Recording Phone Calls, Quirky Question # 85

Quirky Question # 85:

We recently heard a rumor that a member of our software engineering staff is planning to leave and start a software company of his own that may compete with us.  Further, we have heard that he is discussing his plans with others outside of our company using the desk phones in our San Francisco office.  We would like to record his conversations to see what he is planning and whether he is using any of our proprietary information or soliciting any of our employees to join him.  Since we own the telephone system, can’t we record or listen in to his calls?

Dorsey’s Analysis:

While you may have good reason to worry about whether this employee is using your confidential information or improperly soliciting your employees, eavesdropping on telephone conversations to find out is very risky in all states, especially California.  Although federal law provides limited exceptions that allow employers to monitor private telephone conversations, California law subjects employers to criminal and civil penalties for the same, even when the employer owns the communication system.

As information technology has expanded in the workplace, so too have legal and ethical privacy issues for employers.  Monitoring the use of electronic equipment in the workplace can be tricky, and employers need to understand the strict federal and state laws that limit those actions.  Generally, both federal and California laws prohibit eavesdropping through the monitoring or recording of confidential telephone conversations.

The Federal Electronic Communications Privacy Act

An employer who “provides” a telephone and/or voice-mail system may access those systems only under certain conditions.  As a general rule, the Electronic Communications Privacy Act (“ECPA”) prohibits intentional interception or disclosure of electronic communications.  18 U.S.C. § 2501, et seq.; 18 U.S.C. § 2701, et seq.  Courts have found that eavesdropping or recording a conversation at the time of transmission constitutes “interception.”  United States v. Meriwether, 917 F.2d 955 (6th Cir. 1990); Fraser v. Nationwide Mutual Insurance Co., 135 F. Supp. 2d 623 at 634.  On the other hand, mere retrieval of stored information, such as voice-mail, probably would not be considered a violation of the Act because the transmission has already ceased.

There are two key exceptions to the ECPA that allow employers to monitor their employees.  First, an employee may either expressly or impliedly consent to an employer’s monitoring.  Federal courts are split on what constitutes implied consent, and they often examine the way a company sets out and enforces its policies.  Although courts are usually reluctant to find implied consent, it has been found where

the employee is informed of the well-known monitoring program and the policy is consistently enforced.  If the policy is not clear that personal calls as well as business calls will be monitored, then consent may not be found.

The second ECPA exception to electronic monitoring allows employers to monitor an employee’s telephone calls or voice-mail messages in the ordinary course of business.  For example, if the communications are intercepted by employer telephones or related equipment for the purposes of customer service or training, the business use exception would likely apply.  Even so, courts look to whether there is a reasonable business justification for the monitoring in each case, and have created somewhat varying standards when applying this exception.

The ECPA was designed for those employers who “provide” phone and/or voice-mail systems, and, thus, it does not apply to employers whose electronic systems are provided by an outside entity.  Because you own your company’s telephone system, your company may fall within the federal exceptions to telephone monitoring, so long as you set forth and consistently enforce clear policies, obtain the consent of your employees, and conduct the monitoring in the ordinary course of business.  California law, however, is a very different matter.

California Privacy Act

In California, persons who eavesdrop or surreptitiously record workplace conversations are vulnerable to civil or criminal liability under the Privacy Act.  Cal. Penal Code § 630, et seq.  Unlike federal law, California does not provide a business use exception, but it does permit electronic monitoring of “confidential communications” with the consent of all parties.

The Privacy Act defines “confidential communication” as “any communication carried on in circumstances as may reasonably indicate that any party to the communication desires it to be confined to the parties thereto.”  Excluded from this definition is “a communication made in a public gathering . . . or in any other circumstance in which the parties to the communication may reasonably expect that the communication may be overheard or recorded.”

In 2002, the California Supreme Court adopted a broad reading of the Privacy Act to resolve a split in the Courts of Appeal concerning the definition of “confidential communications.”  Flanagan v. Flanagan, 27 Cal.4th 766 (2002).  The court held that the Privacy Act applies to “the actual conversation, not its contents,” and distinguished between “simultaneous dissemination” of a conversation and the “secondhand repetition” of its contents.  This means that eavesdropping is prohibited in California only if done while the message is in transit.  As a result, the mere retrieval of stored voice-mail messages that have already been transmitted may limit an employer’s exposure to criminal or civil liability.

Many employers choose to notify employees in advance, through a written policy within their employee handbook, that their activities may be monitored.  Under any circumstances, an employer should warn all employees using its electronic communication systems that they should not expect their communications to be private.  Some may even go so far as to indicate on outgoing voice messages that the caller’s message may be monitored by the company.  However, because California law requires the consent of both parties to a “confidential communication,” eavesdropping or recording is prohibited if any party to the conversation expects it to be private.  For this reason, while there are certainly steps you can take to protect your confidential information, especially if you have a written technology usage policy in place, recording or listening in on the employee’s calls may be a perilous option.

Dorsey & Whitney

Dorsey & Whitney

Dorsey is a business law firm, applying a business perspective to clients' needs. We make it our first priority to know the context in which you do business - your market, your competitors, your industry.

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