The Legal Risks Of Monitoring Employee Conduct

Investigating suspected employee theft, monitoring telephone usage, and random drug testing are just a few of the common practices used by employers to increase productivity and ensure safety in the workplace. Employers are well aware that such actions may expose them to claims for breach of contract if they depart from established employment policies, disparate treatment claims under Title VII if they treat similarly situated employees differently on the basis of a protected characteristic, and emotional distress claims if they do almost anything that upsets an employee.

In addition to these common claims, however, such employer action may implicate a number of privacy issues. Increasingly, employees have relied on a variety of privacy protections as yet another avenue for asserting claims against employers. The most common claim asserted is invasion of privacy, sometimes called "intrusion upon the seclusion of another."

The employee privacy area can be difficult for employers to navigate because cases generally turn upon whether an employee had a reasonable expectation of privacy while engaging in the act that is being monitored by an employer, and whether the employer's means of monitoring was unreasonably offensive. As one might expect, it is difficult to predict what expectations of privacy courts will deem to be reasonable and what means of investigation they will find unreasonable. Analyzing some of the most recent court decisions in this area does, however, offer some guidance.

Employee Investigation: The Johnson v Kmart Case

In a recent Illinois case, the court found that an employer may have unreasonably intruded upon its workers' privacy rights when it hired undercover investigators to pose as employees and report their observations to management.1 The employer, K Mart, suspected that employees were stealing, vandalizing merchandise, sabotaging operations, and using and selling drugs in a distribution center where some 500 people were employed.

To identify the responsible individuals, K Mart hired two private investigators to work undercover at the center, mingle with employees, and periodically submit confidential reports to the general manager of the center. K Mart assigned one investigator to focus on theft, sabotage, safety, and drug use. A second investigator was also asked to report any evidence of theft or drug use.

The trial court granted K Mart's motion for summary judgment on the employees' invasion of privacy claim, finding that there was no unauthorized intrusion because the employees voluntarily disclosed their personal information in conversations with the investigator-employees. Although a voluntary disclosure of private information will normally defeat a claim for invasion of privacy2, the Illinois appellate court reversed the trial court, finding that the conversations were not truly voluntary because they were induced by deceptive means3.

Accordingly, the court found that the employees had a reasonable expectation of privacy in their conversations with co-workers, and it was a question of fact as to whether the unauthorized intrusion into matters relating to their private lives would be offensive or objectionable to a reasonable person4.

Note that the court did not find that undercover investigations were per se unreasonable intrusions into employees' privacy expectations. Instead, it focused on the fact that the investigation exceeded the limits of a legitimate business purpose, such as reducing theft, vandalism, and drug use in the workplace.

The evidence showed that, despite the specific instructions given by K Mart, the two investigators included in their reports information about the criminal conduct of employees' children; incidents of domestic violence; impending divorces; sexual conduct of employees, including the frequency and the gender of sex partners; employment plans, such as, which employees intended to quit without giving notice and which employees were looking for another job; employee complaints about the employer; and employee health problems, such as who had prostate cancer and who was suspected to be an alcoholic.

The court noted that even though K Mart admitted that it had no business purpose for gathering such information, it never instructed the investigators to change their practices or exclude such highly personal information in the reports. Accordingly, it appears that an employer would not be intruding upon an employee's reasonable expectations of privacy if such an undercover...