CHAPTER 20
DIGITAL WORKPLACE 2005:
THE USE & ABUSE OF THE
TOOLS OF THE TRADE

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§ 20.1

I. RECENT TRENDS & DEVELOPMENTS

§ 20.1.1

A. INTRODUCTION

The challenge to employers to stay abreast of developing office technological tools and their ever-expanding uses remain constant. Employers who do not keep up on the tools of the digital workplace, and their proliferating uses, face exposure to legal claims that cannot be effectively countered with defenses of "I didn't know she was downloading that music on her office laptop," or "I didn't know he could take and send pictures with his company cell phone."

The past year provided many object lessons for employers on what not to allow to happen, and provided suggestions of some pro-active steps they could take concerning the use of what could become electronic evidence. Some of the year's biggest hits — and dangers: �� In the latest installment of the ongoing litigation saga of former employee Laura Zubulake and her former employer (UBS Warburg), UBS was sanctioned in July 2004 by a federal judge for failing to prevent the destruction of e-mails relevant to the plaintiff's employment discrimination case.¹

• A prominent Silicon Valley financier was found guilty of obstruction of justice in May 2004 because he had sent a one-sentence e-mail to employees urging employees to "clean up" office files after an investigation had commenced.² The New York Attorney General's office announced an investigation of what the insurance industry terms "incentive fees", but which others characterized as kickbacks or bid rigging, based in part on e-mails as evidence suggesting that a "live body" be sent to a meeting ("…perhaps you can send someone from your janitorial staff — preferably a recent hire from the U.S. Postal Service.").³ And one employee's termination for violating company electronic communications policies was affirmed, notwithstanding his creative defense that he was accessing and sending heterosexual pornography on his office computer in an effort to disguise his gay sexual orientation.⁴
• A federal court concluded that an employer's notification of its employees by e-mail of the institution of a new dispute resolution policy which included a waiver of a right to a jury trial was invalid where the notification was contained in a single-spaced, full-page e-mail to all employees. The e-mail did not mention the waiver of the employees' right to a jury trial, or that the employer expected its employees to be bound by the new dispute resolution policy if they continued to work there.⁵
• The Judicial Conference of the United States issued proposed amendments to the Federal Rules of Civil Procedures, which included suggested changes relating to electronic evidence. The proposals addressed issues of early attention by counsel and the court to electronic evidence discovery issues, the production of electronic evidence which is not "easily accessible", the assertion of privilege after production of electronic evidence, and a limit ("safe harbor") on sanctions for electronic information lost as a result of routine operation of computer systems. The proposed rules, if approved, could take effect as soon as December 1, 2006.⁶
• The United States Supreme Court affirmed in a per curiam opinion a public employer's termination of an employee who posed partially nude, wearing a uniform indicative of the general nature of his employment, and masturbated in an online video he offered anonymously for sale.⁷
• The EEOC and three other federal agencies issues new regulations specifying who is an Internet "job applicant" for the purpose of the employer's obligation to keep track of the race, gender, and national origin of job applicants.⁸
• In the hotly-contested presidential election last year, one Washington state employer and company owner e-mailed his employees that if Senator Kerry won the election, he would sell the company.⁹ The "Prosperity Project" encouraged employers to send e-mails to their employees explaining how various candidates stood on businessrelated public policy issues.¹⁰ And in New Mexico, one group of employees objected when management e-mailed all employees with an invitation to pick up a complimentary ticket to an appearance by President Bush.¹¹
• The Internet Corporation responsible for assigning names and numbers is considering adding to more domain names:. "jobs" and. "mobi." The former would designate online job search sites, and the second would foster the use of mobile and wireless technologies.¹²
• Playboy announced that it would provide photos of partially nude and nude women to subscribers' digital download and display devices. Playboy named its service "iBod."¹³

§ 20.1.1(a)

Trends In Usage

The following statistics provide shape and context to the use of electronic resources in the workplace:

• Sixty-three percent of full-time or part-time workers in the United States regularly use e-mail.¹⁴ Sixty to seventy percent of American business is conducted electronically. Over one billion e-mails are sent daily in the United States. Eightyeight million employees are connected to the Internet.¹⁵ On a typical work day, 10% of workers spend more than four hours a day on e-mail, up from 8% in 2003. Because of the increasing volume of e-mail to employees, some employers are requiring employees not to read e-mail until 11 a.m. each day.¹⁶
• Seventy percent of all access to pornography sites occurs during traditional work hours.¹⁷ Twenty-four percent of employees in one survey reported that they or a coworker had visited x-rated websites, engaged in sex talk using IM, or sought other Internet sexually oriented activities.¹⁸
• Twenty percent of 840 employers responding to an annual survey by the American Management Association and the ePolicy Institute released in July 2004 reported being ordered by a court or regulatory body to produce employee e-mail (up from 14% in 2003, and 9% in 2002). The same survey revealed that only 79% of employers had written e-mail policies in place, 35% had e-mail retention policies, and 54% provided any employee education concerning those policies. Sixty percent of the respondents reported that they monitored their employees' e-mail, but only 10% monitored instant messages, even though 31% of employees used IM at work. One-quarter of respondents reported terminating an employee for violating the employer's e-mail policy.¹⁹
• By mid-2004, there were 26 million camera phones in use, compared to the 8.5 million in use in 2003. By 2006, 80% of all mobile phones sold are expected to be camera phones.²⁰
• One survey of employers reported that 56% of all responding companies received resumes by e-mail, up from 34% of the same group in 2000. Some employers reported requesting an applicant's SAT scores, with some of that group eliminating applicants who scored below 1300 of a possible 1600 points.²¹

Courts continue to grapple with the application of laws and legal concepts which began evolving years, decades, and even centuries before electronic methods and data came into common usage. Now, electronically stored information can include data stored in digital, analog, or optical form.²² It can include active data or data files, metadata, and replicant or residual data, as well as e-mail. This information may be found on desktop computers, laptops, centralized servers, backup servers, and on storage media such as CD-ROMs, floppy diskettes, magnetic tape, ZIP disks or drives, cell phones and PDAs.²³ It is expected that governments will increasingly permit required documents to be stored electronically. For example, Congress passed a bill in the fall of 2004 allowing employers to store "I-9" forms electronically.²⁴

§ 20.1.1(b)

The Employer's Evolving and Expanding Duty to Preserve Electronically Stored Information

As individuals and corporations increasingly do business electronically ... using computers to create and store documents, make deals, and exchange e-mails — the universe of discoverable material has expanded exponentially.… The more information there is to discover, the more expensive it is to discover all the relevant information until, in the end, "discovery is not just about uncovering the truth, but also about how much of the truth the parties can afford to disinter".…²⁵

The five orders issued in the ongoing saga of Zubulake v. UBS Warburg LLC²⁶ have served as a legal icebreaker on the issues of the nature and scope of electronic discovery of the electronic workplace, leading contemporary demands for evidence embodied in electronic technology through the sheet ice of traditional discovery concepts. Plaintiff Laura Zubulake was hired by UBS Warburg as a senior equities trader.²⁷ At the time of her termination, she was earning compensation of approximately $650,000 a year.²⁸ Zubulake sued her former employer for gender discrimination and retaliation under federal, New York, and New York City law.²⁹ In the course of the discovery process, she demanded that the defendant produce e-mail exchanges held in defendant's hardware and storage data. As a securities firm, UBS was required by the Securities and Exchange Commission to maintain extensive e-mail backup and preservation protocols.³⁰ Zubulake justified her demand in part on her estimate that, if she were to prevail on all her claims, her estimated damage recovery would be $13 million, exclusive of any punitive damages or attorney's fees.³¹

UBS Warburg refused to provide all the discovery demanded by Zubulake. The employer contended that simply to retrieve and review the backup tapes required to search for e-mails responsive to her discovery demand would cost about $300,000,³² not counting attorney time necessary to review the retrieved e-mails to determine whether any of the material was privileged from disclosure. UBS Warburg maintained that the plaintiff would have to bear the extraordinary expenses the employer would incur in retrieving the e-mails from archived storage.

In Zubulake I, the court set forth a list of seven factors to be considered in determining the circumstances under which the cost to the producing party of complying with demands for discovery of electronic media may be shifted to the demanding party:

1. the extent to which the request is specifically tailored to discover relevant information;
2. the availability of such information from other sources;
3. the total cost of production, compared to the amount in controversy;
4. the total cost of production, compared to the resources available to each party;
5. the relative ability of each party to control costs and its incentive to do so;
6. the importance of the issues at stake in the litigation; and
7. the relative benefits to the parties of obtaining the information."³³

The court cautioned that each factor is not equal in weight.³⁴ The court concluded that, taking the factors into consideration, the employer was required to produce all responsive e-mails on its active servers or on its optical disks at its expense. It would also be required to produce, at its expense, responsive e-mails from any five backup tapes, selected by the employer, and to report the results of that search, including time and money spent, in an affidavit. When it received that report, the court would then decide whether further discovery from the remaining 89 backup tapes was justified and, if so, at whose expense.³⁵

In July 2003, the court reviewed the employer's affidavit. Based on the information contained in it, the court ordered that Zubulake had to pay a quarter of the estimated total cost of restoring archived data ($166,000), though the employer would pay the bulk of the cost.³⁶ The court also ordered that the employer would have to bear, alone, any costs, including attorney and paralegal time, associated with reviewing the retrieved data to determine whether a privilege from disclosure might be asserted (costs which the employer estimated at $107,000).³⁷

In October 2003, the court wrote a fourth order in the case, this one addressing the costs of retrieving e-mail and the consequences to the employer of having deleted previously stored e-mails. The court noted that:

Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a "litigation hold" to ensure the preservation of relevant documents.³⁸

Zubulake sought sanctions against her former employer of:

1. having the employer bear the complete cost of storing the monthly backup tapes (not 75% of the cost, as ordered in Zubulake III),
2. an adverse inference jury instruction concerning the missing e-mails, and
3. having the employer bear the costs of re-deposing certain individuals on the subject of the deleted e-mails.³⁹

The court denied the request to reallocate the cost-shifting, noting that the missing e-mails had already been considered a factor in allocating the costs.⁴⁰ The court also denied the adverse inference instruction, concluding that Zubulake had not satisfied the requisite burden of proof to show that the employer had a culpable state of mind, and that the missing information was relevant to or supported a party's claim or defense.⁴¹ Finally, the court in Zubulake IV did find that UBS Warburg should bear the cost of limited re-depositions of some witnesses concerning the missing e-mails.⁴²

The most recent chapter in this evidentiary "Bleak House" for employers was Judge Scheindlin's order of July 2004, which resulted from the limited re-depositions of certain employer witnesses by the plaintiff. As a result of the re-depositions permitted by the court's decision in Zubulake IV, the plaintiff presented evidence that one key e-mail had been irretrievably lost, and that others were likely lost.

