Employee privacy a sensitive legal issue:

June 26, 2006

For all businesses, especially small companies, the best way to approach potential legal issues is proactively: spending time crafting policies and procedures today can save significant headaches-and attorney fees-down the road. This is especially true for the thorny issue of privacy in the workplace.

While the right to privacy isn't enumerated specifically in the Constitution, it remains a closely guarded prerogative for most Americans. Harris polls consistently show that more than 85 percent of respondents are concerned about the erosion of privacy and rank it among their most cherished freedoms.

Indeed, privacy rights often are taken for granted-many employees believe, for example, that they extend into the workplace, which is not necessarily the case. For business owners, the notion of balancing employee privacy with business interests is a touchy legal subject, but a vital one to address, especially in the age of e-mail and widespread employee Internet access.

Generally, it is important for employees to recognize that their privacy at work is restricted. For business owners, it's a matter of liability: the courts have found employers liable in sexual- and racialharassment cases, for example, for inadequately policing material transmitted by employees via e-mail or telephone.

For small-business owners, the issue of employee privacy is a double-edged sword. Smaller companies often are able to attract and retain good employees based on a more flexible, familial atmosphere-an environment that's difficult to maintain with a draconian privacy policy posted on every bulletin board.

At the same time, however, smaller firms don't have the legal and financial resources of a large corporation. They are illequipped to afford discrimination or harassment lawsuits or other legal action related to the unlawful acts of its employees. To avoid this, companies must demonstrate that they take reasonable action to monitor employee activity and immediate steps to correct any problematic behavior.

The important first step is to have a privacy policy that is available to employees (in the employee handbook and elsewhere) and explained to new hires. This addresses an important legal issue, the "reasonable expectation of privacy." If an employee is told she is subject to monitoring and searching, then there is little argument that she should expect privacy.

When crafting the privacy policy, an employer should recognize general legal limitations that apply even in the workplace. The four basic privacy rights generally recognized in these situations are:

Appropriation of a person's name or likeness;

Publication of private facts;

Publication that places a person in a false light; and

Unreasonable intrusion upon the seclusion of another, which includes tactics-like telephone surveillance-that would be considered unduly offensive to a reasonable person.

Generally, if your policy steers clear of the above-mentioned issues and is applied equitably to all employees, it is appropriate and enforceable.

Think of your privacy policy as another part of protecting your business, just like a security system or insurance policy. You hope you never have to use them, but having them in place is simply good judgment.

Treating your employees with respect and dignity encourages a happy and productive workplace. At the same time, a reasonable privacy policy is essential to protecting your own interests, and minimizing the legal risks to your company.

Magid is an assistant professor of business law at the IU Kelley School of Business Indianapolis. Her major fields of expertise include employment and technology law.
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