Target. Home Depot. Neiman Marcus. This isn’t a list of places to shop. These companies were hit with some of the biggest data breach incidents of 2014. And, as the recent hack on Sony Pictures Entertainment demonstrates, it’s not just the customer information that gets compromised in cyberattacks—employees can also be the victims.
In November, hackers broke into Sony’s computer systems and stole personal information of over 47,000 current and former employees, celebrities, and freelancers. The information included personal emails, budgets, salary information, human resource records, and other private (and embarrassing) documents. Some of the stolen information was leaked online, including a spreadsheet containing names, birth dates, and Social Security numbers of over 3,000 employees. Buzzfeed reports that the 40 gb data dump contains email exchanges between Sony and its employees regarding very sensitive matters, such as their medical treatments, disciplinary action, and inter-office romance.
The ease with which the hackers did their dirty work is eye-opening. The attack was carried out with widely available malware. It didn’t help that Sony’s security measures were shockingly subpar. Sony had failed to encrypt the leaked files. One of the stolen files containing login credentials to Sony computers and servers and other online accounts was quite obviously named “Passwords.”
Sony apparently made a conscious decision not to beef up its security. In 2007, Sony’s then-executive director information security, Jason Spaltro, said in an interview that it was a “valid business decision to accept the risk” of a security breach, and that he would not invest $10 million to avoid a possible $1 million in loss. A team of just 11 employees was responsible for maintaining the security systems for Sony’s 7,000 employees. A September 2014 security audit report showed gaps in Sony’s security procedures, such as failure to monitor one firewall and more than 100 other devices.
In the aftermath of the attack, Sony is facing four lawsuits. Three of the lawsuits allege that Sony failed to take adequate precautions to guard against known weaknesses in the security of its computer systems. Another lawsuit accuses Sony of waiting too long to notify employees that their personal data had been stolen.
What should companies do to protect themselves against a data breach like Sony’s? Be sure to develop administrative, physical, and technical safeguards over personal information handled by your company. At minimum, use encryption technology. If a third party handles personal information of your employees or customers, contractually require them to exercise reasonable care and to report security breaches immediately. Another precautionary measure is to conduct periodic security audits and risk analyses of information systems.
If a data breach involves a business located in Hawaii or one that does business in Hawai‘i and maintains or possesses personal information of Hawaii residents, Hawaii law requires the business to notify persons affected by the breach. If notice is provided to 1,000 persons or more at once, the State Office of Consumer Protection and credit reporting agencies must also be notified. Companies should prepare data breach procedures in advance so that a clearly charted process for complying with applicable notification laws is available in the chaos ensuing after a data breach incident.
Federal law clearly gives employees the right to communicate with each other and with unions about work-related matters for purposes of “mutual aid and protection.” Commiseration among co-workers about working conditions, work policies, wages, and the like are concerted, protected activity under the National Labor Relations Act (NLRA). But must an employer allow employees to use its computer equipment for such communications? Employers breathed a sigh of relief when the National Labor Relations Board (NLRB) answered “no” in its Register Guard decision issued in 2007. Under Register Guard, employees generally don’t have a right to use their employer’s electronic equipment and systems to engage in protected activity, and employers may adopt a policy prohibiting employees from using company email for non-work purposes, including communications concerning protected activity.
Seven years later, the Register Guard rule is cast into doubt. In Purple Communications, Inc., an employee handbook declared that all company computers, Internet access, voice mail, and the e-mail system were the exclusive property of the company and were to be used only for business purposes. The employer prohibited employees from using such company property to engage in activities on behalf of organizations or persons with no business affiliation with the company. Appling Register Guard, the Administrative Law Judge in the case dismissed a union’s claim that Purple Communications’ employee handbook violated the NLRA. The NLRB’s General Counsel appealed the decision, asking the NLRB to overrule Register Guard.
