San Francisco Employment Privacy Law Lawyer & Attorney : Littler Mendelson Law Firm : Employment Related Privacy Issues

Joseph Braun, the owner of a New Jersey label manufacturer, hired the wrong bookkeeper and paid a hefty price. Before Braun hired the bookkeeper, referred to only as “M.A.” in a New Jersey appellate court opinion published on August 29, 2008, M.A. had completed twelve months in a pretrial intervention program after being charged with forgery and theft. One month after completing the intervention program, M.A. was charged with fourteen counts of forgery and the theft of more than $220,000 from his employer; he served 364 days in jail after a guilty plea. While still on probation, M.A. landed his bookkeeping job with Braun’s company.

Apparently not having conducted a background check, Braun gave M.A. ever-increasing responsibilities to the point where M.A. was responsible for order entries, payroll, bank records and the company’s computer system. M.A. repaid Braun’s trust by giving himself an $85,000 raise — without Braun’s authorization. The raise was just the tip of the iceberg, as M.A. defalcated more than $650,000 from Braun’s business. M.A. was prosecuted for his crimes, convicted and sentenced to seven years in prison.

On appeal, M.A. argued that the trial court had improperly denied his motion to suppress personal information stored on a laptop as well as a desktop computer found at Braun’s place of business. The New Jersey appellate court, following several frequently cited federal appellate court decisions, held that M.A. had no reasonable expectation of privacy in his workplace computer and affirmed the conviction. In reaching this conclusion, the court relied on the following facts:

(a) Braun’s business owned the computers;

(b) the computers were kept at Braun’s business;

(c) Braun told M.A. when he was hired that the business owned the computers;

(d) the desktop was connected to the corporate network;

(e) co-workers had access to both computers; and

(f) M.A.’s private office was never closed or locked.

The facts were weighed so heavily against M.A. that this case provides guidance in only the most limited circumstances.

A few minor changes of the facts show why: M.A. marked all of his personal files as “private” when saving them to the company’s document management system. It was well known within the company that system administrators respected the “private” designation. M.A. did not permit any other employees to log into his computer; nor did he share his username or password with any co-workers. When M.A. left his private office, he shut and locked his office door using a combination that was unknown to anyone else in the company. On fairly similar facts, the Florida Court of Appeals recently held that a church pastor had a reasonable expectation of privacy in child pornography stored on his office computer.

The point is that corporate ownership of computers and notice to employees of that ownership will not always open the door to searches with impunity of personal information stored on a business computer. Instead, employers should look more deeply into who, in fact, has or could have access to the information at issue and whether workplace computer use policies actually are put into practice.

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With the State of Connecticut reeling from a series of massive security breaches that have exposed the personal information of hundreds of thousands of state residents, Connecticut's Governor and General Assembly joined forces in mid-June to make Connecticut only the second state (after Michigan) to mandate that private employers publish a policy on the protection of employee Social Security numbers (SSNs). The new Connecticut law — entitled, "An Act Concerning the Confidentiality of Social Security Numbers" (the "Act"), and effective October 1, 2008 — also imposes on private employers a statutory duty to safeguard, and properly dispose of, personal information more broadly defined. Continue reading. . .

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An Oregon law, signed by Governor Ted Kulongoski in mid-July and effective January 1, 2008, establishes the strictest information security requirements imposed by any state law to date. This new law is especially significant for multi-state employers, as the statute applies to any business which maintains the “personal information” of an Oregon resident regardless of the size of the company’s presence in Oregon. Personal information is defined to include precisely the type of information which all employers maintain about every employee, i.e., first name or initial and last name plus social security number, driver’s license number, or financial account number.

The Oregon law requires employers who maintain personal information on Oregon residents to do the following:

• Designate a security officer
• Conduct a risk assessment
• Assess the safeguards in place to manage the risks
• Train employees in security policies and procedures
• Require by contract that service providers maintain adequate security (note the connection to the trend discussed above)
• Adjust the security program over time to meet changing circumstances
• Implement adequate physical and technical safeguards
• Properly dispose of personal information

While Oregon may be one of the less populous states, state legislators appear to be engaging in “one-upmanship” as they enact new data protection statutes. Employers can expect other states to attempt to match or exceed Oregon’s legislation. Consequently, employers can expect that, in the near future, they will need to take a closer look at their information security practices for employee data and take steps to better safeguard that information not as some extra effort but simply to be in compliance with newly enacted state data protection legislation.

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