The Perils of Privacy

Privacy Falls in the Face of Lawsuits

But a fear of costly lawsuits and big punitive awards might be changing those hands-off decisions. A growing number of companies are putting an end to mixing business with pleasure when it comes to online communications.

"Every company is going to be sued sometime," says Jim Bruce, a lawyer and partner at Wiley, Rein and Fielding, a Washington, D.C., law firm. "The courts are telling companies that they can make it hard on themselves or they can make it easy on themselves. If they're smart, they'll have rules of the road and make sure employees know what those rules are."

Bruce explains that two recent court cases--Kolstad v. The American Dental Association and EEOC v. Wal-Mart Stores--set precedents. Each case found that companies are liable for their employees' actions on the job because the company was managing them at the time.

While those two findings didn't necessarily talk about e-mail or Web surfing, corporate lawyers know that both computer functions can be hotbeds of trouble, Bruce says. "People don't realize what's out there--pornography and racist jokes, all sent among friends," he adds. "Where you get into trouble is when there's an allegation of race or sex discrimination. Suddenly there's a subpoena for what's on peoples' computers."

Laying Down the Law

How better to keep employees from sending harassing e-mails, using company computers to hack into another site, or even creating a hostile work environment by calling up pornographic Web sites at their desks? Don't let them do anything that's not directly work-related.

The courts say if a company wants to avoid punitive damages, it must set up policies to keep employees within the law, whether it be for harassment or sexual discrimination, and it needs to make sure employees understand the letter of the law, Bruce says.

"It's clear that the courts are holding companies up to a standard by which it's no longer sufficient to tell employees that there is a policy. You have to be able to demonstrate that employees understand what you told them," the EMA's Stackpole says.

Toward that end, the EMA is working on customizable software that companies could use to test employees' understanding of computer-usage policies, Stackpole says. The software, meant for running on intranets, will quiz workers on policy and have them make decisions about various scenarios. If the employee chooses the wrong answer, a tutorial pops up on that aspect of the policy and then another scenario is given to test the worker again.

"Companies can use that as a defense when they go to court," Stackpole says, adding that the software should be available early in 2000. "Someone could say, 'I read the policy but I didn't understand it.' We can now say, 'You scored 99 on the test. How is it possible you didn't understand?'"