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Employer Monitoring of Employee Phone Conversations Requires Planning

Garen Dodge and Maria Mullarkey
June 2006 | Privacy in Focus

There are a number of reasons why an employer may wish to monitor or record its employees' telephone conversation—to ensure quality of service at call centers, help train new workers, detect misuse of company phones, prevent disclosure of confidential information or investigate harassment complaints. Before they pick up the receiver, however, employers should be aware of the laws governing such call monitoring—and take steps to ensure they act within the law.

Telephone Monitoring on the Rise
Although not as prevalent as Internet, email and other computer-use monitoring, employer surveillance of phone lines is on the rise, according to a 2005 electronic monitoring survey conducted by the American Management Association and the ePolicy Institute. In 2001, only 9% of companies recorded their workers' phone calls, according to the study, but—as of 2005—19% were monitoring the conversations of workers in selected job categories and another 3% were recording and reviewing all of their employees' phone conversations. (A smaller number, 15%, review either all or selected categories of employees' voicemail messages.) For those companies that record employees' phone conversations, the study found that fully 86% inform employees of that policy—which, as discussed below, is critical to ensuring compliance with the law.

Both federal and state laws prohibit, with some exceptions, intercepting phone conversations. The federal law, Title III of the Omnibus Crime Control and Safe Streets Act of 1986 (also known as the Wiretap Act)—which was amended in 1986 to cover electronic communications and in 1994 to encompass cordless telephones—prohibits intentionally intercepting any wire, oral or electronic communications or using or disclosing a communication's contents when a person knows that the communication was intercepted. See 18 U.S.C. § 2511. Violating the statute can lead to criminal sanctions—including imprisonment—as well as civil fines and other sanctions. State wiretapping laws are largely based on the federal law.

The "Business Extension Exemption"
Title III provides two exceptions that can enable employers to monitor their employees' phone calls without violating the statute. One narrow exception, commonly known as the "extension exemption" or "business extension exemption," allows for phone-call monitoring when the equipment used to listen in falls outside the statute's definition of a "device" used to intercept communications. Specifically, any telephone equipment or facility furnished to a company by a communications service provider that is used "in the ordinary course of its business" is not an intercepting "device" within the meaning of the statute. See U.S.C. § 2510(5)(a). In such situations, because no device is involved in monitoring or recording phone calls, the statute does not apply.

Courts have not always agreed on what equipment qualifies for the exception or what constitutes an employer's ordinary course of business. Many federal courts hold that use of standard extension telephones, furnished directly by telephone service providers, falls within the exception. See, e.g., Watkins v. L.M. Berry & Co., 704 F.2d 577, 581 (11th Cir. 1983). If employers use listening or recording devices that are not similarly provided by telephone service providers, however, the business extension exception may not apply. See, e.g., Williams v. Poulos, 11 F.3d 271, 280 (1st Cir. 1993) (holding that an employer's custom-made monitoring device did not qualify for the exception); Deal v. Spears, 980 F.2d 1153, 1158 (8th Cir. 1992) (holding that a recorder purchased at an electronics store and not provided by the telephone company did not qualify); Sanders v. Robert Bosch Corp., 38 F.3d 736, 740 (4th Cir. 1994) (holding that a "voice logger" not sold by the telephone company did not qualify).

Whether a call is monitored in the ordinary course of business can also depend on the specific circumstances of each case. Some employers may be able to claim that phone monitoring is an industry standard and thus automatically falls within their ordinary course of business. See Arias v. Mutual Central Alarm Serv. Inc., 202 F.3d 553, 559 (2d Cir. 2000) (involving an alarm service company). In many cases, however, the determination depends on the content of the specific conversation. Generally, if the conversation pertains to business matters, the exception can apply. See Royal Health Care Servs. Inc. v. Jefferson-Pilot Life Ins. Co., 924 F.2d 215, 218 (11th Cir. 1991) (noting that the entire phone call at issue concerned charges for a patient insured by the company and therefore was business-related). Even so, many courts hold that non-business-related phone calls can be monitored only to the extent necessary to ascertain their personal nature. See Watkins, 704 F.2d at 582 (holding that an employer was permitted to intercept an employee's phone call with a friend discussing social topics and a job interview only long enough to determine that the call was not business-related). Thus, relying on the business extension exemption poses risks because its application often boils down to very imprecise determinations—namely, whether the call uses a regulated device, whether a call is personal and, if so, whether the monitoring of that call ceased early enough.

"Consent" Is Safer
In light of these uncertainties, employers wishing to monitor phone lines are in a much better position to protect themselves from legal challenges if they pursue the second main exception: consent. Under Title III, it is not unlawful to intercept telephone or other communications if one of the parties to the communication has given prior consent. See 18 U.S.C. § 2511(2)(d). Therefore, under the federal statute, employers can lawfully monitor their employees' calls if they simply obtain their consent beforehand.

Although consent in the context of phone-call monitoring can be implied, see Poulos, 11 F.3d at 281, it should not "casually be inferred." Griggs-Ryan v. Smith, 904 F.2d 112, 117 (1st Cir. 1990). For example, the fact that an employee knows his or her company is merely capable of monitoring phone conversations is not enough to establish implied consent. Watkins, 704 F.2d at 581. Consent will likely be found, however, where an employer has notified its workers that it reserves the right to monitor calls, such as through employee handbooks or signed acknowledgments. See U.S. v. Rittweger, 258 F. Supp. 2d 345, 354 (S.D.N.Y. 2003). Even with such notification, the implied consent may only apply to business (not personal) conversations.

Although most state wiretapping laws track Title III and require only one party's consent, 12 states require all parties to a communication to consent in order to preclude application of their wiretap laws. Thus, it is imperative for companies to know whether the states in which they do business or in which phone calls will be monitored are "one-party" consent states or "two-party" consent states and to adjust their policies and procedures accordingly.

Useful Steps to Obtain Employee and Third-Party Consent
Employers can implement a number of steps to comply with federal and state wiretap laws, including notifying workers and third parties about phone-monitoring practices and documenting their consent. For example, with respect to their employees, companies can:

  • Inform employees in a written phone-monitoring policy that their telephone conversations over business phones may be monitored or recorded as a part of normal business operations.
  • Obtain signed statements from employees acknowledging that they have received and reviewed the phone-monitoring policy.
  • Display signs or attach stickers to business phones noting that phone calls may be subject to monitoring and recording.
  • Advise employees that business phones should not be used for personal calls and that personal calls may be inadvertently monitored or recorded.
  • Provide separate phones that can be used for an employee's personal calls during lunch or other break times.

With respect to third parties, such as customers or clients, participating in phone conversations, companies can:

  • Provide a verbal announcement at the beginning of incoming calls notifying third parties of the monitoring policy and of the purpose for the monitoring (for example, for training purposes or quality assurance).
  • Instruct employees to recite a similar announcement of the monitoring policy when making outbound calls to third parties.
  • Adopt a beep tone audible throughout a call indicating that the conversation is being monitored or recorded.

The commercial feasibility of these approaches will necessarily vary.

Although there is no clear-cut rule as to what constitutes prior consent to have a telephone call monitored or recorded, these and other practices are commonly used to obtain a party or parties' necessary consent. Before implementing a phone-monitoring or recording policy, however, employers are advised to first consult with legal counsel to ensure they get a full understanding of the applicable laws and of how best to protect themselves from legal challenges. Sample language is available from the authors.

The authors acknowledge the assistance of WRF summer associate Greg Langlois, a third-year law student at The Georgetown University Law Center.

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