Employee Privacy

A recent decision by the First District Court of Appeal in San Francisco reminds that employers must be sure to protect employee privacy. In Life Technologies Corp. v. Superior Court, Case No. A131120 (Jul. 14, 2011), the court reversed an order granting discovery of individually-identifying personnel information in an age discrimination and retaliation lawsuit. The question in such cases is whether there is a "serious invasion" of an employee's "reasonable expectation of privacy," as explained in Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal.4th 360, 53 Cal.Rptr.3d 513 (2007).

The Court of Appeal identified the following principles for determining the discoverability of personnel records of non-witness third parties: (1) The public interest in preserving confidential personnel information generally outweighs a private litigant's interest in obtaining that information. (2) A private litigant may tilt the balance in his or favor only by showing a compelling need for particular information that cannot reasonably be obtained through depositions or from nonconfidential sources. (3) Even where the balance tilts in the private litigant's favor, the scope of disclosure must be narrowly circumscribed. In the case before the Court of Appeal, the trial court had failed to balance the interests correctly, and had failed to provide sufficient safeguards for the disclosures that it ordered. It should have required notice to the affected employees, and then sealed or severely limited the use and dissemination of the disclosed information.

Here are some additional examples of restrictions on acquiring and disseminating employee information:

(1) Applicants for employment may be subjected to drug screening, but once they become employed, may only be required to undergo drug screening where there is reasonable suspicion of improper activity. Loder v. City of Glendale, 14 Cal. 4th 846 (1997).

(2) Targeting a private office for video surveillance constitutes an intrusion into an area as to which the employee has a reasonable expectation of privacy, but the intrusion is not actionable unless the surveillance captures the employee's image. Hernandez v. Hillsides, Inc., 47 Cal. 4th 272 (2009).

(3) Employees may have a privacy interest in their work email and Internet use, but it can be overcome by a warning from the employer that email and Internet use is subject to monitoring and that employees should not expect to have any privacy when using the employer's systems. TBG Ins. Services Corp. v. Superior Court, 117 Cal. Rptr. 2d 155 (2002).

(4) Employers must not access employees' confidential medical information without consent, and must not retaliate against employees for standing on their right confidentiality of their medical information. Pettus v. Cole, 49 Cal. App. 4th 402 (1996).

Does the Wal-Mart decision matter?

Business and employee advocates seem to agree that the Supreme Court's decision in Wal-Mart Stores, Inc. v. Dukes (No. 10-277 June 20,2011) is a landmark decision of some sort. The U.S. Chamber of Commerce says that it "is without a doubt the most important class action case in more than a decade." According to the ACLU, the decision "increases the likelihood that discrimination will now go unremedied in many cases." Newspaper editorial boards concur. The L.A. Times says that, because of the decision, "serious allegations against Wal-Mart dating back a decade won't be tested in court, and similar lawsuits against other employers will never be undertaken at all." A Wall Street Journal article says that the decision "is likely to reverberate in other class actions, making lower courts scrutinize whether large groups of employees are similar enough to sue together."

The fact of the matter is that the decision breaks no new ground and is unlikely to have any long term effects on discrimination cases. This is an example of the Supreme Court's correction of an error by the Ninth Circuit in applying established class action rules, not of the articulation of a new standard. It was not appropriate to use the class action device to to address pay and promotion decisions at 3,400 individual stores involving hundreds of thousands of employees. In fact, all nine justices agreed that the Ninth Circuit's decision to recognize the class alleged in the case was wrong.

Employers should not expect that large class actions will become less frequent, particularly in the wage and hour area, where an unlawful pay practice can lead to multi-million dollar awards to employees. Wal-Mart itself has had a string of such cases go against it recently. On June 10, 2011, a Pennsylvania appellate panel affirmed the award of over $150 million in damages and penalties for wage and hour violations. Braun v. Wal-Mart Stores, Inc., 2011 PA Super 121. In December 2008, it agreed to pay up to $640 million to settle a number of wage and hour class actions around the country.

Discrimination class actions will also continue, where the plaintiffs can show that groups of employees with the same protected characteristic have different terms and conditions of employment than others. Ebbert v. Nassau County (Case No. 05-CV-5445 April 32, 2009) is a good example. Nassau County paid police communications workers (over 90 percent of whom were women) less then it paid fire communications workers (100 percent of whom were men). The county could not come up with a sufficiently convincing explanation for the disparity to win a summary judgment motion. On June 9, 2011, it submitted a proposed settlement of $7 million for court approval to settle the class action.