers should obtain authorization from employees to access e-mail.

The Stored Communications Act also presents other potential pitfalls. It makes the use or disclosure of the contents of electronic communications a separate offense when the party using or divulging the information is an "electronic communications service." In Andersen Consulting LLP v. UOP, 1998 U.S. Dist. Lexis 1016 (N.D. Ill. 1998), the court dismissed a suit by Arthur Andersen against its former client, UOP, regarding distribution of the content of e-mails critical of Arthur Andersen to the media. Andersen used UOP's e-mail system to communicate with Andersen employees and UOP employees while performing consulting duties at UOP. As the relationship soured, UOP distributed e-mails critical of Arthur Andersen to the media.

The court ruled that Andersen had no claim under the Stored Communications Act because UOP did not provide "electronic communication services" to the public. Rather, UOP's system was a private system, available only to those persons given permission by UOP to use it. Many employers who monitor e-mail use on a private system will be able to rely on this same argument to avoid ECPA liability. See also Crowley v. Cybersource Corp., 166 F.Supp. 2d 1263 (N.D. Cal. 2001) [rejecting the plaintiff's claim that Amazon provides electronic communications services simply because it receives e-mails from customers].

ECPA Exceptions

The ECPA contains exceptions for monitoring in the ordinary course of business and monitoring to protect system provider services. 18 USC §2510 (5) (a). This exception also may provide a safe harbor for employers that monitor employee usage of e-mail. ECPA also allows monitoring when one party to a conversation has consented. 18 USC §2511 (2) (d). Establishing a policy that clearly obtains consent and minimizes any claimed right to privacy likely will satisfy ECPA. 4/

Protecting Copyrights and Trademarks

Copyright laws apply to materials obtained from the Internet and through e-mail. See, e.g., A&M Records v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). It is foreseeable that employees will republish copyrighted material obtained either through corporate subscriptions to on-line publications or through personal subscriptions to on-line publications.

Under both traditional agency principles and as a "publisher" (the owner of the e-mail system), it is possible that such republication may lead to employer copyright liability. Employers should consider prohibiting employees from subscribing to any copyrighted material for non-business purposes and warn employees of the potential damages arising from violation of copyright law.

Employers also should warn employees not to use the trademarks of the employer or other companies without authorization. Unauthorized use of a trademark could result in claims for disparagement of the mark as well as claims for unauthorized use. See, Patmont Motor Werks v. Gateway Marine, 1997 U.S. Dist. Lexis 20877 (N.D. Cal. 1997). 5/

Balancing Employee Privacy Against Avoiding Liability

Given the liability risks that employers face, they should consider implementing e-mail monitoring policies. Such policies, however, illustrate employers' conflicting legal obligations.

Consistent employer monitoring of e-mail risks a jury finding either that the employer exercised control over an e-mail misuse or that employees suffered an invasion of privacy. Yet, failure to monitor e-mail systems raises an equally unattractive risk: third-party suits for negligent supervision. 6/

To avoid claims of invasion of privacy based on monitoring, employers must make clear that the e-mail system or Internet gateway is company property, that monitoring will occur and that employees have no expectation of privacy in e-mail messages or Internet use on company systems. 7/

With proper policies and disclaimers, employees should have no reasonable expectation of privacy on company systems even when the company-provided computer is a home computer. In TBG Insurance Services Corp. v. Zieminski, 96 Cal.App.4th 443 (2002), the court held that a senior executive had to hand over to his former employer a computer the company provided for work at home. The company alleged that he had used the company-owned computer to visit pornographic Web sites in violation of company policy. The court rejected the executive's privacy claim, reasoning that employer policies establishing proper use of e-mail and the Internet "diminish an individual employee's expectation of privacy by clearly stating in the policy that electronic communications are to be used solely for company business." See also, Muick v. Glenayre Electronics, 280 F.3d 741 (7th Cir. 2002) [company computer use policy reserving the right to inspect meant the employee had no reasonable expectation of privacy regarding use of a company laptop]; United States v. Angevine, 281 F.3d 1130 (10th Cir. 2002) [same].

