The legalities of monitoring employees online

As a general principle, employers are legally permitted to monitor their employees online during business hours. Keeping a close eye on workers can help maintain company confidentiality, limit workers from surfing the web on company time and ensure the prevention of harassment.

But such monitoring does come with caveats, as well as risks.

For example, screening employee email on the employer’s network may be permissible but may require advance notice. In states such as Connecticut and Delaware, laws are in place that require employers to provide prior notice before electronically monitoring employees. A union contract may also place certain limits on monitoring and public-sector employees may have some rights under the Fourth Amendment with regard to unreasonable search and seizure.

Federal law can also come into play. Although the Electronic Communications Privacy Act (ECPA) generally prohibits the monitoring of electronic communications, it contains a “business purpose exception” that permits employers to monitor the electronic communications of workers if the company has a “legitimate business purpose.” The statute also allows monitoring with consent and many companies do this by including such permission as part of the onboarding process for new employees before granting access to the company’s networks or systems.

Another wrinkle: third-party communications. States such as California and Illinois mandate that all parties to a communication provide consent to its interception in transit. For employers, that means providing notice to recipients of employee emails and obtaining their consent before scanning a message from a friend or third party. Many companies post a notice on the company’s website and/or include a statement in employee emails that all messages are subject to monitoring and any response implies consent with the employer’s practices.

Even with all these issues, monitoring emails may be more straightforward than focusing on employee social media accounts. The Stored Communications Act (SCA) addresses the situation of accessing electronic communications stored by a provider (such as Gmail or Microsoft), as distinct from an employer accessing emails on its own system. Under the SCA, employers can be liable for the unauthorized access and disclosure of electronic communications in storage on corporate servers of a provider.

Further, roughly half the states ban employers from either requiring or requesting a worker to verify a personal online account like a Facebook profile, blog or Instagram or to log on to their social media account. While technology is available for employers to get around these laws (using keystroke logging software, for example, or taking screenshots), some of the information being monitored by an employer could itself be protected – such as union organizing activities under the National Labor Relations Act, attorney-client communications or in some states, geolocation data.

Mobile devices add another layer to the analysis. For workers using employer-provided mobile phones or devices, the employer has the right to legally monitor use from contact lists to photos and videos to Internet visits and emails. As for bring-your-own-device (BYOD) situations, the terms are generally dictated by the employer’s BYOD policy, but this is an emerging area of law and therefore murky.

All of these legal considerations are centered in the United States. Companies that operate outside the U.S. borders will have international law to contend with as well, notably the European Union General Data Protection Regulation (GDPR) and regulations found in its member states. As a general matter, EU law and the GDPR offer employees a greater level of privacy than that found in the United States. Last year, the EU’s highest court did rule that companies can monitor employee email – if workers are notified in advance.

Perhaps most importantly, employers should recognize that like all things related to technology, the legalities of monitoring employees online are constantly evolving. Being able to adapt to changing laws, regulation and technology will keep employers on their toes.

May 4th, 2018|Educational Series, Security|

Business identity theft is alive and well

And it can happen to your business.

Criminals do not discriminate – any type of business or organization of any size or legal structure including sole proprietorships, partnerships, LLCs, trusts, non-profits, municipalities and county governments, school districts and corporations are all targets for business identity theft.

What exactly is business identity theft?  First, let’s clarify that we are not talking about an information security breach or an incident involving the loss or theft of confidential consumer information. Rather, business identity theft discussed here involves the actual impersonation of the business itself.

It happens when criminals pose as owners, officers or employees of a business in order to get their hands on cash, credit or loans, leaving the business on the hook to deal with the debt. A favorite tactic of identity thieves involves the theft of the tax identification number (TIN) or employer identification number (EIN) of the company or the owners’ personal information to use that data to open new lines of credit or obtain a business loan based on the company’s identity.

Another common form of business identity theft occurs when criminals file fake documents with the Secretary of State’s office to change company information such as its registered address or the names of directors, officers or managers. Once the records have been changed, the identity thieves can establish lines of credit or new accounts with the false information.

Other examples of the fraudulent use of a company’s information include current or former employees making use of their access to financial documentation; establishing a temporary office space or merchant accounts in a company’s name; going through a business’s trash and recycling bins to find account numbers or other sensitive data; using phishing attacks or other scams to get the business’s banking or credit information from employees; and filing for tax credits with stolen EINs.

Businesses are an attractive target for identity thieves. Generally speaking, a company will have higher credit limits than an individual, so opening a new account or line of credit in a business’s name will yield more cash for a criminal and larger purchases will receive less scrutiny. Perhaps most frustrating, companies are required by law to report certain identifiers (an address, EIN/TIN, and names of directors in most states), meaning the information is publicly available and easily accessible to anyone.

