Electronic Privacy in the Workplace

The Supreme Court will soon weigh in for the first time on the permissible scope of employer monitoring of employees' electronic communications. Such monitoring activity raises many issues that remain the subject of uncertainty in this developing area of the law.

The case under consideration by the Court, Ontario v. Quon, arises in the context of government employees, who are protected from unreasonable searches by the Fourth Amendment. Private-sector employees have no such constitutional protection. Nonetheless, the Supreme Court's forthcoming ruling will likely have implications for private employers who face employee claims alleging an invasion of their common-law privacy rights.

The Legal Landscape Facing Private Employers

Courts have generally upheld the right of private employers to monitor electronic mail and Internet usage by employees while they are using the employer's network, provided that employees are given notice that the network is intended solely for business usage and that it is subject to monitoring by the employer. Beyond this “safe harbor,” there are a dizzying array of issues concerning the permissible scope of employer activity in monitoring employees' electronic communications. For example, a private employer will face uncertainty, and potential liability, if:

• The employer accesses messages sent by employees over personal e-mail accounts (such as with Hotmail or Gmail) using employer-owned computers (e.g., Stengart v. Loving Care Agency, Inc., 973 A.2d 390 (N.J. Super. Ct. App. Div. 2009); Pure Power Boot Camp v. Warrior Fitness Boot Camp, 587 F. Supp. 2d 548 (S.D.N.Y. 2008));
• The employer inspects communications made through an employer-owned computer kept at the employee's home, where the employee may be found to have a greater expectation of privacy (e.g., Curto v. Medical World Communications, Inc., No. 03-CV-6327 (DRH), 2006 U.S. Dist. LEXIS 29387, 99 Fair Empl. Cases (BNA) 298 (E.D.N.Y. May 15, 2006));
• The employer accesses and seeks to use in litigation an employee's e-mails containing privileged communications with an attorney (e.g., Convertino v. U.S. Department of Justice, Civ. No. 04-0236, 2009 U.S. Dist. LEXIS 115050, at *32-34 (D.D.C. Dec. 10, 2009); In re Asia Global Crossing Ltd., 322 B.R. 247, 258 (Bankr. S.D.N.Y. 2005));
• The employer allows some personal use of electronic networks, but conditions usage on “the highest standards of morality” or other imprecise standards (e.g., Bowman v. Butler Township Board of Trustees, 2009 Ohio 6128, 2009 Ohio App. LEXIS 5145 (Ohio Ct. App. Nov. 20, 2009));
• The employer is a multinational concern and reviews electronic communications of employees located in the European Union who are subject to the EU Privacy Directive (Directive 2002/58/EC);
• The employer disciplines an employee for electronic communications made outside of working hours and not through employer systems (e.g., N.Y. Lab. Law ' 201-d(2)(a); Cal. Lab. Code ” 1101-1102); or
• The employer does not comply with a collective bargaining agreement that limits electronic monitoring.

In some contexts, employers may have an affirmative legal duty to monitor or restrict employees' electronic and Internet communications. In one case, a court found that an employer that had notice of possible unlawful activity harmful to others (such as child pornography) through an employee's use of the employer's network had a duty to take action to monitor the conduct and protect third parties. Doe v. XYC Corp., 887 A.2d 1156 (N.J. Super. Ct. App. Div. 2005). Also, under Federal Trade Commission guidelines (effective Dec. 1, 2009), an employer may be held liable if it fails to develop and enforce policies that restrict employees from promoting or endorsing the employer's products through blogs or social networking sites without disclosing the employees' relationship with the employer. (16 C.F.R. Pt. 255.)

Private employers also face recently enacted state laws that require employers to provide specific notice to employees of employer monitoring activity. (Conn. Gen. Stat. ' 31-48d; Del. Code Ann. Title 19,
' 705(b).) Other states are considering similar legislation. Accordingly, a single approach is no longer possible as legal requirements fragment along state lines.

The Case Before the Supreme Court

So far, the U.S. Supreme Court has not addressed any of the issues described above. That will soon change. On Dec. 14, 2009, the Court announced that it will review the Ninth Circuit's ruling that a public employer violated an employee's Fourth Amendment right to privacy when the employer reviewed personal and sexually explicit text messages sent from the employee's government-issued pager. The case is Ontario v. Quon, No. 08-1332. A ruling by the Supreme Court is expected by the end of June 2010. The Ninth Circuit's ruling can be found at Quon v. Arch Wireless Operating Co., 529 F.3d 892 (9th Cir. 2008), petition for rehearing en banc denied, 554 F.3d 769 (9th Cir. 2009).

In this case, the City of Ontario, CA, contracted with a vendor (Arch Wireless) to provide text-messaging pager services to the City's police SWAT team, of which Sgt. Quon (the plaintiff) was a member. The City had an official, written policy on computer, Internet and e-mail usage by employees that limited usage to business purposes, and warned employees that: 1) they should have no expectation of privacy; and 2) their usage would be monitored. The City did not have a written policy concerning use of the text-messaging pagers, but a police lieutenant informed Sgt. Quon and others at a meeting that pager messages were considered e-mail and would fall under the City's policy as public information and could be audited.

However, the police lieutenant later implemented the informal practice of allowing police employees to use the pagers to send personal messages, without any auditing, as long as they paid for any “overage” usage beyond the subscription level paid for by the City.