Zubulake V addressed "counsel's obligation to ensure that relevant information is preserved by giving clear instructions to the client to preserve such information and, perhaps more importantly, a client's obligation to heed those instructions."⁴³ Even though employer's counsel has alerted the employer at the outset to preserve all possible relevant e-mail, and make an ongoing effort to do so, some employer's representative deleted relevant e-mails. "Other employees never produced relevant e-mails." ⁴⁴

In this court's view, the culpability for late-produced and never-produced e-mail evidence did not lie solely on the shoulders of the employer. The employer's counsel:

• failed to request retained information from one key employee;
• failed to give the litigation hold instructions to another employee;
• failed to adequately communicate with another employee about how she maintained her computer files; and
• failed to safeguard backup tapes that might have contained some of the deleted emails. ⁴⁵

The court in Zubulake V, with this additional information now available, revisited the plaintiff's request for sanctions for the employer's failure to produce evidence, and for destruction of evidence. It concluded that the employer's counsel must take the following steps to ensure compliance with the evidentiary preservation obligation:

1. Issue a "litigation hold" at the outset of litigation, or whenever litigation is reasonably anticipated.
2. Communicate directly with the "key players" in the litigation concerning the preservation duty, and periodically remind them that the duty still applies.
3. Instruct all employees to produce electronic copies of their relevant active files.
4. Identify and secure all backup media which the party is required to retain.⁴⁶

Applying these standards to the facts as developed, the court reasoned that the employer "deleted the e-mails in defiance of explicit instruction not to [do so]."⁴⁷ The court found that the employer's spoliation of evidence was willful, and that the lost e-mails were presumed to be relevant.⁴⁸

For the actions of the employer and its counsel in failing to preserve relevant evidence, the court concluded that the plaintiff would be entitled to a jury instruction allowing the jury to draw an inference adverse to the employer concerning the contents of the deleted and lost emails, the employer was ordered to pay the costs of any depositions or re-depositions required by the late production of e-mails, and the employer was ordered to pay the cost's of Zubulake's motions seeking sanctions against the employer.⁴⁹

In a postscript to Zubulake V, the court warned:

Now that the key issues have been addressed and national standards are developing, parties and their counsel are fully on notice of their responsibility to preserve and produce electronically stored information.⁵⁰

The five Zubulake orders are a bracing reminder of the evidentiary significance of e-mail to today's businesses, and the costs and other consequences of using, storing, and not deleting it. The quintet of orders makes clear that it will be the responsibility of both the employer and the employer's counsel to identify, secure, and retain all possibly relevant electronic evidence, on pain of being subject to sanctions for their failure to do so.⁵¹

§ 20.1.1(c)

The Use of E-mail as Evidence in Workplace Litigation & Investigations

The past year saw more examples of the use of workplace e-mail as pivotal evidence in civil, criminal and administrative proceedings implicating employers.

• After the first trial ended in a hung jury, the second trial by federal prosecutors of financier Frank Quattrone in San Jose, California, ended with Quattrone's conviction. One of the key items of evidence in the case was Quattrone's e-mail directive to employees to "clean up" their office files after the federal investigation had commenced.⁵²
• New York State Attorney General, conducting his third investigation of a major industry, used e-mails obtained by subpoenas from major insurance brokers as evidence of bid rigging.⁵³
• In a creative attempt by an employee terminated for, among other reasons, failure to follow his employer's electronic resources policy, the employee claimed that the pornographic heterosexual e-mails he sent to other employees were merely an attempt to conceal his gay sexual orientation.⁵⁴

§ 20.1.1(d)

Controlling the Use of the Employer's E-mail Resources

Even when no litigation may ensue, employers should be aware of the possibility for negative and counterproductive e-mails, especially from terminating employees. For example, an associate attorney at a California law firm, resigning at the end of May 2004, sent the following e-mail to firm employees:

As many of you are aware, today is my last day at the firm. It is time for me to move on and I want you to know I have accepted a position as "Trophy Husband." This decision was quite easy and took little consideration. However, I am confident this new role represents a welcome change in my life and a step up from my current situation. While I have a high degree of personal respect for … as a law firm, and I have made wonderful friendships during my time here, I am no longer comfortable working for a group largely populated by gossips, backstabbers and Napoleonic personalities. In fact, I dare say I would rather be dressed up like a piñata and beaten than remain with this group any longer. I wish you continued success in your goals to turn vibrant, productive, dedicated associates into an aimless, shambling group of dry, lifeless husks. May the smoke from any bridges I burn today be seen far and wide. …⁵⁵

The e-mail was disseminated to attorneys at other law firms nationally within hours of its first being sent.

Another employer, a school administrator beset with what he perceived were ongoing "leaks" by dissatisfied teachers to the local media, received even more heat when he sent out an e-mail to all teachers which included the statement: "If any staff member asks you to provide underground information to local media, remind that person that undermining one's boss can be career-limiting."⁵⁶

§ 20.1.1(e)

Cellular Telephones

Capabilities

Cell phones are available which provide an array of services in addition to telephony, including:⁵⁷

• accessing the Internet (including text messaging)
• taking, sending, and receiving pictures;
• recording videos;
• playing music;
• timekeeping;
• scheduling;
• serving as a flashlight and mirror; and
• competing online with others remotely in arcade-type games.

§ 20.1.1(f)

Global Positioning Systems (GPS)

Some employers now keep tabs on the location of their mobile staff to ascertain when they will arrive at their next appointment, and to confirm that the employee is taking the most direct route to that location.⁵⁸ Employers can equip cell phones provided to employees with software which allows the employer to pinpoint an employee's geographic location at any given time, sometimes to within 15 feet.⁵⁹ Some nursing homes and hospitals are using this technology, or radio frequency identification (RFID), to track the movements of nurses while on duty.⁶⁰

The scope of use of such technology — the purpose for which an employer may use such information — has been the subject of collective bargaining agreement provisions in recent years.⁶¹ Some unions have demanded of employers implementing GPS technology in the workplace to agree that GPS data could not be used to discipline or evaluate employees.⁶²

§ 20.2

II. OVERVIEW—THE DIGITAL WORKPLACE

§ 20.2.1

A. USING THE ELECTRONIC TOOLS OF THE WORKPLACE

With the steady expansion of the service sector of the economy and the relative contraction of the manufacturing sector, American business has seen the increasing use of a variety of technological innovations intended to increase productivity. Today's employees are expected to be able to use a personal computer, access and use resources available from the Internet, send and receive electronic mail (e-mail) and voicemail, use cellular telephones, and participate in videoconferencing, to name but a few of the new tools.

Businesses spend anywhere from thousands to millions of dollars in acquiring, configuring, programming, updating, and refining their computer systems. Virtually all computer systems acquired by businesses are configured to allow e-mailing and, in most cases, provide Internet access for employees for business purposes. A company's computer system is one of its most important operational tools, and frequently contains a major portion of the business' informational assets.

Most businesses do not allow members of the public free rein to use the company's physical assets. Company management owes it to itself, as well as to the company, to preserve and enhance the company's assets by ensuring that the company's e-mail system, when used by employees and nonemployees, be used for business purposes only.

As has been historically true with the telephone, employers must promulgate written policies concerning appropriate and inappropriate employee uses of these tools. Several decades ago, the question was whether personal calls would be allowed at work using company phones. Now, the questions have become more multifaceted:

• May an employee use the company computer system to send or receive non-businessrelated e-mail? How frequently? Of what kind?
• May an employee store non-business-related information on the company's computer system? What kind of information? If the employee password-protects the nonbusiness information, should the employer be told what that password is? Does the employee have the option of physically locking the desktop computer? If so, does management have a key to that lock? Can the drives of an employee's desktop computer be accessed remotely? By whom?
• May an employee avoid taking the time to leave the office and shop during the employee's lunch break, when the sought item might be found, purchased, and delivery ordered in a small fraction of the time online, using the company's equipment?
• Does the company's hardware and software allow "instant messaging" (IMing)? What is the company's policy on IMing: Forbidden? Allowed only for personal reasons? Allowed without restriction?
• Should employees on their breaks or lunch time be permitted, using the company's system, to surf the Internet to access:

Online auctions?	Stock brokerages?
Music download sites?	Chat rooms?
Political sites?	News sites?
Game sites?	Travel sites?
Job search sites?	Gambling sites?
Pornographic sites?	Political campaign sites?

If employers do not make affirmative choices on these issues, draft and issue policies, and ensure that their employees know and understand the policies, employers will have these questions decided for them, not by themselves, but by a jury, judge, or arbitrator. For employers not to take action to control their workplace tools is to expose themselves to the substantial risk that these tools will be misused and abused, at significant cost and, perhaps, negative publicity to the employers.

These questions, and their answers, implicate more than just legal liability. With the additional demands employers are asking employees to assume, employees are pushing back to demand greater autonomy, and some measure of privacy in the workplace, for the hours they put in. An employer must weigh the effect on employee morale of a policy which, for example, allows no personal use of e-mail or Internet access, and allows the employer to search at any time the employee's e-mail, Internet access, and voicemails. With increasing employee job mobility, employers need to retain and motivate their best employees — to persuade them that their business is a great business for which to work. The cost of recruiting and replacing a good employee is high, indeed.

