New York Will Require Employers to Disclose Monitoring to New Hires

Employers in New York must disclose electronic monitoring, such as internet access and videoconferencing, to new hires under a new law taking effect in May, as workers contend with an employment landscape that’s increasingly dependent on technology.

The new law comes amid a worldwide push for greater privacy protections for consumers and workers, adding compliance obligations for businesses that must contend with general consumer privacy laws and employee-specific statutes.

White-collar companies in recent years, and especially during the coronavirus pandemic, have turned to online tools—video-conferencing, workflow management software, and the like—to increase worker productivity.

“Over the last 20 years, we’ve gone through an unprecedented electronic and digital transformation in the workplace,” said Mark Goldstein, a partner at Reed Smith LLP in New York. “This is an attempted counterbalance at that.”

The law—which takes effect May 7—requires disclosures to employees hired on or after that date. It applies to phone calls, internet searches, and online calls conducted through platforms such as Zoom Video Communications Inc.

The New York attorney general may seek penalties of up to $500 for the first offense, $1,000 for the second offense, and $3,000 for the third offense.

Compliance Obligations

Businesses should review hiring and onboarding documents and use standardized language that tracks to the statute if appropriate, said Katharine Liao, a partner at Squire Patton Boggs in New York.

“Practically speaking, this is a reminder to make your policies clear in employee handbooks, and to review offer letters or employment agreements, confidentiality agreements, and electronic communications policies,” Liao said. “Small and large employers, even those with strong practices may want to fine-tune the text of their policies.”

Large companies with robust legal teams and employment law expertise are likely already aware of the law, but smaller businesses may not know of the statute or the fact that it applies to them, said Anne Patin, a partner at Seward & Kissel LLP in New York.

The law applies to all non-state employers engaged in electronic monitoring with a place of business in New York, regardless of the number of employees or their annual revenue.

“Closer to May we will remind clients of their new obligations,” Patin said. “For larger companies, we’ll also reach out to HR departments to make sure the requirements are included in their onboarding procedures.”

Potential Litigation

The law doesn’t contain a private right of action, which means plaintiffs are unlikely to be successful in bringing suit against companies that violate the New York law.

Still, that doesn’t mean attorneys won’t try to bring claims under the law, said Kristin Bryan, a senior associate at Squire Patton Boggs in Cleveland.

In the privacy arena especially, plaintiffs have sought to “piggyback” various privacy statutes, and some plaintiffs will argue that those laws impose various obligations and duties on employers, Bryan said. By alleging that a defendant failed to meet its statutory obligations, employees could seek to bring common law tort or related claims, she said.

New York isn’t viewed as a forum that’s particularly friendly for class action plaintiffs, though, Bryan said.

“While there is still a risk, I don’t see it as becoming the next California or Illinois in terms of privacy litigation,” she said. “It’s unlikely that violations of this new law could be used as a predicate for creating new theories of liability in data privacy class actions.”

The statute itself is short, and there has not been additional guidance posted since the law passed, said Victoria Jaus, an associate at Vedder Price P.C. in New York. Enforcement once the statute takes effect may help companies better understand the technical specifications of the law, she added.

The passage of the law in New York may inspire other states, such as California and Illinois, to pass similar legislation, said Jonathan Wexler, a partner at Vedder Price in New York.

Connecticut and Delaware already have similar workplace monitoring laws.

“New York City is becoming one of the most employee-friendly jurisdictions in the country, and New York state is not far behind,” Wexler said. “This may be a trend to a limited extent in states that are like-minded, but I don’t see it sweeping the nation.”