Minimizing Employer Liability for Employee Internet Use.

As employee use of email and the Internet increases, so does the potential for an employer to be held liable for employee misconduct. For example, employers have been sued for copyright infringement when an employee downloaded copyrighted material from the Internet, for racial discrimination when employees circulated offensive emails, and for sexual harassment when employees posted harassing comments on an electronic bulletin board. Employee misconduct may also lead to claims of retaliation, defamation, misappropriation of trade secrets, hacking, spoilation of evidence, and violation of securities laws. Although email and the Internet can increase productivity and efficiency in an office, companies need to be aware of the risks involved and should consider taking some pre-emptive steps to minimize their liability.

One recent decision highlights some of the issues related to employer liability for employee use of email and the Internet. Blakey v. Continental Airlines (N. J. Sup. Ct., June 1, 2000) involved a pilot's claims for sexual harassment and defamation stemming, in part, from co-employees postings on an electronic bulletin board provided by Continentals chosen Internet Service Provider. Continental required its pilots and crew members to learn their schedules and flight assignments by accessing its computerized Crew Management System. Continental employees could access CMS using a voice response system by dialing into the system using a regular telephone and via the Internet using an ISP. Continental selected CompuServe to provide Continental employees Internet access to the Crew Management System for a monthly fee. In addition CompuServe offered to those Continental employees who subscribed to its service access to an electronic bulletin board called Crew Members Forum

Shortly after becoming Continental's first female pilot to captain an A300 aircraft, the plaintiff began filing hostile work environment sexual harassment complaints with Continental representatives. In 1993, she filed a sexual harassment claim in federal court. In the midst of the federal litigation, other pilots posted derogatory and insulting gender-based comments on the Forum. Blakey was denied leave to amend her federal claim and subsequently filed a claim for sexual harassment and defamation in New Jersey state court. The trial court granted Continental's motions to dismiss and for summary judgment and Blakey appealed. The appeals court affirmed, finding that Continental was not vicariously liable for defamatory statements by Continental pilots and that because Continental did not require its employees to access the Forum and employees bore the cost of using the Forum, there was no basis for Continental's liability under the doctrine of respondeat superior.

The New Jersey Supreme court reversed and remanded, holding that although `employers do not have a duty to monitor their employees' private communications, employers do have a duty to take effective measures to stop employee harassment when the employer knows or has reason to know that such harassment is part of a pattern of harassment that is taking place in the workplace and in settings that are related to the workplace.

One of the questions the Supreme Court addressed was whether the Forum is the equivalent of a bulletin board in the pilots' lounge or a work-related place in which pilots and crew members continued a pattern of harassment. The court recognized that harassment by a supervisor that takes place outside of the workplace can be actionable; simply because an electronic bulletin board may be located "outside" of the workplace does not mean that an employer does not have a duty to correct harassment by co-employees.

The court stated that it was unclear whether the Forum "was such an integral part of the workplace that harassment on the Forum should be regarded as a continuation or extension of the pattern of harassment that existed in the Continental workplace" and it remanded this issue to the lower court. The court suggested that the trial court should first determine whether Continental derived substantial workplace benefit from the overall relationship with CompuServe, noting that the record did not contain Continental's contract with CompuServe, the number of current users of the CompuServe services, or indicate whether Continental sought the inclusion of the Forum in the services provided by CompuServe.

Here in California, Senator Debra Bowen (D., Redondo Beach), introduced SB1822 on February 24, 2000, a bill that would prohibit an employer from secretly monitoring the email or other computer records of employees. The bill also provides that employers who intend to inspect, review, or retain any email or computer records generated by the employee must first prepare and distribute to all employees a workplace privacy and electronic monitoring policy. Failure to comply with the proposed law, and/or failure to have each employee acknowledge in writing that he or she has read; understands and acknowledges receipt of the policy subjects the employer to criminal misdemeanor liability and can form the basis of civil causes of action.

Implementing Effective Procedures

In addition to adopting a sexual harassment policy, employers seeking to avoid liability should consider the following:

* Adopt, implement, and enforce an email and Internet use policy;

* To avoid employee right to privacy claims, include language in the policy to notify employees that their email messages and Internet activity may be monitored;

* Include specific restrictions pertaining to the content of electronic messages, prohibiting messages that are defamatory, profane, obscene, tortious, offensive or otherwise unlawful and prohibiting employees from distributing copyrighted material or company trade secrets and confidential information;

* Establish and enforce a policy for email retention and system security, including the need for employees to protect their passwords and use security measures such as encryption to send sensitive documents;

* Include procedures in the policy which encourage early reporting by employees of offensive practices;

* Implement internal procedures to effectuate a prompt, fair investigation of employee complaints involving the use of Internet and email transmissions, and inform employees that inappropriate conduct will lead to disciplinary action, up to and including termination;

* Warn employees that email is for business purposes, and encourage employees to send and receive personal e-mail during non-business hours at home;

* Consider the use of filtering software to prevent employees from accessing certain web sites and monitoring software that identifies email containing specific terms;

* Examine contracts with communications and Internet access providers to determine whether certain services, such as the electronic bulletin board provided to Continental's employees, could be considered an extension of the workplace in employment discrimination claims;

* Communicate to supervisors and managers the importance of early reporting of policy abuses, and carefully monitor policy compliance;

* Periodically review Internet and email policies for legal compliance.

Carla Feldman is a partner in the Litigation Department at Loeb & Loeb LLP. She concentrates her practice in advising and defending employers in labor and employment matters. Jill Westmoreland is an associate in the firm's iLaw group.