An article published by the Bureau of Labor Statistics attempted to predict the effect of electronic business (e-business) on existing occupations, industries and staffing.⁶³ For example, for the 40 million persons employed in 1998 in marketing, sales and administrative support workers, the article's author concludes the development of e-business will result in a dampening of employment requirements for such occupations.⁶⁴ E-business will also dampen the output and employment requirements for the 14.5 million persons employed in retail trade (except eating and drinking places and non-store retailers), the 19 million employed in manufacturing, and the two million employed by depository institutions.⁶⁵ E-business will, however, stimulate output and employment needs in industries such as computer services, telephone and cable communication services, and water, sewer, pipeline and communications and power line construction.⁶⁶ The article notes that the U.S. Postal Service expected the amount of first class mail to peak in 2002, then decline at a rate of 2.5% a year in fiscal years 2003 through 2008, due in large part to e-mail.⁶⁷ The overall effect of e-business on education services (11.2 million employees in 1998) is predicted to be little or none. The article's author observed that "[m]uch education content can be digitized and delivered online and is sometimes referred to as ‘webucation' or e-learning."⁶⁸ The article concludes: "It is unlikely that the impact of e-business on output and employment will ever be fully measured."⁶⁹

§ 20.2.1(a)

Internet Hiring & Recruiting

Using the Internet in hiring is no longer something unique to high-tech companies. Employers in most fields of employment understand the benefits of Internet recruiting and are using it to fill a full range of positions. Among large employers, 90% now recruit electronically.⁷⁰

Employers can also use the Internet to administer proficiency tests to potential employees, including keyboarding, computer programming, data entry, general math, and psychological tests. Whether advisable or not, a private test center may be linked directly to a company's Internet home page and the tests instantly scored on-line.

It is possible that employers who post job openings on the Internet but do not post job openings in other more traditional forums could open themselves to an adverse impact claim. This is because some groups of applicants are less likely to have computer access, while other subgroups are more likely to have such access. This "Digital Divide" has been the subject of several studies and much commentary.⁷¹ In an adverse impact case, an employment practice that appears neutral on its face can be found to be discriminatory if it has a harsher or adverse impact on a protected class of people (e.g., Hispanics, females, Asians, etc.). The adverse impact analysis is often applied to determine if employment criteria or employee selection processes are discriminatory.

Although there may be differences by race in access to computers for job searching, among all applicants with access to computers, African-Americans actually are more likely to use the Internet for job searches than Caucasians.⁷² Significant differences exist between racial groups among those households with computers and with Internet access. For example, a study by the U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA) revealed that Asian-American and Pacific Island households are more likely to have both computer and Internet access, followed by Caucasian, African-American, and Hispanic households.⁷³ Gender also is a distinguishing, although small, factor in Internet use. African-American and Hispanic women are more likely to use the Internet than African-American and Hispanic men, while more Caucasian, Asian-American, and Pacific Islander men than women were likely to use the Internet.⁷⁴

Concerns with Internet Recruiting & Hiring

Unauthorized Workers

The Internet allows workers from all over the world to apply for jobs and thus increases the chance that an employer will encounter an applicant not allowed to work in the United States. Employers must use caution in Internet recruiting. If workers from only the United States are sought, but applicants from foreign nations submit applications electronically, the employers' hiring decisions may well fall within the ambit of the Immigration Reform and Control Act (IRCA).⁷⁵

Reporting Requirements

Internet recruiting also presents problems for federal contractors who are required by Executive Order No. 11246 to keep records of the people who apply for jobs, including the race and gender of the applicants. Executive Order No. 11246 requires that every federal contractor and subcontractor agree not to discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin, and to take affirmative action to ensure that all applicants and employees are employed without regard to those classifications. The reporting requirements are a way to ensure that discrimination is not taking place.

While an employer can usually determine race and gender by simply looking at the applicant, Internet recruiting does not normally allow the employer to see the applicant. Thus, it becomes more difficult for an employer to gather the required race and gender data. In addition, determining who is an applicant for purposes of the reporting requirements of Executive Order No. 11246 is not easy when an employer utilizes Internet recruiting. For example, if an employer receives 500 applications over the Internet, but only examines 20, must it keep records on all the people who sent résumés or only the 20 people who had their résumés examined? How your organization handles this process should be reviewed with corporate counsel.

In March 2004, the EEOC joined with three other federal agencies in issuing new recordkeeping guidelines for employers who accept applications through the Internet. After three years of development, the new guidelines define, in a question-and-answer format, what constitutes a "job applicant" for purpose of maintaining required information on the race, gender, and national origin. To meet the designation of "job applicant," an employer must have acted to fill a particular position, the individual must have followed the employer's standard procedures for submitting applications, and the individual must have indicated an interest in the particular position. ⁷⁶

Fraud & Misrepresentation

The risk of fraud and misrepresentation increases when an employer uses the Internet to recruit. It is much easier to falsify documents and information sent over the Internet. For example, when looking at an applicant's transcript on-line, the employer cannot check an embossed seal to make sure the transcript is authentic. Diploma mills exist which will provide a person a Ph.D., based solely on "life experience" (cum laude designation thrown in for no additional charge).⁷⁷ Before hiring anyone from the Internet, an employer should meet with the applicant face-to-face and should require documentation that verifies an applicant's identity.

An employer also must be careful to avoid making any misrepresentations when posting job openings on the Internet. If the job posting turns out to be significantly different from the actual job, that posting can come back to haunt the employer. How can employers run afoul of laws prohibiting misrepresentations by them? Consider the following scenario:

A plaintiff claims she was falsely induced to leave her job and work for Company X. She claims that the employer induced her to work for Company X by promising her that she would be in charge of approximately 50 employees. The employer claims that this was not a promise, but only a mere suggestion. However, the employee presents a copy of Company X's Internet posting of the position for which the plaintiff applied that states: "Job responsibilities: supervise over 50 employees."

Assume a second scenario:

In an effort to save time, a company uses material from its public relations department in its Internet job postings. As this material was created to attract clients, it understandably contains some overstatements and exaggerations in an effort to make the company appear as attractive as possible to clients. A job applicant accepts a position at the company on the basis of the statements in these materials. Upon discovering that some of the statements in the job posting were exaggerations, she sues for false inducement.

Employers should avoid making any exaggerations or misrepresentations in their job postings. While such puffery may help attract clients, it can also be the basis of a fraudulent inducement claim.

Negligent Hiring

The tort of negligent hiring is based on the principle that an employer has a duty to protect its employees and customers from injuries caused by employees who the employer knows, or should know, pose a risk of harm to others. Thus, an employer may be liable for negligence in selecting an applicant for employment when, for example, the employer neglected to contact the applicant's former employers or to check references, and such an investigation would have demonstrated the applicant's violent or criminal background or other indicia of unfitness for the job.⁷⁸

The ease and speed associated with hiring over the Internet can make an employer rush through the hiring process without checking references and verifying all information supplied by an applicant. An employer who fails to check references or to contact the applicant's former employers dramatically increases its risk of being held liable for negligent hiring. An increased ability to access information in the digital workplace will undoubtedly affect the standard the courts use when determining whether an employee was negligently hired or supervised. As technology continues to develop, employers will have an expanding array of information at their disposal and a corresponding responsibility to check and investigate the information. Employers will be able to access such information without the need for actual physical possession of documents. The information and documents will instead be accessible by computer via a modem.

On the positive side, the Internet offers a solution to the problem of wanting to hire an employee immediately but having to wait for a background check to be completed. Systems now exist for an almost instantaneous background check. For example, a service named PeopleWise performs 50 state background checks in less than two minutes. (For more information, visit the PeopleWise website at http://www.people-wise.com. PeopleWise is an alliance partner of Littler Mendelson.)

In addition to the issue of negligent hiring, there is also the tort of negligent retention. Under this theory of negligence, an employer may be held liable for failing to investigate, discharge, or reassign an employee after becoming aware that the employee is violent or otherwise unfit.⁷⁹ In larger corporations, where individuals get transferred from department to department, there may be information maintained electronically that could indicate that an employer was negligent for retaining an individual or for not taking appropriate protective or disciplinary steps. An example would be an employee with aggressive or violent tendencies who sends anonymous, threatening e-mail messages to others in the department and is then transferred to another department, where the activity starts anew. The employee eventually is transferred to a third department, where the e-mail messages resume. This kind of behavior might escalate into an assault or even a homicide. In hindsight, the company could have set up a computer program that traced the source of the threatening e-mail messages to the current assignment of the employee. Indeed, this would probably be viewed as a relatively simple and inexpensive precaution. By failing to use the available technology and digital information, the company could find itself liable for failure to provide a safe work environment and for negligent retention.

§ 20.2.1(b)

E-Distribution of Personnel Policies

Many employers distribute employee handbooks, personnel policies, and benefits information electronically. Electronic distribution offers benefits such as a reduction in copying and production costs associated with producing a traditional employee manual. However, electronic distribution is not risk-free. For instance, how does an employer ensure that each employee reads the manual? How does an employer insure that each employee receives and reads updates? How does an employer preserve previous copies of the handbook? How does the company prevent a hacker from modifying the handbook or policies online? Campbell v. General Dynamics should be considered an example of how not to provide e-mail notification of policy changes, especially changes which would "change employees' legal rights." ⁸⁰The court noted that the employer did not use any available methods to confirm an employee's receipt and understanding of the new policy, such as by a reply e-mail, or even noting "I accept" in a return e-mail, let alone holding a meeting announcing the change in policy, with a sign-in sheet to confirm employees' attendance.⁸¹

Existing software systems that help employers track which employees have accessed the handbook and which ones have not. These same tracking systems enable employers to track employees who have not yet accessed the revised handbook. Of course, access does not ensure that the employee read it, but the same has always been true when a large bound book is given to a new employee. One new software system enables selected individuals to post and track policies and procedures for the organization, and allows the rest of the organization to read them.