The NLRB invited interested groups to file briefs addressing whether the Register Guard rule should be overturned. Over twenty organizations representing a broad range of union and management interests accepted the invitation and filed amicus briefs with the NLRB. However, the NLRB ultimately chose to defer deciding the issue. See Purple Communications, Inc., 361 NLRB 43 (Sept. 24, 2014).
The NLRB decided the appeal without reaching the controversial issue of whether to overturn Register Guard because it found that the employer had committed other unfair labor practices. A footnote in the decision noted that the NLRB would “sever and hold for further consideration the question whether Purple’s electronic communications policy was unlawful.” This signals that the NLRB is still open to overruling Register Guard, perhaps when a case involving what it considers a more appropriate factual scenario comes along.
For now at least, employers may lawfully adopt work rules restricting use of its email and other electronic equipment and systems to business purposes, and employees may be disciplined for violating such rules. How much longer such rules will stand remains to be seen.
In the last few years, we’ve seen how the private social media activity of employees can get employers in trouble for violating a variety of laws. The National Labor Relations Act. HIPAA. Title VII. Now you can add the Americans With Disabilities Act (ADA) to the list.
In Shoun v. Best Formed Plastics, Inc., 2014 WL 2815483 (N.D. Ind. June 23, 2014), a federal judge held that an employer may be liable under the ADA for an employee’s Facebook comments about the medical condition of a co-worker. George Shoun, an employee at Best Formed Plastics, sustained a workplace injury and took leave to recover. Shoun’s co-worker, Jane Stewart, learned about his injury because she processed his worker’s compensation claim and monitored his medical treatment for the company. Stewart posted this snarky message on her personal Facebook account: “Isn’t [it] amazing how Jimmy experienced a 5 way heart bypass just one month ago and is back to work, especially when you consider George Shoun’s shoulder injury kept him away from work for 11 months and now he is trying to sue us.”
Shoun sued the company, alleging that Stewart’s post made it liable for violating the ADA. According to Shoun, the post was visible to the business community. Shoun claimed that prospective employers refused to hire him because of the post, causing him emotional distress and mental pain and suffering.
The court refused to dismiss the ADA claim against the company, reasoning that Stewart obtained the information through an employment-related medical inquiry and then wrongfully disclosed it. As a result, Shoun could sue for violation of Section 102 of the ADA, which provides that any information relating to a medical condition of an employee obtained by an employer during “voluntary medical examinations, including voluntary work histories, which are part of an employee health program available to employees at that work site,” must be “collected and maintained on separate forms and in separate medical files and [be] treated as a confidential medical record.” Moreover, the company could be liable for Stewart’s actions even though she posted the message on her private Facebook account in her own time.
Shoun is another reminder of how easily the lines between personal and professional conduct can get blurred on social media. Employers must train their employees about what they may and may not disclose on social media. It is almost never proper for an employee to share medical information obtained at work on his or her personal social media account. The confidential nature of medical information needs to be emphasized especially when training employees who handle workers’ compensation claims, medical leave requests, billing for health services, FMLA claims, etc.
Employees can get carried away on social media. US Airways learned this the hard way when its employee responded to a customer complaint on Twitter with an obscene picture of a woman and a toy jet. An apology and deletion of the tweet followed an hour later (an eternity in cyberspace). US Airways claims its employee made an “honest mistake,” and the incident has not spawned a lawsuit, but one can imagine situations in which the malicious online statements of an employee land the employer in legal trouble.
So what’s an employer to do? Thankfully, employers can find some solace in Section 230 of the federal Communications Decency Act (“CDA”), as a recent Indiana case illustrates. In Miller v. Federal Express Corp., an employee of a non-profit organization, 500 Festival, Inc. (“500 Festival”), and an employee of FedEx separately posted comments on media websites criticizing the plaintiff’s leadership of Junior Achievement of Central Indiana, which he ran from 1994 to 2008. Although the employees posted the comments using aliases, the plaintiff traced the comments back to IP addresses assigned to 500 Festival and FedEx and sued them for defamation.