Over time, the police lieutenant responsible for the pagers grew tired of being a “bill collector” for overages by individual police officers above the subscription limit, and the City decided to audit text-messages to determine if overages were due to work-related messages (in which case the subscription level could be increased) or if they were due to personal use. Because the City could not itself audit the text messages sent through the vendor's network, the City asked the vendor to provide transcripts of the text messages, and the vendor did so without seeking permission from Sgt. Quon or the recipients of his messages. The City learned that there were a large number of personal text messages, including many that were sexually explicit.

Sgt. Quon then sued, alleging that: 1) the vendor violated his rights under the Stored Communications Act (“SCA”) (18 U.S.C. ” 2701-2711) when it released the text messages to the City; and 2) the City violated his constitutional rights under the Fourth Amendment to be free from “unreasonable searches and seizures.”

The Ninth Circuit first ruled that the vendor's provision of text-messaging through wireless communications was an “electronic communication service” under the SCA because the vendor electronically stored the messages on its server. As such, the vendor violated the SCA by disclosing the messages to the City, since an “electronic communication service” may only disclose messages with the consent of the addressee or intended recipient of the message. It is not enough for the subscriber (the City) to give consent. The vendor sought Supreme Court review of this ruling, but it was denied.

Analysis

This ruling is significant in its own right, and applies fully to private employers. Whenever an employer outsources a text-message or other communications service to a vendor operating an external network, a careful analysis will be required of the service's status under the SCA before the vendor can share messages with the employer. Employer-owned and operated systems generally do not face the same issue, because the “provider” of the communications service has broad rights to review communications stored on the system. 18 U.S.C. ” 2511(a)(2), 2701(c)(1). Accordingly, private employers may wish to restructure or reconsider their use of externally provided networks if it is critical for the employer to have ready access to their employees' electronic communications.

In Quon, the Ninth Circuit went on to address whether: 1) Sgt. Quon had a reasonable expectation of privacy in his text messages; and 2) whether the City's review of those messages was an “unreasonable” search, under the Fourth Amendment standard laid down by a plurality of the Supreme Court in O'Connor v. Ortega, 480 U.S. 709 (1987), for searches of government employees' property.

The 1987 ruling in O'Connor did not involve a search of electronic communications. In that case, a plurality of the Supreme Court held that: 1) government employees' right to privacy in the workplace depends on the “operational realities of the workplace” and the specific facts of the case; and 2) the reasonableness of a search depends on whether, at its inception, the search is “reasonably related in scope to the circumstances which justified the interference in the first place.” At the time O'Connor was decided, Justice Scalia, who concurred in the judgment, lamented the vagueness of the plurality's “ad hoc, case-by-case” Fourth Amendment standard.

In the Quon case, the Ninth Circuit first found that Sgt. Quon had a reasonable expectation of privacy for his text messages even though he had attended a meeting at which he was told that the City's e-mail monitoring policy would apply to text messages. The court reasoned that the official policy did not reflect the “operational reality” in light of the police lieutenant's assurance that the City would not audit employees' pager use as long as they paid for overages above the subscription limit. The court also determined that the employer was bound by the lieutenant's assurances even though “he was not the official policymaker, or even the final policymaker,” because he was in charge of the pagers and it was “reasonable” for Sgt. Quon to rely on the lieutenant's policy.

The Ninth Circuit in Quon acknowledged that a search is reasonable under the Fourth Amendment if it is “necessary for a noninvestigatory work related purpose” (namely one not seeking evidence of employee wrongdoing), such as determining whether the subscription level was adequate and whether officers were being required to pay for work-related expenses. However, the court found that the search was “not reasonable in scope,” because “less intrusive methods” were available, such as by asking Sgt. Quon to count the number of his work-related text messages. On this basis, the court found that the City's review of the text messages was an unreasonable search and seizure, and in violation of the Fourth Amendment.

The City unsuccessfully petitioned for rehearing en banc, but seven judges on the Ninth Circuit wrote a vigorous dissent, which argued that the court panel had departed from the employer-friendly standards set by the Supreme Court in O'Connor v. Ortega. Quon v. Arch Wireless Co., 554 F.3d 769 (9th Cir. 2009). According to the dissent, Sgt. Quon had no reasonable expectation of privacy because he had been informed that text messages could be audited, it was foreseeable that a SWAT team's messages could be reviewed by an investigating board after the SWAT team responded to an emergency incident, and police records are public records under California's Public Records Act. The dissent also argued that the court erred by applying a requirement that government use the “least intrusive means” for searches of this type, a standard previously rejected by the Supreme Court and other circuits.

The Supreme Court agreed to review the case, which provides the Court with an excellent opportunity to revisit the vague standard laid out in the plurality opinion in O'Connor v. Ortega, and in particular to define the Fourth Amendment standards for searches of public employers' electronic communications.

Private Employers

In Ontario v. Quon, the Supreme Court will have to determine for the first time the privacy rights of public employees in their electronic communications. Whatever the Court rules, that ruling will not expressly affect private employees because the Fourth Amendment's restrictions apply only to governmental searches and seizures and not to searches by private employers.

However, the Supreme Court's forthcoming ruling is likely to have a significant impact, by analogy, on the common-law privacy rights of employees. Such common-law claims (particularly those alleging an intrusion upon an individual's right to seclusion) have been the primary grounds that employees have used to challenge private employers' actions in monitoring their electronic communications. See Restatement (Second) of Torts ' 652B (1977). It is hard to see why a public employee's “reasonable expectation of privacy” against electronic monitoring would be much different than a private employee's “reasonable” expectations. After all, privacy is the issue in both settings.