§ 20.2.1(c)

The Growth of E-Training

The need for training employees in the Information Age will only intensify. To retain good employees and recruit additional quality assistants, employer must accept that training of employees represents an investment, not a cost. One team of futurists notes that major American companies believe that each single dollar invested in training to expand the skill sets of current employees produces anywhere from $20 to $30 in profits.⁸² The same authors predict, "A substantial portion of the labor force will be in job retraining programs at any moment."⁸³

The Internet has dramatically improved the area of training and education in the workplace by introducing an innovative way to provide workplace training. Employees can now receive training via the Internet on a wide range of topics — from avoiding sexual harassment to balancing the company's bank account.⁸⁴

Internet-delivered training is more convenient than traditional training. Sending employees to training seminars disrupts the workplace and is difficult to organize. Internet-delivered training is also less expensive. None of the travel costs associated with sending employees to training seminars are associated with Internet-delivered training. Internet training may seem expensive at first, but it saves money over the long run. Companies that use Internet-delivered training report impressive cost savings.

Internet-delivered training might decrease an employer's risk of being sued for negligent training if such training can be shown to be more effective than traditional training. Internet-delivered training can be effective in part because it allows an employee to learn at her own pace. If she does not understand something, she can study it until she comprehends it. In addition, Internet-delivered training provides an ongoing source of education. Anytime the employee has a question, she can consult the Internet-training program for a refresher course.⁸⁵

Keeping track of which employees have been trained is easier to do when Internet-delivered training is used. An Internet-based training program can record which employee logs on and when that employee logs on and logs off. Thus, an employer can tell if an employee logged off halfway through the training session. An employer who sends its employees to a traditional training seminar may not be aware if an employee walks out in the middle of the seminar.

While Internet-delivered training makes it easier for an employer to track which employees have received training, it also can make it harder for an employer to verify that the employee who claims to have taken the training is the person who actually took it. There are several things an employer can do to avoid problems like these. An employer can require employees who receive training over the Internet to utilize digital signatures. A person can write his or her signature on a pad which is an accessory to the computer, as is done more frequently in in-person retail credit card transactions. The sender of a message signs a digitizing tablet. This signature is then compared to the signature in the master template that is stored in the computer database to ensure that it is indeed a valid signature.

For detailed information regarding training requirements, see Chapter 15 of THE NATIONAL EMPLOYER®.

§ 20.2.1(d)

Internet-Induced Job Terminations & Eliminations

The Internet is increasingly playing a role in employee terminations. Employers are finding it necessary to terminate employees who abuse the Internet at work and employees whose jobs have been eliminated by the Internet. Employers are also finding they may have to terminate employees who cannot adequately use today's technology. Before termination decisions are made, employers must remember that technology used in the workplace creates a record that can be used against the employer, as well as the employee.

Termination for Improper Internet Use

Personal use of the Internet by employees during work hours is becoming a growing phenomenon. It is likely that more employers will find it necessary to terminate employees who continually use the Internet for personal reasons during work.⁸⁶

Employee Activities on the Internet

If they are not doing work, what are employees doing on the Internet? One study revealed that employees used Internet access at work for, among other functions, to:⁸⁷

read the news (72% of respondents)	instant message (26%)
make travel arrangements (45%)	download music (13%)
make purchases (40%)	play games (11%)
perform a job search (37%)	chat (9%)
check stock prices (33%)	access pornography (4%)
coordinate or plan social events (27%)

The problems for employers of unauthorized use of e-mail and the Internet are not academic concerns. Just a few employees abusing the e-mail system can have wide-ranging ramifications. In 2000, Dow Chemical Co. fired 74 employees in Midland, Michigan and Freeport, Texas, and disciplined 435 other employees at those locations, who had e-mailed pornography and violent images from company computers.⁸⁸ Those employees who downloaded, saved and distributed the offensive material were fired. Employees who simply opened and deleted offensive material were not reprimanded. The termination of employees for downloading pornography from the Internet and storing it on their office computer has routinely been upheld.⁸⁹

In another variation on this theme, in Urofsky v. Gilmore, the Fourth Circuit Court of Appeals upheld, against constitutional challenge by state university professors, a Virginia statute prohibiting state employees from using state computers to access sexually explicit material on the Internet for work-related purposes without prior permission.⁹⁰ The professors had challenged the Virginia statute on two grounds. They first contended that the statute violated their right to free speech. The court of appeals ruled against them on this theory, noting that they were speaking as government employees, not as citizens speaking on matters of public concerns. The professors also contended that, as individual professors and academic researchers, they had additional academic freedom rights requiring the unfettered access to such Internet sites. The majority of the appellate court responded to that argument by holding that "to the extent that the Constitution recognizes any right of ‘academic freedom' above and beyond the First Amendment right to which every citizen is entitled, the right inheres in the University, not in individual professors, and is not violated by the terms of the" state statute.⁹¹

Employee use of the Internet for non-work-related purposes is inappropriate, but understandable. Social e-mailers feel that the activity makes them happy, doesn't negatively affect their productivity, and keeps people engaged.⁹² One commentator compared the Internet situation to giving employees a television set with 20,000 channels, only 17 of which are related to company business. In such a situation, the employer can hardly be surprised when the employees are caught watching "Days of Our Lives."⁹³

The Burden of Netsurfing on the Conduct of Business

Employee use of the Internet for non-work-related purposes is troubling for several reasons. First, employees who are using the Internet for personal reasons often use up valuable bandwidth by downloading entertaining video clips or other documents and programs. This burdens the system and makes it more difficult for others to use the Internet efficiently. (Injunctions entered against music download and exchange sites (such as the now-defunct Napster) may decrease this activity — or they may not.) Second, Internet use for non-work-related purposes costs companies money. The loss of productivity can be estimated. For example, if 50 $20-per-hour employees spend just one hour of work time per day surfing the Internet for non-work-related purposes, the company loses the value of $1,000 per day in worker productivity. According to one study, when the Starr report on the proposed impeachment of President Clinton was posted on the Internet, so many employees spent company time reading it that more than $450 million in productivity was lost.⁹⁴

Personal use of the Internet during work hours also leads to increased risk of liability for the company. An employer can be held liable when an employee uses the company's Internet access facilities for unlawful or inappropriate purposes.

Thus, personal use of the Internet during work hours is a significant problem that may very well cause an employer to terminate an employee. Employers should stress in their policies that improper use of the Internet and all other workplace technology is strictly prohibited and will not be tolerated. (Sample provisions and sample policies can be found at the end of this chapter.)

An employer who terminates or disciplines an employee for inappropriate use of the Internet must make sure that the action is not discriminatory. To avoid such problems, employers must make certain to apply rules regarding Internet use at work consistently.

NLRA Considerations

Employers who have no policies concerning the use of the company's e-mail systems and Internet access are at risk that nonmanagement communications concerning possible unionization of the workforce would be protected by law.

The NLRB has continued to fine-tune its judgments on when an employer's e-mail policy, and its enforcement (or nonenforcement) of that policy, can violate the National Labor Relations Act (NLRA), section 8(a)(1). Several recent cases provide examples of how reviewing administrative agencies analyze the availability to employees of an employer's e-mail system to determine the extent to which the employer may be required to allow thirdparty access and use — including by unions and for union purposes. In Guard Publishing Company, the issue before the administrative law judge (ALJ) was whether the company's blanket ban on the use of its communications systems for proselytizing or solicitation for commercial or political causes, outside organizations, or non-job-related solicitations, violated Section 8(a)(1) of the National Labor Relations Act as the policy was applied.⁹⁵ The employee challenging the company's policy was a copy editor — but also served as the local union president. She used her office computer and internet access for both work and nonwork- related purposes, including union communications. Her first warning from her employer resulted when she sent an e-mail from her office computer to about 50 employees advising them of an upcoming union rally. Her second warning resulted from her sending two e-mailings to employees at their office e-mail addresses, from the union office, as to: (1) how to dress to demonstrate support for a union position, and (2) expressing support for the union entry in a local parade. The evidence presented to the ALJ tended to prove that both line employees and their managers used the company's e-mail system for both business and nonbusiness purposes, and the employer was found to have violated the NLRA.⁹⁶

In Encompas Services Corp., the Board's Division of Advice concluded that where the employees in question were electricians working on a construction project, and unlike supervisors, did not use e-mail or the Internet to be productive and that the computers allowing e-mail and Internet access were not in a work area for those employees, an employer's restriction disallowing the use of those resources for political causes, outside organizations or other non-job-related solicitations did not constitute a violation of the NLRA.⁹⁷ Where employees have access to and use computers for a significant proportion of their work responsibilities, a similar blanket policy prohibiting non-business use of the system may well be overbroad. These cases are very fact-intensive, and it is difficult to predict how such cases will be handled by the NLRB in the future.⁹⁸

Internet organizing efforts have had mixed success as the dot.com economy deflates. A drive by the Northern California Media Workers Guild to organize employees of Etown.com, a San Francisco-based Internet retailer, was fought by the employer on the ground, among others, that the company would close if the organizing drive was successful. The planned election was seen as the first representation election for any "new economy" firm. After the union withdrew several unfair labor practice charges it had filed with the NLRB, and the scheduling of the representation election, the company ceased operations.⁹⁹ A comparable organizing drive by the Washington Alliance of Technology Workers directed at the 400 service representatives at the Seattle customer service facility of Amazon.com was likewise thwarted by the company's decision to close the facility.¹⁰⁰

An employer also must take care that a termination for improper Internet use does not violate the NLRA. In one case, an employer was found to have violated the NLRA when it fired an employee for e-mail-related misconduct.¹⁰¹ In that case, an officer of the company sent an e-mail announcing changes to the company's bonus system and invited employees to share their views regarding the changes. An employee sent a detailed e-mail message to his fellow employees criticizing the changes. When the employer learned of this e-mail, it demanded that the employee write a memorandum stating that he had behaved improperly. The employee refused to do this and was terminated. The National Labor Relations Board held that the termination violated the NLRA because the employee had engaged in concerted activity when he used the e-mail system to enlist support for his opposition to the changes in the bonus system.

A case like this one is not restricted to e-mail and could easily arise in other contexts. For example, an employee could post his opposition to company policy on Internet message boards or in Internet chat rooms. An employer wishing to terminate an employee for such conduct must make sure the termination would not violate the NLRA.

§ 20.2.1(e)

Internet-Related Elimination and Transfer of Jobs

Many jobs are becoming unnecessary as the result of advancements in technology. The Internet has displaced workers because jobs that once had to be performed by a person can now be performed by the Internet. For example, an architecture firm that used to send all blueprints to clients via an in-house delivery department now can send blueprints directly over the Internet. Thus, the delivery department employees are no longer needed.