At least one court has suggested that an employer, to avoid employment liability, may have to act to learn the identity of persons making disparaging postings on Internet billboards sent from personal systems. Blakey v. Continental Airlines, Inc., 164 N.J. 38 (2000). The New Jersey Supreme Court ruled that Continental Airlines could be held liable to a female pilot for harassing postings on a CompuServe board dedicated to the airline. The bulletin board was used to schedule shifts and communicate among pilots. While Continental pilots also could use a company supplied toll-free number or a stand-alone terminal at a Continental facility for the same purposes, the court ruled that the privately run bulletin board was sufficiently related to Continental business to require it to keep the board free of discriminatory or retaliatory messages. Id. at 60-61. The case was sent back to the trial court to decide this issue.

Blakey is troubling because it suggests that an employer may be liable for employee conduct occurring outside the workplace on sites that have a minimal relationship to the business. Blakey did not address whether disciplining an employee for posting messages on a private Web site with a home computer would give rise to invasion of privacy claims. Because any action taken against employees who use home machines to post messages on private bulletin boards raises significant First Amendment and privacy issues, advice of counsel should be sought before taking action.

The Perils of Telecommuting

Advances in technology and a decrease in personal computer prices have allowed many employees to set up home offices. These technologies, combined with cellular phones and facsimile machines, often allow people to work from home almost as capably as they would in the office. Many employers find telecommuting can reduce overhead costs. Telecommuting, however, creates several employment concerns.

First, an employer must consider how it determines and records the hours of work for telecommuting employees who are not exempt from overtime. Employers usually must record these employees' hours of work, ensure that breaks are taken and monitor whether overtime liability is incurred. Therefore, employers must devise a consistent method for dealing with these issues, ensure that employees are informed of the procedure and ensure that the plan will have the approval of state or federal wage and hour agencies.

Further, several cases arising under the American With Disabilities Act raise the issue of whether an employer must allow an employee to telecommute as a reasonable accommodation for a disability. Most of these cases focus on whether presence at the workplace is an essential function of a particular job. Several U.S. Courts of Appeals have ruled that presence on the job is an essential function of employment under the facts presented and, therefore, telecommuting was not a reasonable accommodation. In Vande Zande v. Wisconsin, 44 F.3d 538 (7th Cir. 1995), the court accepted the employer's argument that the positions at issue required teamwork and consequently required the presence of the employee at work.

Other courts have refused to adopt a presumption that telecommuters are not as productive as their in-office counterparts because of a lack of teamwork. See, Kristen M. Ludgate, Telecommuting and the Americans with Disabilities Act: Is Working at Home a Reasonable Accommodation? 81 Minn. L. Rev. 1309 (1997). See also, Bell v. Wells Fargo Bank, 62 Cal. App.4th 1382 (1998) [reversing summary judgment in favor of employer who revoked employee's right to telecommute].

ADA issues involving telecommuting usually must be addressed on a case-by-case basis.

The Electronic Union

Unions are becoming increasingly savvy about using technology to organize. In Washington State, high-tech temporary employees formed an "electronic union," WashTech. The group is affiliated with the Communication Workers of America and has more than 250 members at 15 technology companies, including Microsoft, RealNetworks and Amazon.com. Unions also have launched Internet sites to publicize union issues and to strengthen the bond between the union and potential members.

It is unclear to what extent employees must be provided access to company-provided technology for union organizing. However, it is clear that an employer cannot discriminate against union adherents regarding personal use of e-mail. The NLRB has held that one employer violated the NLRA by prohibiting organizing activity on its e-mail system while allowing employees to distribute other non-work related messages. E.I. du Pont de Nemours & Co., 311 NLRB 893 (1993). 8/

The NLRB, like many federal agencies, has struggled to apply rules and regulations drafted for traditional manufacturing facilities to the digital workplace. 9/ For this reason, all cases involving use of e-mail or the Internet for protected activity are being referred to the NLRB's Division of Advice. 10/

While the NLRB has promulgated no uniform policy, in Pratt & Whitney, 1998 NLRB GCM LEXIS 40 (1998), the general counsel suggested that limited use of company-provided systems to engage in discussions regarding terms and conditions of employment and organizing issues must be permitted. While the general counsel's memorandum is not binding on employers and is not considered precedent of the NLRB, it is an indication of how the board may address employee access to company systems.

