Employer Alert: New Duty to Police Illegal Activities in the Workplace

1. Employer Alert: New Duty to PoliceIllegal Activities in the Workplace Presented by M. Karen Thompson

2. Jane Doe v. XYC Corporation New Jersey Appellate Division December 2005 • Employees’ known or suspected illegal activities impose new duty on employers: • Investigate • Act to stop conduct • Report conduct to the authorities • Prevent harm to third parties

3. Facts • Somerset County employer with 250 employees • Computer specialists discover employee accessing pornographic websites with company computer • No further investigation done over two year period • Complaints from supervisors and co-workers • IT Manager confirms employee’s access, including one site with name suggesting child pornography, but does not access those sites • Employee instructed to stop unauthorized actions

4. Facts (Cont’d) • Supervisor discovers renewed activities but takes no action • Employee arrested on child pornography charges • Videotape and photos of 10 year old stepdaughter recently had been transmitted to child pornography website from company computer • Nude photos of stepdaughter and other children stored on company computer system • More than 1,000 pornographic images downloaded to company computer

5. Lawsuit Against Employer • Employee’s wife, and mother of child, files suit against employer in February 2004, claiming: • Employer knew or should have known of employee’s conduct • Employer had a duty to report actions to authorities for workplace crimes • Employer breached that duty, enabling employee to continue activities • Stepdaughter harmed by resultant molestation and photography • Money damages for resulting harm (treatment and care)

6. Trial Court Decision • Employer had no duty to monitor its employees’ Internet activities or e-mails • Employer breached no duty by failing to report actions • Employer lacked affirmative evidence or knowledge of employee’s actions • Employer acted reasonably under the circumstances • Ultimate harm to child not caused by employer • Complaint dismissed

7. Appellate Division Analysis • Did the employer have the ability to monitor its employee’s use of the Internet? • Did the employer have the right to monitor his activities? • Did the employer know, or should it have known, that the employee used its electronic equipment for an illegal purpose? • Did the employer have responsibility for conduct outside the scope of employment? • What action should the employer have taken, once it knew of illegal actions?

8. Appellate Division Analysis (Cont’d) • Did the employer have the ability to monitor its employee’s use of the Internet? • YES because: • Employer had already conducted limited investigation of activities • Employer had software that allowed regular monitoring • Employer could have kept a log of sites visited by the employee

9. Appellate Division Analysis (Cont’d) • Did the employer have the right to monitor his activities? • Yes, because: • Written company policy permitted it • Employee had no reasonable expectation of privacy

10. Appellate Division Analysis (Cont’d) • Did the employer know, or should it have known, that the employee was using its equipment for an illegal purpose? • Yes, because: • Employees complained of activities • Supervisory personnel confirmed access to porn sites • More thorough investigation would uncover child pornography access

11. Appellate Division Analysis (Cont’d) • Did the employer have responsibility for employee’s conduct outside the scope of employment? • Yes: Employer can be held responsible for damages caused by criminal conduct if: • the employee engages in the conduct on the employer’s premises • the employee uses the employer’s equipment • the employer has the ability to control the conduct • the employer knows or should know there is a reason to exercise control

12. Appellate Division Analysis (Cont’d) • Where did XYC Corp. go wrong? • Should have conducted immediate and thorough investigation • Could have terminated the employee • Should have reported activities to law enforcement authorities • Breached dual duties: • public policy against possession or viewing child pornography • obligation as employer to prevent its employee from intentionally harming others or creating unreasonable risk of bodily harm to them

13. Obligations Of Employers • Prevention of injury to third parties • Greater responsibility imposed when illicit activities are suspected or reported • Duty to investigate • Duty to act once employer knows or should know of illegal conduct • Take effective action to stop activity • Inform relevant authorities • Preserve evidence • Decision provides authority to take action without fear of employee reprisals

14. Contexts In Which DutyCould Arise • Internet piracy/terrorist activities • Identity theft • Employee privacy violations • Drug dealing • Child abuse

15. Policy Unanswered Questions • If the employer has a computer monitoring policy, how consistently must it be used, if at all? • What is the level of suspicion that will trigger the duty to investigate? • Must the employer access all unauthorized Web sites being visited by its workforce, or only those with suspicious names? • If the employer has no computer monitoring policy, must it implement one? Should it purchase monitoring software?

16. M. Karen Thompsonmkthompson@nmmlaw.com Areas of Practice:Labor & Employment Products Liability Defense Litigation Alternative Dispute Resolution Admitted to Practice in: New York and Jersey State and Federal Courts Education: Rutgers University, J.D. Monmouth University, B.A., magna cum laude