In addition, as companies rely more on the Internet to sell products, fewer salespeople are needed. Customers buy directly from the Internet and disintermediation results. Some companies such as Egghead Software have moved their entire business to the Internet and sell all products on-line. Southwest Airlines recently announced that it is closing three of its nine call centers due to decreased demand, as more travelers book flights via the Internet.¹⁰² Thus, the Internet is causing some jobs to become less needed or completely unnecessary. Employers who terminate employees because the Internet has usurped their positions must make certain they terminate employees in a nondiscriminatory manner. For example, if half of the sales positions are being cut, employers must make certain that they are not terminating only older salespeople.

An employer with a unionized workforce will face additional problems when it seeks to terminate employees rendered unnecessary by the Internet. What can be done about displaced or replaced union workers? Can they be terminated without violating the collective bargaining agreement? Must they be placed in other departments? Collective bargaining agreements often have technology clauses that define what will happen within a company with regard to technological change. As Internet use in the workplace continues to increase, more technology clauses will include specific instructions regarding how a company is to deal with changes brought about by the Internet.

When a collective bargaining agreement is silent regarding the employer's right to make a particular operating change and the operating change has a significant impact on employees, the employer may be required to bargain with the union regarding that change.¹⁰³ In N.L.R.B. v. Columbia Tribune Publishing Co., the court upheld a Board ruling that the employer failed to bargain in good faith when a change in the type of machinery used in its plant resulted in the layoff of half of the bargaining unit.¹⁰⁴ Thus, an employer seeking to terminate employees because the Internet has made their positions obsolete may likely have a duty to bargain with the union before making any decisions. An attorney should be consulted before any termination decisions are made in a union facility.

The development of telecommunications technology has led some employers to transfer their telephonic customer service capability from the United States to locations where labor costs are much lower. One Congressional committee reported that radiologists in India interpret CT scans for U.S. hospitals, and that computer technicians in Ghana process New York City parking tickets.¹⁰⁵

§ 20.2.1(f)

Monitoring, Searching & Retrieving Employees' Electronic Work Product

Employers are continuing to refine their efforts to strike a balance among employee privacy, productivity, and potential liability in employees' use of Internet access and e-mail. Products allowing varying degrees and purposes of employer monitoring of Internet usage are in continuous development by software engineers. One product allows an employer to enter an employee's hourly wage, and the program calculates the company's cost and lost productivity as a result of inappropriate Web surfing.¹⁰⁶

Another concern of employers, in addition to avoiding liability for sexual harassment cases is their concern about the use of company resources in a manner which affects both employee productivity and the use of company bandwidth resources.¹⁰⁷ Products such as MailSweeper and PornSweeper can analyze large e-mail files and image attachments for nude or pornographic content. Other products are being developed which would allow employers to monitor employees' e-mail with increasing specificity, although effective e-mail monitoring is quite complicated. As libraries considering the use of filters for their public computers have found, separating the violent and pornographic wheat from the permissible or harmless Internet chaff is very far from a science.

Even United States judges, as employers, are wrestling with the dilemmas other employers face in determining what restrictions to place on the use of e-mail and the Internet by their employees. The Judicial Conference earlier considered a proposal which would have required judges and their employees to agree to unlimited monitoring of their e-mail and Internet use. The proposal drew heavy fire, especially from federal judges. In 2001, the Judicial Conference approved a compromise policy that would allow some tracking of Internet use by employees and judges, such as the downloading of pornography and music. The revised policy does not allow the monitoring of e-mail, nor unlimited monitoring of judges' or employees' use of the Internet. The proposal had first arisen when a review of Internet use by federal court employees revealed that 3% to 7% of the judiciary's browser traffic involved streaming media, such as audio and video downloads, which slow down servers by taking up bandwidth.¹⁰⁸

Employers with international operations will need to maintain a constant eye on changing regulations in this area. For example, in June 2003 legislation was proposed in the United Kingdom requiring employers to provide notice to employees that their electronic workplace communications are being monitored.¹⁰⁹

Whether e-mails are in transit or have arrived and been stored when retrieval is accomplished may determine whether or not the employer has violated the Wiretap Act,¹¹⁰ the Stored Communications Act (SCA),¹¹¹ or both. The plaintiff in Fraser v. Nationwide Mutual Insurance Co., was hired as an independent contractor.¹¹² In order to perform his services for Nationwide, Fraser leased hardware and software from Nationwide. The lease agreement specified that the computer system was the property of Nationwide, and that Nationwide retained the right to monitor the contractor's use of the system to protect against unauthorized use.

At the behest of other independent contractors, Fraser drafted a letter to a Nationwide competitor soliciting the business of Fraser and other independent consultants. On hearing a rumor of the existence of this solicitation, Nationwide searched the company's electronic file server for e-mails relating to this letter. It found one such e-mail, from Fraser to another independent contractor for Nationwide, who had received and discarded the e-mail. Based on this evidence, Nationwide terminated Fraser's independent contractor agreement with the company.

Fraser sued Nationwide, alleging among other claims that Nationwide had violated the Wiretap Act and the SCA by retrieving the e-mail from the storage site. The district court held that the employer violated no state or federal law in retrieving the e-mail. Retrieval after transmission was not "interception," which would have violated the Wiretap Act. Similarly, as the message was retrieved post-transmission by Nationwide, and not during transmission, the SCA was not violated, either.¹¹³ The district court's conclusion was affirmed by the U.S. Court of Appeals for the Third Circuit.¹¹⁴

§ 20.2.1(g)

Wage & Hour Issues

The informality and cooperation of Internet activities can lead to employment situations which fall afoul of traditional regulation. In 2001, three individuals sued America Online, Inc., claiming that they should have been paid minimum wages for work they did as "volunteers" in chat rooms that AOL offered subscribers. The plaintiffs filed suit under a state statute allowing class action procedural benefits, and requiring the disgorgement of profits by a company found in violation of it.¹¹⁵

§ 20.2.2

B. TELECOMMUTING

§ 20.2.2(a)

Introduction

Although many employers are anxious to consider the possibility of telecommuting for some positions, not all positions are susceptible to telecommuting. Some EEOC trial attorneys objected when that agency's inspector general suggested that the position of trial attorney could be a "telework" position.¹¹⁶ In addition, at least one commentator has suggested that "telecommuting appears to be magnifying the existing gender segregation and hierarchy in the paid labor market because employers have developed … types of telecommuting arrangements that affect men and women differently."¹¹⁷

Courts continue to apply familiar standards to the new twists of working afar. In July 2003, the New York Court of Appeal held that an employee of a New York company who resided in Florida was barred from making a claim for unemployment benefits in New York after her termination. The court reasoned that "physical presence" is the determining factor in deciding whether an applicant is eligible for unemployment benefits, and that "[u]nemployment has the greatest economic impact on the community in which the unemployed individual resides."¹¹⁸

§ 20.2.2(b)

Telecommuting, Virtual Workers & Teams on the Internet

The digital workplace is most evident in the increased reliance on telecommuting and other flexible work arrangements. As technology evolves, the physical space which has been known as "the office" is becoming less and less important. Technology allows workers to communicate and work together regardless of where they are located. Employees in different cities and even different countries can work together in cyberspace, just as effectively and efficiently as if they were sitting side by side in an office. One estimate was that approximately 15% of U.S. employees participates in some form of telecommuting arrangement with his or her employer and that number is expected to increase.¹¹⁹

While virtual workers and virtual teams are becoming more common, they still present some novel legal issues and dilemmas for employers who utilize them. Before jumping on the virtual bandwagon, an employer should familiarize itself with the issues implicated in hiring virtual workers and assembling virtual teams. Otherwise, virtual workers could create very real problems for employers.

Telecommuting is an attractive option for employees because it often provides increased flexibility and greater control over the employees' work environment. The federal government has been a leader in encouraging public sector employers to consider the option of telecommuting (also known as telework). Benefits to employers include increased productivity, reduced tension levels, and improved quality of life.¹²⁰ Telecommuting also reduces traffic congestion, air pollution, and energy consumption. Employees avoid the costs and stresses of commuting, incur reduced expenses for work attire, and can more easily make child care arrangements.

Real benefits are also apparent to an employer's bottom line. The General Services Administration estimates that telecommuting employees are 20% more productive than their in-office counterparts. Other benefits include savings on real estate costs. As companies consider implementing a digital workplace to improve productivity, however, they should carefully evaluate the full impact that new technology will have on their workforce. (A list of components to consider for a successful telecommuting policy is included as subsection C at the end of this chapter.)

§ 20.2.2(c)

Telecommuting as an Accommodation Under the ADA

The Internet has had a significant impact on the issue of disability in the workplace, particularly on what reasonable accommodations an employer may be required to provide for disabled employees. With increasing frequency, employees who are, or are perceived to be, disabled under the Americans With Disabilities Act (ADA) have either requested or demanded that they be allowed to telecommute as a reasonable accommodation. And more and more courts are scrutinizing the possibility of allowing employees to telecommute as a reasonable accommodation. The burden remains, practically speaking, on the employer to demonstrate clearly that telecommuting is not feasible, if that is the employer's ultimate decision.

As with most ADA claims, the courts' decisions concerning the employers' limits of reasonable accommodation are extremely fact-intensive. For example, in one federal case in 2001, the trial court's grant of summary judgment to the employer on the employer's denial of telecommuting to an employee claiming multiple chemical sensitivity and fibromyalgia was affirmed on appeal. The appellate court's decision rested on factual showings that the company did not allow other employees to telecommute, that the computer software necessary for the employee's job could not be used by remote access, and that the employee's job could not be done without carbonless paper.¹²¹

Presence as an Essential Job Function Under the ADA

For those employees who cannot work at the employer's place of business due to a disability, telecommuting is sometimes an attractive solution. The question, then, is whether an employer is required under the Americans with Disabilities Act (ADA) to permit a disabled employee to telecommute as a reasonable accommodation. An associated question will be whether physical presence at an office is an essential job function. Courts have taken varying and unpredictable routes of analysis when presented with such cases.¹²²

Another potential discrimination problem that arises under the ADA is not as obvious. Some groups advocating for the disabled have argued that employers will use telecommuting to isolate and hide them from society. The groups charge that employers will go beyond accommodation and use technology to make the disabled invisible to society. The fear is that employers will place disabled people in telecommuting centers or at home because of the way they look or the way they act while in the work environment. In this instance, the groups argue that the ADA's purpose of mainstreaming disabled persons into the workforce will be defeated.

