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Spying on Your Employees? Better Understand the Law First

Max Freedman
Max Freedman
Business News Daily Contributing Writer
Updated Oct 20, 2022

Employee monitoring technology is becoming more common in the workplace. Before you install it, be sure you know the laws surrounding its use.

  • Employers can use employee monitoring technology to track their staff’s real-time locations and activities.
  • The Electronic Communications Privacy Act of 1986 is a federal law that allows employers to monitor their employees’ verbal and written communications under certain circumstances. Some state laws regulate this activity.
  • Transparency in your employee monitoring practices is important to make your employees feel more secure and protect your business from potential legal action.
  • This article is for employers who want to implement employee monitoring solutions and learn how to avoid legal issues in the process.

From eliminating distractions to adding technological automation, there are numerous ways businesses can improve workplace productivity. One method is the use of surveillance and tracking software. Workplace privacy and employee monitoring technologies have become more prevalent in recent years, especially as the rapid growth of digital technology has streamlined the use of surveillance platforms. If you plan to use this type of technology, it is important to understand how federal and state laws affect it and how to best implement these tools in your business.

What is monitoring in the workplace?

“Employee monitoring” refers to the methods employers use to surveil their workplaces and their staff members’ whereabouts and activities. These methods include employee monitoring software, time clocks, video surveillance, GPS systems and biometric technology. Video surveillance, for example, can strengthen your business’s security and productivity. Catching a thief on camera certainly reduces shrinkage costs.

Employee tracking and monitoring systems serve other important purposes. Their main goals are to prevent internal theft, examine employee productivity, ensure company resources are being used appropriately, and provide evidence for any potential litigation.

Editor’s note: Need employee monitoring software for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.

One category of employee monitoring technology, time and attendance software, is often seen as an entirely separate set of tools. Time and attendance systems give your business a record of when employees work and take paid time off that is valuable not only for payment calculations, but in case a dispute over hours or vacation time ever become a lawsuit. These digital systems also provide an accurate record of when employees start and end their day, which can help you determine productivity levels.

Beyond simple video surveillance in the workplace, you can equip company computers with employee monitoring software or, if your team’s duties revolve around driving, install GPS fleet tracking hardware in your company vehicles.

Regardless of the technology they use, some business owners may not know how far they can or should extend their authority to monitor employee activity. It’s always best to turn to federal and state employee monitoring laws and regulations to establish limits.

Key takeawayKey takeaway: Through employee monitoring technology, employers can surveil their workplaces and track their staff members’ real-time locations and activities when they’re on the clock.

Employee monitoring laws and regulations

Federal and most state privacy laws give discretion to employers as to how far they can go with their employee monitoring programs. In some cases, employers do not have to inform employees they are being monitored, depending on their state and local laws. Some regulations do require employee consent.

“As a general rule, employees have little expectation of privacy while on company grounds or using company equipment, including company computers or vehicles,” said Matt C. Pinsker, adjunct professor of homeland security and criminal justice at Virginia Commonwealth University.

Federal workplace privacy and employee monitoring laws

Federal workplace privacy and employee monitoring regulations stem primarily from the Electronic Communications Privacy Act of 1986. The ECPA allows business owners to monitor all employee verbal and written communication as long as the company can present a legitimate business reason for doing so. It also allows for additional monitoring if the employee gives consent. However, the ECPA consent provision can be tricky, as it might be inferred to allow monitoring of employees’ personal and business communications.

Additionally, several federal court cases have determined that employers may legally look through employees’ emails after they are sent. That’s because the ECPA defines “electronic communications” as any electronic messages currently in transmission. Upon sending, these transmissions become “electronic storage,” which courts have determined employers can monitor.

In general, monitoring must be within reason. For example, video surveillance can be conducted in common areas and entrances; however, surveillance in bathrooms or locker rooms is strictly prohibited and opens a company up to legal repercussions.

Another issue arises when you retain any recordings, especially of meetings. If you record meetings with employees, especially ones dealing with discipline or HR-related issues, you may be legally obligated to keep those recordings and turn them over to a court if litigation arises. [Interested in using a video surveillance system? Check out our best business surveillance system picks.]

