Chapter Two: Monitoring Employees What You Can (And Cannot) Do in California

Monitoring Workplace Communications The Right Way

As a small business owner, you need to ensure productivity and protect your company’s assets. Monitoring workplace email, phone calls, and messages is a common and often necessary practice. However, California law requires you to carefully balance these business interests with your employees’ privacy rights.

Here’s what you need to know: You can legally monitor work-related communications, but there’s a critical requirement—you must inform your employees that monitoring is taking place. This isn’t optional, and transparency is key.

The best practice is to implement a clear, written policy that covers:

• What communications and activities are being monitored
• The business reasons for monitoring
• How the collected information will be used

Your monitoring practices should be reasonable and job-related. Overly intrusive monitoring can create legal risks and damage employee morale, so it’s important to limit your monitoring to what’s truly necessary for legitimate business purposes.

Video And Audio Recording: Understanding The Boundaries

Video and audio surveillance can serve important security and operational purposes, but California law imposes specific requirements on how you implement these measures.

For video surveillance, you may record in common areas such as entrances, exits, and general workspaces. However, you must inform employees (and anyone entering your business) that video recording is in use. This can be accomplished through posted notices, employee handbook policies, or written acknowledgments.

There are important limitations: You cannot conduct surveillance in areas where employees have a reasonable expectation of privacy. This includes restrooms, locker rooms, and break rooms. Recording in these areas violates California privacy law, regardless of whether employees were notified.

Audio recording requires special attention. Under California Penal Code section 632, recording conversations requires the consent of all parties to the conversation. This means that if you want to use audio surveillance, you need explicit consent from everyone who might be recorded. This is a higher bar than video surveillance, and you should consult with an attorney before implementing audio monitoring.

Using Monitoring Data In Employment Decisions

When you’ve properly disclosed your monitoring practices and obtained employee consent—even implied consent through policy acknowledgment—the data you collect can be valuable evidence in employment decisions. This includes disciplinary actions, terminations, and defending against wrongful termination claims.

Monitoring data can provide clear documentation of misconduct, poor performance, time theft, policy violations, and other employment issues. When employees know they may be monitored, this documentation becomes particularly credible.

However, the foundation for using this data effectively is having proper policies in place from the start. Your employees need to understand how monitoring data may be used in employment decisions. This isn’t about catching people off guard—it’s about setting clear expectations.

A key legal concept here is “reasonable expectation of privacy.” To minimize legal risk, your workplace policies should explicitly state that employees have no expectation of privacy:

• In the workplace (with exceptions for restrooms and designated break areas)
• When using company-provided equipment, systems, or networks
• While operating company vehicles equipped with monitoring technology

This clarity protects both you and your employees by establishing clear boundaries and expectations.

The Risks Of Monitoring Without Proper Policies

Monitoring employees without clear policies and without their knowledge or consent creates significant legal exposure. Privacy lawsuits in California can be costly and time-consuming, and they can seriously damage your business.

Here’s something every business owner should understand: Once you’re sued, you’ve already lost, regardless of whether you ultimately prevail. Even if you win the case on its merits, you’ll still need to pay legal fees, spend valuable time away from your business, and expend your emotional capital enduring the stress and distraction of litigation.

The financial impact extends beyond legal fees. Your reputation may suffer when customers and potential employees learn about privacy-related litigation. This can affect your ability to attract talent and maintain customer trust.

Inside your organization, employees who feel their privacy has been violated typically experience decreased morale and productivity. This can lead to increased turnover and difficulty retaining good employees.

The solution is straightforward: Always maintain clear, written monitoring policies, and always obtain employee consent before implementing any monitoring measures. This is both a legal requirement and a practical necessity for protecting your business.

Staying Compliant As Privacy Laws Evolve

Privacy law is not static. California continues to expand employee privacy protections, and what’s compliant today may require updating tomorrow. As a business owner, staying informed about legal developments is essential to maintaining compliance and avoiding liability.

I recommend regular policy reviews—at minimum, annually, but more frequently if you’re implementing new monitoring technologies or if there are changes in the law. Your policies should evolve along with legal requirements and industry best practices.

Working with an experienced employment law attorney provides several advantages:

• Review of existing policies to identify gaps or compliance issues
• Updates to reflect current California law
• Guidance on implementing new monitoring technologies legally
• Protection for your business, employee relationships, and reputation

The cost of preventive legal counsel is modest compared to the expense of defending a privacy lawsuit. Getting your policies right from the beginning is simply good business practice.