§ 20.2.2(d)

Issues When Telecommuters Work in Multiple Jurisdictions

Once an employer ceases to be limited by physical office space, he or she can employ workers from all over the world. However, having virtual teams made up of workers in different states and possibly even different countries creates complicated jurisdictional issues. In some instances, information lawfully released in one state may not be lawfully received in another state. Similarly, monitoring an employee may be lawful when done in the home office but unlawful in the out-of-state satellite office where the employee works. Many states have different or unsettled laws regarding privacy, confidentiality, monitoring, and surveillance. Thus, employers must know an ever-increasing number of different state employment and labor laws. Furthermore, employees or their attorneys may engage in forum shopping by carefully studying both the law of the state in which the employee is found, and the law of each state in which the employer is found, and make a determination as to where a lawsuit may be most favorably received. Some of these concerns can be addressed in a carefully worded employment contract, but the potential for jurisdictional disputes and conflict-of-law issues are considerable.

Employers who send information between countries face the same problems. Employers must be cognizant of the other country's respective labor and employment laws, especially that country's laws regarding privacy. The American-based employer should not, and cannot, assume that all countries view privacy and other employment law issues in the same manner as in America. (For more information on the European Union Directive on Data Privacy, see Chapter 18 of THE NATIONAL EMPLOYER®.)

Generally, individuals and entities are subject to the laws of their states of residence, and are subject to being sued there. For natural persons, one is a resident of the state in which one lives and works. Business entities are residents of the state in which they are organized, and also of every state in which they are engaged in continuous and systematic activity. A corporation is also likely to be a resident of every state where its employees, including telecommuters, live and regularly work. Residents can be sued in courts in their states of residence on any type of claim. The claim does not need to have any relation to the state. Thus, for example, an Indiana corporation with telecommuters in California and employees who reside in Florida could possibly be sued in Indiana, California, or Florida. For example, if an employer regularly communicates with a virtual worker in a different state, those communications may establish sufficient contacts with that state to support personal jurisdiction over the out-of-state employer. ¹²³

Traditionally, the employment and labor laws of the state in which the employee actually works have governed the working relationship.¹²⁴ This may be changing, however, in part due to technologies that now permit an employee to work from a home office hundreds, or even thousands, of miles from the employer's place of business. Increasingly, employers are able to hire employees who live and perform their work in a different state, or even in another country. As a result, courts and employers must struggle with the question of which state's laws to apply to the employment relationship.

§ 20.2.2(e)

Workers' Compensation & the Telecommuter

The issue of employees working at remote locations and at home through telecommuting raises an entire host of questions under the workers' compensation remedial scheme. Particularly for employees working in the home, it may be very difficult to determine when these preconditions for workers' compensation exist. The issues of causation and proof will also become increasingly complex. As an example, if an employee trips while walking down a staircase at home and the employee's "office" is at home, was the employee acting in the course of employment while traveling down the stairs? Or what happens when a telecommuter gets up from his or her home workstation to get a cup of coffee, and then slips and falls in the kitchen? Is the employee covered by the employer's workers' compensation insurance in any of these instances?

Traditionally, the employer's workers' compensation carrier does not cover accidents that occur off the employer's premises. However, when an employee performs a specific task at home at the employer's request, the employee is covered by workers' compensation. Additionally, an employee who is expected to operate out of his or her own home is covered if he or she is injured while in the course of employment.¹²⁵

And what about accidents between the telecommuter's home and the employer's place of business? Normally, an employee is not covered for an injury that occurred while the employee was on his or her way to work. However, there are exceptions to this rule, particularly when the employee has a secondary work site at home. In that case, an injury occurring on the way between work and the secondary (home) work site is covered, as travel between work sites is considered compensable. The question then arises — when is the home a "secondary work site," so that travel between the home and office qualifies as travel between work sites? Generally, courts consider the regularity of the work done at home, whether working at home is more than just a convenience for the employee, and whether there is business equipment in the home. The first two factors are the most important. Some companies have had trouble getting workers' compensation insurance for their at-home workers because insurers consider it an opportunity for fraud.

One recent case provides an example of how a worker's compensation administrative judge decided the claim of a telecommuter. Melissa Bigelow worked as a US Airways account manager from a basement office in her parents' home. She claimed that she slipped and fell, injuring her shoulder, on the steps leading from the basement as she was in the process of going to a "pop-in" appointment with one of the employer's clients. The judge denied the claim on the grounds that Bigelow's account of the scheduling and occurrence of the appointment did not meet her burden of proof, especially in light of conflicting evidence provided by the times of various telephone calls.¹²⁶

§ 20.2.2(f)

Independent Contractor Status of Telecommuters

The digital workplace has changed the way many jobs are performed and in so doing, has blurred the line between independent contractors and employees. Federal and state laws that protect workers and regulate the relationship between a business and a worker generally apply only to employees, not to independent contractors. Also, employers normally do not maintain benefits for independent contractors. Currently, confusion exists as to whether the virtual worker is an employee or an independent contractor. Increasingly, these workers are being treated as "employees," despite the fact that they have never appeared at the office or the plant and are subject to a minimal amount of control and supervision from the employer. To avoid costly confusion, employers should make certain to determine the status of the worker performing the assignment and clearly set forth whether the worker is an employee or an independent contractor.

In determining independent contractor status, the most important factor is whether an employer has the right to control the method and manner used to achieve the results desired. Courts also rely upon the factors comprising the "economic-reality test" in determining independent contractor status. Under the economic-reality test, the court looks to the alleged employee's opportunity for profit or loss depending on his or her managerial skill; the employee's investment in equipment or materials; whether the services rendered require a special skill; the degree of permanence of the working relationship; whether the service rendered is an integral part of the alleged employer's business; and whether the worker's income depends on the alleged employer.

It is quite easy to see that the changing nature of the employment relationship in light of the digital workplace will impact the independent contractor analysis. An employer's control over a telecommuting employee will be considerably less compared to an employee at the actual workplace. The employer will not likely have the ability to supervise and monitor a telecommuting employee as it would an employee in the workplace. Further, telecommuting employees may own their own computers, modems, and fax machines and perform different work than on-site employees. These employees can potentially be viewed as having invested in the equipment and materials necessary to perform their jobs. The ultimate impact on an independent contractor analysis will be seen in time as companies routinely use telecommuting. For a more detailed discussion of employment law issues related to independent contractors, see Chapter 23 of THE NATIONAL EMPLOYER®.

§ 20.2.2(g)

Wage & Hour Issues When Employees Work from Home

The information superhighway also raises several issues under wage-and-hour law. How does an employer determine and record the hours of work of a nonexempt employee working in his or her home? How will break period and meal period requirements be enforced for nonexempt employees? How will "regular work hours" be established for purposes of determining whether training time is outside such hours and thus, possibly noncompensable? How long must a "break" be for an employee working at home before it becomes noncompensable time? How does an employer monitor and control overtime? How, when, and where will wages be paid? Will travel time to a company facility be noncompensable commute time or compensable travel time between work sites? How will partial days of absence from work be calculated for exempt employees whose employers require use of paid leave in such situations? Should an exempt employee, who logs on his/ her computer for five minutes to answer a question from work before leaving for a day of personal business, be paid for a full day's salary? These issues are certainly not insurmountable, but an employer contemplating work by telecommuters needs to address these issues or run the risk of facing considerable liability.

Employers may be subject to additional regulation if the nonexempt telecommuter's work falls within the definition of homework as used under the Federal Labor Standards Act (FLSA). Homework is defined as the production of goods "in or about a home, apartment, tenement, or room in a residential establishment," regardless of the source of the materials used by the homeworker.¹²⁷ Nonexempt employees performing homework must be paid minimum wage and overtime as required by the FLSA. The FLSA also has specific recordkeeping requirements applicable to employees performing homework. Further, employers in certain industries must obtain certificates for homework and must fill out an employee handbook that specifies, among other things, the number of hours worked. The FLSA's definition of homework and its corresponding regulations clearly focus on industrial manufacturing employees. The definition, however, is arguably broad enough to include many telecommuters. Employers must consider the impact of these laws on any telecommuting program.

Several states, including California, New York, Connecticut, Hawaii, and Illinois have laws similar to the FLSA that regulate certain types of work performed in the home. Several of the statutes appear limited to homework involving industrial manufacturing. As mentioned in the discussion above, however, many of the statutes are written broadly enough that they may be applied to home technology and the work performed utilizing this technology. The laws vary in the amount of regulation imposed on employees who perform regulated homework. Most of the laws require the employer and the employee to obtain permits and certificates for the homework. Other states, such as Illinois, require that the employee's home work area have proper ventilation and specifies the cubic feet of airspace an employee must have in the work area. Further, most of the statutes require a certain amount of recordkeeping for the homeworker. Employers should consider these state homework laws in relation to their telecommuting programs.

The traditional factors used to determine when on-call time is work time will also need to be reevaluated for the nonexempt telecommuters. Federal regulations state that if an employee is required to wait for a call to work at the employer's premises or any location other than the employee's home, all waiting time must be counted as hours worked. The considerations in determining whether on-call time is work time include the employee's freedom of movement, the frequency of calls to return to work, response-time requirements, and equipment transportation. The changing context of the working environment for telecommuters will obviously require alterations in the traditional analysis. For additional information regarding the FLSA, see Chapter 21 of THE NATIONAL EMPLOYER®.