The Indiana Court of Appeals affirmed the trial court’s dismissal of the defamation claims against 500 Festival and FedEx based on the Section 230 of the CDA. Congress passed Section 230 to protect companies that serve as intermediaries for online speech from liability for harmful content posted by third parties. A defendant claiming Section 230 immunity must show that: (1) it is a provider or user of an interactive computer service; (2) the plaintiff’s claim treats it as the publisher or speaker of information; and (3) another information at issue was provided by another content provider. Satisfying these three elements immunizes the defendant from suit, although the author of the offensive content could still be held liable.
It’s not difficult to see how Section 230 applies where, for instance, the operator of an online discussion forum is sued for defamation based on a comment posted by a forum member. The operator easily qualifies as an “interactive computer service” and can argue it is not liable for content that someone else published. But could a corporate employer qualify for Section 230 immunity? The court in Miller said yes, siding with precedent set by California and Illinois courts. An employer that provides or enables multiple users on a computer network with Internet access qualifies as a provider of an interactive computer service. Since the defamation claims tried to hold 500 Festival and FedEx liable for allegedly publishing statements made by their employees, Section 230 barred the claims.
Controlling what employees say online can be a daunting task, but it’s nice to know that employers have some protection from legal liability for the “honest” (or not so honest) mistakes of employees.
Birth announcements. Girl Scout cookies fundraisers. Leftovers in the company lounge. We’ve all probably received an email at work on these or similar subjects. It’s uncommon for an employee be disciplined for sending an email of such nature. But would that limit a company’s ability to act when employees circulate emails on more controversial topics?
This question was raised in a recent National Labor Relations Board (NLRB) decision involving the Jet Propulsion Laboratory (JPL) affiliated with NASA. In re California Inst. of Tech. Jet Propulsion Lab, 360 NLRB 63 (Mar. 12, 2014). Based on a Homeland Security directive, NASA began requiring JPL employees to submit to federal background checks as a condition of continued employment. Twenty-eight JPL employees who believed that the background check process violated their privacy rights filed a federal class action. The case led to a U.S. Supreme Court decision holding that mandatory compliance with the background check process did not violate the right to informational privacy. See NASA v. Nelson, 131 S. Ct. 746 (2011).
Several of the plaintiffs felt that management did not adequately inform employees about the actual impact of the Supreme Court decision, so they expressed their view of the decision in emails to their colleagues. The emails were sent to several thousand JPL employees using NASA-owned computers and JPL email addresses. After allegedly receiving complaints about the emails, management issued written warnings to the authors of the emails. The warnings alleged that the authors had violated several work policies prohibiting, among other things, “spamming” co-workers; sending unauthorized, non-work-related emails; and implying JPL endorsement of a position on political, social, or legal issues. The authors filed charges with the NLRB claiming that JPL violated their right to engage in concerted protected activity under Section 7 of the National Labor Relations Act.
The NLRB found that JPL employees frequently circulated emails on topics like charity fundraisers and social causes. Such emails technically violated work policies, but there was no evidence of enforcement in those instances. The discipline in this case was thus suspect. Although employees have no legally protected right to use their employer’s computers to engage in protected concerted or union activity, and may be lawfully disciplined for doing so, management may not choose to enforce only work policies involving concerted protected activity.
The decision is not a prompt to start disciplining employees who offer home-baked cookies to co-workers using email. Email can be a convenient tool for building company morale. But the decision does warn against using work policies pretextually to control discussion of work matters. JPL selectively enforced its work policies to silence certain viewpoints on a work-related issue, as highlighted by the fact that JPL supervisors commented on the Supreme Court decision using their work email accounts without being subjected to discipline. Work rules commonly included in an employee manual but inconsistently enforced– like an email use policy – shouldn’t be used as a basis for silencing employees who criticize management or express dissatisfaction with work conditions.