The invoicing and payment terms typically available to businesses can also work against them. Identity thieves may have a window of up to 30 days after a purchase to disappear before a company detects a problem – and even longer if the thieves use a different address.

Unfortunately, business identity theft is an underreported crime for a variety of reasons. Companies often have no idea their identity has been compromised until they begin receiving unfamiliar bills and collection notices when it is already too late to stop the thieves. Government agencies receive frequent requests for changes to company information and an address change is unlikely to raise red flags. Some businesses aren’t paying close enough attention or fail to caution employees about the possibility of phishing scams, while others may be embarrassed or concerned about their reputation with customers and don’t want to report what happened.

Given the underreporting problem, statistics on business identity theft can be hard to come by. However, the Internal Revenue Service (IRS) said it has seen the number of corporate tax returns flagged for potential business identity theft increase exponentially in recent years, from 350 in 2015 to 4,000 in 2016 with a jump to 10,000 in only the first six months of 2017. The cost of the damage has also risen dramatically, from $122 million in 2015 to $268 million the following year and $137 million for just the first half of 2017.

Importantly, these numbers reflect just one of the many forms of business identity scams.

What can companies do to protect themselves? Click here for a checklist of the most important steps for prevention and what to do if your business becomes a victim.

April 12th, 2018|Criminal Activity, Fraud, Security|

European Commission Adopts EU-US Privacy Shield as Replacement for EU-US Safe Harbor Framework

What this is about 
On July 12, 2016, the European Commission formally adopted the EU-US Privacy Shield (the “Privacy Shield”) which will provide organizations a mechanism to comply with EU data protection requirements when transferring personal data from the EU to the US. This new privacy framework reflects the requirements set out by the European Court of Justice in its October 2015 landmark decision in Maximillian Schrems vs. Data Protection Commissioner, which declared the EU-US Safe Harbor privacy regime invalid.
Privacy Shield overview: The framework provides a set of robust and enforceable protections for the personal data of EU individuals, as well as transparency regarding the use of such data by participating companies, strong US government oversight, and increased cooperation with EU data protection authorities. For more information, see US Department of Commerce (“DOC”) factsheet and FAQs.
Joining the program: 
The DOC will start accepting self-certifications beginning August 1, 2016. Organizations must identify and register with an independent dispute resolution provider prior to submitting their self-certification.
About self-certification:
The decision to participate in the program is voluntary; however, once an organization publicly commits to comply with the framework’s principles through self-certification, that commitment is enforceable under US law by the relevant authority–either the US Federal Trade Commission or the Department of Transportation. To receive the Privacy Shield’s benefits, an organization must self-certify annually to the DOC that it agrees to adhere to the framework’s requirements, based on the privacy principles that include notice, choice, access, and transfer accountability. See the DOC’s guide for more information about participation and compliance requirements.

Disclaimer: This communication is for general informational purposes only, and does not constitute legal advice. No recipient should act, or refrain from acting, on the basis of any information provided here without advice from a qualified attorney licensed in the applicable jurisdiction.

For further information, please contact us at 1-866-723-2287.
July 14th, 2016|Business Transactions, European Union, Security|

California’s A.B. 1710 enhances privacy protections for sensitive personal information

Effective January 1, 2015, A.B. 1710 amends California’s breach notification, security procedures, and Social Security number (SSN) laws, generally outlined as follows:

  • provides that existing personal information data security obligations apply to businesses that maintain personal information, in addition to those who own or license the information;
  • provides that if the person or business issuing the notification was the source of the breach, an offer to provide appropriate identity theft prevention and mitigation services, if any, be made at no cost to the affected person for not less than 12 months, along with all information necessary to take advantage of the offer to any person whose information was or may have been breached, if the breach exposed or may have exposed SSN and driver’s license numbers;
  • provides that a person or entity may not sell, advertise for sale, or offer to sell an individual’s SSN, except as permitted.
October 15th, 2014|Legislation, Security|

The FFIEC issues “shellshock” vulnerability alert to financial institutions

The Federal Financial Institutions Examination Council (the “FFIEC”) issued an alert advising financial institutions about a material security vulnerability in the Bourne-again shell (Bash) system software widely used in servers and other computing devices that could allow attackers to access and gain control of operating systems. The vulnerability, nicknamed “shellshock,” could expose organizations and individuals to potential fraud, financial loss, or access to confidential information. Any financial institution that provides secure services with Linux or nix variants running a vulnerable version of the Bash shell could be at risk no matter what their vendor mix. Given the widespread use of Bash and the evolving nature of the risk, the FFIEC said that regulators expect financial institutions to perform a risk assessment and address the shellshock vulnerability not only in their own systems, but also with their third-party service providers.

October 15th, 2014|Educational Series, Security|