§ 20.2.2(h)

Potential Negligent Supervision Issues with Telecommuters

Many states have a cause of action known as negligent supervision. An employer can be held liable for negligent supervision when the employer becomes aware, or should have become aware, of problems with an employee that indicate unfitness but the employer fails to take further action, such as investigating or discharging the employee, and that employee injures a third party.¹²⁸ Employers should be mindful of the potential for negligent supervision claims when allowing an employee to work at an off-site location. The ability to observe and monitor an off-site employee's conduct is much more limited than where an employee is working in a traditional office space on a daily basis. An employer can use other methods to keep itself apprised of telecommuter activities. For example, an employer can and should visit employees at off-site locations and keep in continual contact with those employees.

§ 20.2.3

C. MISUSE OR ABUSE OF THE TOOLS OF THE WORKPLACE

§ 20.2.3(a)

E-mail & Internet Access Abuse

E-mail offers enormous benefits to employers and employees. It encourages intracompany communication, increases productivity, and reduces the need for inefficient telephone calls, paper memos, and face-to-face meetings. However, because the use of e-mail is now embedded into normal workplace practices, the risk of liability from e-mail statements also exists. Due to e-mail's informal nature and perceived impermanence, people often use e-mail to send messages that may be inappropriate or too candid to "put in writing." Most e-mail systems create a complete record of the communication. The systems capture the exact text that users send and receive. Additionally, e-mail records usually store information regarding their transmission and receipt, including the names of the sender and recipient, the dates and time that the messages were sent and received, and an acknowledgment that the e-mail was retrieved. This information may be of great value in demonstrating what personnel were involved in making particular policy decisions, and what officials knew, and when they knew it. The lesson is clear: digital communications generally remain stored indefinitely on a hard drive or disk, waiting to be found by a computer consultant during a lawsuit filed by a former employee.

A good example of employee e-mail misuse is Peter Chung, who was briefly employed in 2001 by a global equity company. Ten days after his assignment to Seoul, in an e-mail to fellow employees with the subject line "Living Like A King," Chung exulted in his lavish, company-provided accommodations, and in his purported romantic successes with "hot chicks." His e-mail detailed his apartment's many fine features, including the number of bedrooms and why he would need them, and his incipient exhaustion of his formerly large supply of condoms. The e-mail was forwarded to company managers, and Chung was, very shortly thereafter, a former employee.¹²⁹

The importance of employers making clear to employees the permissible and impermissible use of company e-mail resources was illustrated by a Utah court decision. In the case of AUTOLIV ASP, Inc., v. Utah Department of Workforce Services, the administrative agency awarding unemployment benefits, determined that the fired employees were entitled to jobless pay because they were terminated without just cause.¹³⁰ While the reviewing appellate court reversed this determination, concluding that the employer did not have to prove knowledge by the fired employees if their actions constituted "a flagrant violation of a universal standard of behavior," the company expended enormous resources to succeed in this case. The employees seeking to obtain unemployment benefits had transmitted more than 30 e-mails with sexually explicit text, photos and videos. At the administrative hearing, the employees admitted that they sent the sexually explicit e-mails, and that they were aware of the company's anti-harassment policy.

The case of Intel Corp. v. Hamidi is a classic example of e-mail abuse: a disgruntled former employee sent periodic mass e-mailings to thousands of current employees, warning them about potential layoffs and telling them not to trust management. The company sued to stop the e-mails. The trial court held that the mass e-mails constituted trespass and issued a preliminary injunction that prohibited the employee from sending any additional e-mail messages to current employees at work.¹³¹ The granting of the injunction was affirmed on appeal; however, the California Supreme Court later held that the legal theory on which the employer was granted an injunction against the former employee by the trial court was not supported by adequate.¹³²

Other examples in which misuse of e-mail resulted in litigation include:

• Two African-American employees of a large investment banking firm brought suit demanding $25 million each in damages due to a racist e-mail that was circulated among the white employees. Although the federal court judge dismissed the suit on the grounds that one racist e-mail could not form the basis for a hostile work environment, the judge did allow the employees the opportunity to amend their complaint. The case was later settled.¹³³
• Chevron Corporation settled a case brought by four female employees who alleged they were sexually harassed through e-mail. The case settled for $2.2 million, plus legal fees and court costs.¹³⁴

As previously indicated, it is sometimes difficult to determine the true sender of a message, particularly if the sender wishes to hide his or her identity by using anonymous "re-mailers."

The greatest criticism of such services is that they allow individuals to send harassing or threatening messages without risk of identification. For example, at Oracle Corporation, an e-mail message was sent from an employee's (Adelyn Lee) supervisor to Oracle's CEO, Larry Ellison. The message said, "I have terminated Adelyn per your request." Lee, who had been terminated for poor performance, then used that e-mail message as the basis for a sexual harassment suit. Ellison vigorously denied ever having made such a request, and the supervisor denied ever having sent the e-mail, but the company nonetheless was forced to pay Lee $100,000 to settle her case. Cellular phone records later proved that Lee's supervisor was in his car at the time of the e-mail transmission and could not have been the sender. Further investigation revealed that Lee sent the message, but used the supervisor's password to gain access to his computer so that the message would appear to have been sent by him. Lee was criminally prosecuted and found guilty of two counts of perjury and two counts of falsifying documents, sentenced to one year in jail, and ordered to repay the settlement fee.¹³⁵

Exposing others to pornography downloaded from the Internet is a continuing problem, even outside the workplace. The use of Internet access by public library patrons has thrown into sharp focus the conflict between citizens' freedom of speech and the alleged creation of a hostile work environment for library staff faced with some patrons' repeated access of sexual explicit, pornographic and violent Internet sites, and leaving printouts from such sites on library tables. In Minneapolis in 2001, the EEOC made a determination that such circumstances established a hostile working environment for librarians.

The scope and appeal of salacious e-mail generated in the workplace is worldwide. In December 2000, several employees of a London law firm (including some lawyers) concocted an e-mail purporting to discuss an intimate sexual encounter between two employees. What began as a local prank was disseminated worldwide to an e-mail audience estimated at 10 million people.¹³⁶

§ 20.2.3(b)

E-mail & Other Electronic Evidence

Courts are allowing the discovery in litigation of backup systems consisting of dozens of archive tapes, as the Zubulake cases¹³⁷ demonstrate. Such discovery can be dangerous to employers, because computer users often put messages into e-mail communications that they would never put into writing on real documents. Also, e-mail exists longer than most users realize. Whenever an employee sends a message over the company's network, generally several copies of the message are stored on file servers before being transferred to archive tapes. E-mail can be more permanent than a paper communication. Paper documents can be shredded or discarded, but it is far more difficult to destroy e-mail messages. Even after the "Delete" key is hit, most e-mail systems store messages on a centralized backup file for an indefinite period of time. Mainframe backups also make retrieving e-mail records much easier than retrieving lost paper records.

Employers should bear in mind that once they hit the "Delete" key, the message has not necessarily been irretrievably erased. When a user sends an e-mail message, the user is creating a digital file that is stored on the company's hard drive. The information on the hard drive may be stored for months, or even years. The information remains on the hard drive until the computer runs out of "new" (i.e., unused) space, at which time the computer system will start to fill in (overwrite) the spaces where the deleted files formerly existed. This can take months, or even years. Alternatively, an employer can "clean out" the hard drive, thus erasing all deleted files.

Employers should beware of two pitfalls when cleaning out a computer hard drive. First, unless an expert performs the operation, the computer files may still exist. Second, employers should not suddenly decide to clean out a hard drive when litigation is looming, or the employer risks being accused of the purposeful destruction of evidence.¹³⁸

The increased role of e-mail in litigation presents serious problems. First, e-mail messages are easier to falsify than are handwritten or signed documents. Second, lawyers' requests for digital evidence have made the already burdensome discovery process even more onerous for companies, as there are few limits to what lawyers can demand during discovery. The defendant is usually required to pay for the process of cataloguing or sorting its own records. When this process involves retrieving millions of pages of e-mail stored on hard drives or optical disks, the costs can exceed hundreds of thousands of dollars before the case even reaches trial. There are, however, recent cases that suggest a party may be, at least, partially responsible for the costs incurred in retrieving such material in response to discovery requests.¹³⁹ In Toshiba America Electronic Components, Inc., plaintiff Lexar Media sued Toshiba America (TAEC) and its parent company Toshiba Inc., for misappropriation of trade secrets, breach of fiduciary duty, and unfair competition. Lexar served TAEC with a request for production of documents consisting of 60 categories of documents, including "electronic mail" and "other forms of electronically or magnetically maintained information." After TAEC produced 20,000 pages of documents, a dispute arose as to which party was responsible for the cost of recovery of additional responsive material stored on TAEC's computer backup tapes. The court held that California Code of Civil Procedure section 2031(g)(1) "shifts to the discovering party the expense of translating a data compilation into usable form." However, the court pointed out that its "conclusion does not mean that the demanding party must always pay all the costs associated with retrieving usable data from backup tapes" and that the demanding party is expected to pay only the reasonable expense for a necessary translation.¹⁴⁰

Federal courts also utilize several tests in determining whether a demanding party is responsible for the costs of obtaining "e-discovery." For example, in Wiginton v. CB Richard Ellis, Inc., the court ordered a putative class of female employees to pay 75% of the costs to restore and search backup tapes for e-mails.¹⁴¹

The scope of e-mail discovery that will be allowed by a court is not always predictable. For example, in Morgan v. Federal Home Loan Mortgage Corporation, an employee suing for discrimination and retaliation was permitted discovery of the defendant-employer's investigation of "racist ‘ebonics' e-mail messages."¹⁴² However, the court allowed discovery only as to the alleged decision makers who had authorized the employee's termination, not for the e-mails of all persons in the agency.