Monitoring computer web activity is different and can fall under different legal precedent. There are different types of computer monitoring software solutions, some with the ability to show you exactly what employees are doing on their computers. You can monitor everything from what websites employees are browsing on the business’s Wi-Fi to what keystrokes they are making on their company laptops. There is practically no reasonable expectation of privacy for an employee using a company device, so a good rule of thumb is to assume that anything employees do on their company-owned computer is visible to their employer.

While it’s fine to monitor employees’ computer usage to make sure they’re not wasting time on social media and frivolous browsing, employers should know they risk acquiring too much information. Employers already have employees’ most personal data, and they can run amok of privacy laws like HIPAA if they disclose private information to anyone.

As an employer, you have the burden of protecting that information, even from an employee’s personal browsing history or private data stored on a company computer. If a data breach were to occur, for example, and certain sensitive information was exposed, it leaves the company vulnerable to litigation by the employee.

State workplace privacy and employee monitoring laws

As with any issue that states regulate, no two states have the same workplace privacy and employee monitoring laws. The most notable laws come from the following states:

  • Connecticut: Any company that monitors its employees in the workplace must inform them in writing and detail the tracking methods used ahead of time.
  • California, Florida, Louisiana and South Carolina: All these states’ constitutions explicitly state that residents have a right to privacy. As such, employers in these states may need to tread carefully when setting up employee monitoring systems.

To be safe, you may be best served by checking with your legal counsel that your use of this technology adheres to both federal and state regulations.

Did you know?Did you know? The ECPA is the primary federal law governing employees’ rights under workplace monitoring. Several states have their own regulations that employers in those states must also follow.

Tips for communicating employee monitoring to employees

Video surveillance doesn’t need to be explicitly disclosed to employees and agreed to by your workforce. Visible signage stating that security cameras monitor the premises can be enough to cover legal and ethical grounds. The knowledge that cameras monitor everything is often enough to prevent internal employee theft.

Transparency is always a good practice. Since many employees feel uncomfortable being monitored, it’s important to be forthcoming about what you hope to accomplish and how surveillance aligns with your business’s goals. According to a survey by Dtex Systems, “77% of employed Americans would be less concerned with their employer monitoring their digital activity on personal or work-issued devices they use to conduct work, as long as they are transparent about it and let them know up front.”

In fact, transparency can make employees more willing to subject themselves to different methods of monitoring and tracking. Approximately 50 of 80 employees at technology company Three Square Market voluntarily had microchips implanted in them. The chips allowed the employees to enter the building and buy lunch without keeping track of an ID card. Three Square Market’s honesty about the purpose of the microchips led to over half of its employees voluntarily participating in the program.

While Three Square Market’s technology isn’t widely used for tracking just yet, Amazon received a patent in 2018 for wristbands that vibrate when employees perform tasks incorrectly. While there is no report of these wristbands being used or even produced yet, the company believes the wristbands could speed up processes. Detractors worry about the technology’s potential to dehumanize employees. Clearly, as technology continues to develop, organizations will have opportunities to track and monitor employees in new ways. As these new options arise, business leaders need to listen to employees and review legal guidelines for employee monitoring. 

Another way employers can monitor employees, as mentioned earlier, is through GPS tracking, normally as part of fleet tracking and telematics on company vehicles. With most fleet software, managers can track a company vehicle and where it’s been, even if the employee is off the clock. Business owners can do this, as they have the right to know where their property is. However, GPS tracking of company devices like laptops and phones is another murky area, since employers can learn more than they need to about an employee’s activity when they’re off the clock. [Related: Check out our best GPS Fleet Tracking picks.]

With any form of employee monitoring, it’s best to err on the side of transparency and balance. For example, clear signage citing your company’s policy discouraging non-work-related computer use can cut down on undesirable behavior without the need to monitor employees overtly.

“Ultimately, a balance can be reached by thinking through legitimate business interests and weighing them against the expectation of privacy of employees while also taking into account regulatory limitations, which may differ state to state, country to country,” said Joseph Lazzarotti, a principal with Jackson Lewis who leads the law firm’s Privacy, Data and Cybersecurity practice group.

Andreas Rivera and Bennett Conlin contributed to the reporting and writing in this article. Some source interviews were conducted for a previous version of this article.

Image Credit: Prostock-Studio / Getty Images
Max Freedman
Max Freedman
Business News Daily Contributing Writer
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.