In traditional factories, the rules for oral solicitation and distribution of written literature were clear. Oral solicitation of co-workers was permitted only when both the employee soliciting and the employee being solicited were on non-working time. Employees who wished to distribute literature such as union flyers were required to do so during non-working time and in non-working areas. It was -- and remains -- unclear whether the NLRB considers e-mail or Internet use to be solicitation or distribution.

In Pratt & Whitney, the general counsel suggested that e-mails intended to elicit only a brief response are a substitute for oral solicitation. In distinguishing between solicitation and distribution, the general counsel stated that the nature of an employee's interest and purpose in transmitting a message must be balanced against the interests of the employer. The general counsel wrote:

Where the communication can reasonably be expected to occasion a spontaneous response or initiate reciprocal conversation, it is solicitation; where the communication is one-sided and the purpose of the communication is achieved so long as it is received, it is distribution. If it is solicitation, it must be permitted in all areas in the absence of an over-riding employer interest; if it is distribution, it may be prohibited in work areas unless the employees have no available non-work areas.

Id. at 13-14.

The general counsel suggested that brief e-mail "conversations" must be allowed as solicitations as long as employees are on non-working time. Presumably, e-mail "conversations" that are intended to spark a lively and lengthy debate and that will consume significant work time and system resources need not be allowed. The general counsel opined that if employees are using e-mail to communicate, the employer may not prohibit these messages provided that "there is no evidence of special circumstances that make such a prohibition necessary in order to maintain production or discipline." Id. at 16.

The general counsel provided no specific guidance in Pratt & Whitney concerning what types of e-mail transmissions might constitute distribution. The general counsel suggested only that e-mail intended to be a one-way communication, such as the mass distribution of a flyer or a position paper, likely is a substitute for distribution. 11/

Enforcing the Pratt & Whitney rule may be unworkable. Enforcement requires that an employer second-guess the intent of an employee who transmits an e-mail regarding potential organizing -- risky business for an employer. A safer course of action for employers to prevent abuse is to discipline employees based on diminished job performance. However, before implementing such a policy, the advice of counsel should be sought. 12/

While employers likely will be required to allow some use of company systems for organizing, the NLRB has indicated that reasonable limits on such use will be allowed. For example, the NLRB has held that use of e-mail for publication of sensitive company documents or confidential materials is not protected activity in certain circumstances. The NLRB has relied on specific facts, such as legends marking documents confidential and the type of information contained in a document, in deciding whether an employee's conduct is outside the protection of the NLRA.

In another Advice Memorandum, the general counsel suggested that posting a confidential business document by a union supporter on a union Web page was not protected activity under the NLRA. 13/ Relying on Lafayette Park Hotel, 326 NLRB 824 (1998) and an unambiguous legend stating that a document was a proprietary internal document, the general counsel stated that a company can lawfully prohibit disclosure of confidential business memoranda to persons outside the company. However, in another Advice Memorandum, the general counsel suggested that to the extent a company policy purports to prohibit employees from discussing wage and salary information with each other or with a union, the policy is unlawful. 14/

The NLRB itself has never addressed the legality of employer e-mail policies, and the result has been widespread confusion.

Conclusion

Establishing policies on the permissible use of company-supplied technology is essential. Developing these policies requires balancing employees' privacy interests and the company's proprietary interests.

If you would like to receive legal reports and updates more quickly, by e-mail, click here and fill out the mailing list form.

For more information about the issues covered in this report, please contact Deborah R. Schwartz in our San Francisco office at 415-369-7019 or at dschwartz@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.

ENDNOTES

©2003 Thelen LLP