More and more employment law cases turn on some form of e-mail or other electronic evidence:

• A sexual harassment plaintiff's motion in limine that defendant employer be barred from presenting evidence that plaintiff downloaded pornography from her office computer and e-mailed it to a company manager was denied although the employer was denied the ability to introduce the contents of the pornography into evidence.¹⁴³
• An employee was terminated in part because of the employee's harassment of a fellow manager by means of an anonymous e-mail.¹⁴⁴
• A secretary was terminated for poor performance, including excessive personal e-mail at work. The e-mails at issue were coarse and vulgar. The secretary was discharged in part because her coworkers resented performing her job responsibilities while she was e-mailing for nonbusiness purposes.¹⁴⁵
• In a "reverse sex discrimination" case, an employer accused of firing an employee because he was male, relied on several e-mail messages to disprove the employee's claim of sex discrimination. The e-mail messages, sent between the male manager who was eventually terminated and the female supervisor who terminated him, were used to prove that the employee was not terminated on the basis of his sex. In the e-mail, the male employee was insubordinate and unprofessional. The employer relied on these e-mails to prove that the employee had behaved in an inappropriate manner and appropriately was terminated for such behavior.¹⁴⁶
• A claim of racial harassment in the workplace was buttressed by a plaintiff who produced evidence of racial slurs contained in company e-mail.¹⁴⁷
• In a suit under the Fair Labor Standards Act (FLSA) for nonpayment of overtime compensation, the plaintiff presented an e-mail from her supervisor stating that "I truly want this past weekend to [be] the last one we have to work . . . . I've burnt the midnight oil long enough, just as you have."¹⁴⁸
• In a retaliation case based on the FLSA, the plaintiff's case turned on evidence of e-mail messages sent by the plaintiff to her supervisors regarding her absence from work.¹⁴⁹
• In an ERISA case, the court noted that freelancers were treated differently from employees because, among other things, the freelancers had different e-mail addresses.¹⁵⁰

Even though a manager's destructive comments are made by e-mail, and not orally, the comments still may form the basis for a legitimate management decision to demote the manager.¹⁵¹

Likewise, voicemails, when authenticated, are routinely used as evidence in cases such as sexual harassment.¹⁵² Voicemail poses unique evidentiary difficulties. Unlike e-mail, there is usually no record of the "sender" having left a voicemail, so it is the recipient's data storage which must be accessed and searched. In addition, voicemail has few immediately useful built-in search capabilities. However, the development of voicemail archiving technology means that businesses will face decisions going forward on the manner in which voicemails may or should be archived, and at what cost. Courts remain unpredictable in ruling whether or not voicemails should be maintained as evidence, and the manner and cost allocation of voicemail discovery. ¹⁵³

§ 20.2.3(c)

High Tech Unlawful Harassment

The digital workplace often is the genesis for sexual and other harassment claims. Sexually offensive e-mail and voicemail messages are increasingly being used by plaintiffs as corroborative evidence of a hostile work environment. Beginning in the early 1990s, case law began to reflect such abuses. In Strauss v. Microsoft Corp., a female employee sued Microsoft for gender discrimination relying partly on evidence that her superior sent an e-mail message to the entire staff that "contained sexual innuendo referring to male genitalia."¹⁵⁴ In Miller v. U.S.F.&G., a human resources manager brought a sexual harassment and sex discrimination claim against her employer for terminating her for failing to report that she had been sent several e-mail messages that contained a numerical code that incorporated a list of approximately 75 profane words and phrases.¹⁵⁵

In addition, the Internet has been and will continue to be used by employees to harass other employees. Some employees download obscene material onto employer systems or allow pornographic materials to appear on their PCs. The open viewing of sexually explicit websites may be sufficient to create a "hostile working environment." For instance, Karin Williams, a Chicago police officer, filed a sexual harassment lawsuit claiming that she was exposed to pornographic images on general use computers at work and that her coworkers laughed at her reaction to the pornography. The court allowed her case to proceed to trial based, in part, on her being exposed to the pornography.¹⁵⁶

Many employers have tracking systems that allow them to monitor employee use of the Internet. These tracking systems provide employers with a list of each website visited by each employee who accesses the Internet. This type of system may be useful in assisting employers to discover improper use of the Internet. However, a tracking or monitoring system may also prove to be a liability for an employer if its results are ignored — an employee may use the tracking information as evidence that employees regularly visit sexually explicit websites. This evidence could be used to support a claim that the employer maintained a sexually permissive work environment.

Given that virtual teams mainly communicate with each other over a computer network, employers must remember that a record is created of all these communications. This record remains long after an offensive e-mail is deleted, is often discoverable and can be used against the employer in harassment and discrimination cases. Cyberspace reduces inhibitions and often causes people to say things on-line that they would never say in person. Nuance is not easily communicated on-line, and a virtual team member may offend another member without even trying. The cultural differences among virtual team members living in different countries can create problems. What may be an acceptable on-line communication between two workers in the United States may be offensive when sent, for example, to a female worker in Saudi Arabia. Employers would be well served by facilitating training of virtual workers on how to interact effectively with coworkers from different countries.

Harassment that occurs in the virtual world of cyberspace is harder to stop than harassment in the real world. It is often more difficult to determine the identity of an Internet harasser. In most unlawful harassment cases, the harasser's identity is clear. However, given the anonymity available to users of the Internet, the identity of Internet harassers is often unknown. The ease with which one can assume another employee's e-identity was demonstrated in Hatch v. Fred Meyer, Inc.¹⁵⁷ There, a female retail clerk sued her employer, alleging that she had been subjected to a sexually hostile work environment. The incident at issue occurred when a store manager, noticing that the plaintiff had failed to sign off from her computer, sat down and sent an e-mail to the plaintiff's supervisor. The e-mail purportedly sent by the plaintiff stated that, "I have been watching you from afar and I really think we need to get together. I want to meet you in a dark place and rip your pants off and have my way with you . . . meet me tonight . . . missing you."¹⁵⁸ Because the supervisor who received the e-mail realized that it was likely a vicious prank committed by one of the plaintiff's coworkers and took appropriate action, the sexual harassment suit was dismissed.

Harassers have many ways to keep from being discovered. Anonymous re-mailers are frequently used to ensure the anonymity of on-line harassers. A person wishing to be anonymous simply has to send his or her message to an anonymous re-mailer such as the one available at http://www.anonymizer.com. The re-mailer substitutes a fake header and then sends the message. Thus, anyone reading the message will see inaccurate information about the sender's identity.

Harassment over the Internet raises some interesting questions that have not yet been answered. For example, how far does an employer have to go to stop Internet harassment? Is it enough simply to change the victim's e-mail address? What if the harasser is using an anonymous re-mailer like the one described above? Is the employer required to file a lawsuit and subpoena the Internet Service Provider (ISP) or related records in order to determine the true identity of the harasser? Employers need to be aware of the risk of Internet harassment. Employers must take such harassment seriously and work to prevent and correct it with the same vigilance accorded other forms of harassment.

§ 20.2.3(c)(i)

Cyber-Stalking

Stalking can be considered a form of workplace harassment and violence. The Internet has created a new form of stalking known as cyber-stalking. As employers can be held responsible under a variety of different liability theories for acts of workplace violence, they need to be aware of the potential for workplace violence that the Internet presents.

A cyber-stalker pursues, harasses, and threatens his or her victim through e-mail messages, postings on Internet message boards and discussions in Internet chat rooms. Tragically, some stalking has ended in murder. For example:

• A 44-year-old community college business manager was found guilty of two felony charges of stalking a 14-year-old girl he met in a chat room for teenagers. Notwithstanding the girl's testimony that their relationship and "cyber-sex" were voluntary, the defendant became the first person convicted in Vermont of cyberstalking.¹⁵⁹
• A former Las Vegas topless dancer, spurned after a seven-year affair, set up an Internet site featuring photos of the couple's sexual trysts, drawings of skulls and roses dripping blood, and photos of her former paramour's car, home, license plate, and a map with directions to his home.¹⁶⁰
• A defendant used the computer expertise of a coworker to create an anonymous website to defame the defendant's former girlfriend, including photographs of her, her home and business addresses and telephone numbers, and her alleged sexual interests. The defendant's conviction for aggravated harassment was affirmed.¹⁶¹
• A cyberstalker was convicted of attempting to set up a rape of his victim by posing as the victim over the Internet. He was alleged to have forged e-mail and postings on "personals" websites, claiming to be the victim and stating that she had fantasies of being raped. Six men appeared at the victim's home in response to the forged postings and e-mail. The case against the cyberstalker was the first prosecution under California's revised anti-stalking law to include threats by e-mail, pagers, and other forms of electronic communication.¹⁶² The defendant was sentenced to six years in prison.¹⁶³
• In 1999, an obsessed admirer of a New Hampshire dental assistant paid $45 to an online data broker to obtain her Social Security number and the name of her employer, then tracked her down and murdered her.¹⁶⁴

Cyberstalking can easily turn into real-life stalking. As Internet access at the workplace increases, so too does the potential for offenses of this type.

§ 20.2.3(c)(ii)

Cyber-Defamation

Defamation encompasses any false and unprivileged communication, either oral or written, that has a tendency to injure a person in his or her occupation or reputation. Libel, a type of defamation, is a tort consisting of a false and malicious publication printed for the purpose of defaming someone.

Defamation can arise in the imprudent broadcast by a manger of accusations against an employee which may be both inflammatory and overbroad. For example, in Meloff v. New York Life Insurance Co., an employee claimed that her supervisor had defamed her by circulating an e-mail message to several employees stating that the plaintiff had been fired for engaging in credit card fraud.¹⁶⁵ The message read:

We found it necessary today to terminate Phyllis Meloff, who used her corporate American Express card in a way in which the company was defrauded. Phyliss [sic] had approx [sic] 27 years with New York Life, and whom we considered to be a valued associate. This action reflects our commitment [sic] to ‘adhere to the highest ethical standards in all our business dealings.' I send this to you for your own information.¹⁶⁶

In a classic example of how a manager should not use e-mail, the author of the e-mail sent it to one other manager. The recipient, in turned decided to forward it to four other managers, one of whom forwarded it to five of his subordinates — and one of those e-mails was misaddressed, and so went to an unintended recipient.

The appellate court ruled that Meloff had presented enough evidence to entitle her to a trial on her claim. In the subsequent jury trial, the jury awarded the employee $250,000 in compensatory damages, and $1,000,000 in punitive damages against her former employer on her defamation claim. Although the trial judge overturned the jury's award, the Second District Court of Appeals concluded the judge's action was erroneous, and remanded the case for a jury determination of the impact of the manager's accusation of fraud upon the average listener.¹⁶⁷

Potential liab