Employee Monitoring in an Electronic

Property Judgment Liens continued from cover real estate footprint becomes desirable, product a core function of a company, rather also keep not only information technology, and one way to achieve that is through a than an expensive support mechanism, but security personnel, on staff to maintain to filing a UCC-1 financing statement. creditor will have to file a continuation now. If those liens expire after January 1, mobile workforce. Since cloud services customers seek to gain a benefit not just the security of the system; typically, a Employee Monitoring in an Electronic Age Judgment liens are indexed in the same statement in the final six months of the life 2010, calendar the date and don’t forget are accessed through the Internet, there is in cost, but in quality. Since the cloud customer would have the information by Maryam Maleki and Louise Ann Fernandez manner as security interests and have the of the judgment lien. There are no limits to file a continuation statement in the last no appreciable difference or advantaged vendor spreads the costs of these expensive technology personnel serve double duty same priority. to how many times a personal property six months before the lien expires. gained by having a localized workforce. Just resources across a group of customers, it in this area. nternet and e-mail in the workplace, now used by nearly 40 judgment lien can be extended. as importantly, workers more often seek a can afford to retain the highest quality million Americans, have become valuable assets to business The practical effect of the new law The JMBM Special Assets Team has mobile platform that can be accessed from personnel and the per-unit cost can be less Regulatory compliance enterprises. Unfortunately, the way these tools are used — or is to allow a judgment creditor to file As experienced workout professionals collected many judgments over the years. multiple locations. Using cloud computing than the cost for comparable resources on Finally, cloud computing vendors can Iabused — can become a disaster waiting to happen. A survey of a continuation statement to extend know, all too often securing a judgment is We know what it takes to uncover hidden can be part of a plan to attract and retain an individual customer basis. provide services which meet various legal 1,000 American workers revealed that 64 percent of those with a judgment lien. The process will be not the end but rather the beginning of assets and to protect the investment that key, motivated personnel. and regulatory requirements of clients that Internet access at work use it for personal interests during working similar to what is now done to continue collecting on a troubled loan. It is critical our creditor clients have made in getting Disaster Recovery and Business are outside the clients’ core competency, hours. A majority of employers now think they must (and do) a financing statement for more than five to record judgment liens promptly in the judgment in the first place. Continuation most commonly auditing standards monitor their employees’ Internet and e-mail usage to enhance years. In order to extend the validity of counties where the borrower owns (or Cloud computing An added benefit of cloud computing (particularly SAS 70) and Sarbanes-Oxley productivity and avoid potential workplace liability (although, a personal property judgment lien, the is likely to own) real property and to Year after year, day after day, workout is its dual purpose as both a current, Act requirements, both of which require not surprisingly, a substantial percentage of employees disagree).

calendar the expiration of those liens professionals in the know rely on services can be functioning service and a business assessment of the internal controls of a But can monitoring employee Internet and e-mail be a problem so they can be renewed. Similarly, it JMBM’s Special Assets Team to handle continuation and disaster recovery service organization. Cloud computing for employers? is important to promptly file a notice problem commercial and real estate contracted on an as- service. Internet-provided services have services can assist and streamline auditors’ having his employer-provided home computer monitored by of judgment lien with the California loans. Whatever problem loans you have, this capability because, unlike an in-house opinions on internal controls by providing A Reasonable Expectation Of Privacy authorized company personnel. The court determined that Secretary of State to create a statewide chances are, we’ve seen it. Give us a call. needed, when-needed data center, they are by definition off-site services which are designed with compliance The balance between an employee’s right to privacy and a because he had consented to company monitoring, he had no lien on personal property owned by and not bound to any location. Moreover, in mind. corporate employer’s right to monitor often favors employers. reasonable expectation of privacy in such computer. And in Richard A. Rogan is Chair of the JMBM the borrower. When AB 121 becomes basis. a customer of a cloud computing service Indeed, courts set a high standard for employees to prove that Muick v. Glenayre Electronics, 280 F.3d 741 (7th Cir. Ill. 2002), effective on January 1, 2010, creditors will Special Assets Team. He also serves as the can require that the service maintain a All these factors can make cloud a company violated an employee’s reasonable expectation of an employee receiving and possessing child pornography on also have to calendar the expiration date co-managing partner of JMBM’s San Francisco disaster recovery system – this is, again, computing services attractive to a variety privacy. This seemingly provides wide latitude for employers a company laptop intended for office use had no reasonable of personal property judgment liens and office and co-chair of its Bankruptcy Practice Quality and Responsiveness a potentially expensive and difficult of companies. As we will discuss in the next to monitor employees’ electronic workplace communications. expectation of privacy because the employer informed the remember to file continuation statements Group. For more information, contact Dick Vendors of cloud computing services undertaking for the customer, but part of issue, however, cloud computing services However, there are no absolutes with regard to the question employee that it could inspect the computer. every five years. at 415.398.8080 or [email protected]. also argue that the quality of technical the essential, core competency of a cloud also come with drawbacks and concerns. of privacy in the workplace. While there appears to be great To subscribe to the Special Assets blog, services will increase. Cloud computing computing vendor. latitude, whether an employer can monitor employees is, in The key common element to each of these cases is that the It is a good idea to review all of your please visit www.SpecialAssetsLawyer.com. services are commonly focused on a small Robert Braun is a Partner at Jeffer Mangels actuality, a fact-specific inquiry dependent upon an analysis of employer had a pre-existing policy that it communicated to existing personal property judgment liens number of specialized programs or services Information Security Butler and Marmaro LLP in the Firm’s specific company practices. its employees, so that employees understood the scope of their – for example, customer relationship Cloud computing vendors also argue Corporate Department. Bob’s practice, employer’s intentions. management, or data storage. With that they have more robust, state of the art spanning more than 20 years, focuses on In three past cases, courts have found that employees have no this kind of focus, vendors can develop information security systems, incorporating corporate, finance, and securities law with reasonable expectation of privacy where employers’ policies While most legal disputes regarding employer monitoring a level of expertise and redundancy that the most developed firewalls, encryption, an emphasis on emerging technologies, clearly outlined impermissible e-mail content, identified of Internet and e-mail use have upheld the company’s right Cloud Computing continued from cover cannot be expected by typical technical physical security and other steps which hospitality and business transactions. For more that a violation could result in disciplinary action (including to monitor finding no general reasonable expectation of staff, particularly for small and mid-sized cannot be effectively implemented by most information, contact Bob at 310.785.5331 or termination), and reserved the Company’s right to access privacy, there are cases holding for the employee. In State v. Economies of Scale from the customer to the vendor, and while restrictions. As a result, a customer does not companies. Again, by making the service or individual companies. Cloud vendors can [email protected]. e-mail messages and track websites visited by the employees. In Young, 974 So. 2d 601 (Fla. Dist. Ct. App. 1st Dist. 2008), a These savings are achieved in large part customers may still need desktop technical have to maintain unused resources to meet Garrity v. John Hancock Mutual Life Insurance Co. 2002 U.S. pastor employee who stored child pornography on his church- because of economies of scale - a vendor support, cloud computing vendors reduce fluctuating demands or to anticipate growth, Dist. LEXIS 8343 (D. Mass. 2002), employees who used the provided computer had a reasonable expectation of privacy. In can offer the service for less than similar this cost through remote tools, allowing and can eliminate unnecessary resources if employer’s e-mail system to share sexual jokes were terminated. this instance, the employee was successful because the employer services on an in-house standalone basis. the vendor to access workstations on-site business declines; cloud computing services THE JMBM CORPORATE COUNSEL ROUNDTABLE - YOU ARE INVITED Since the employees in question knew of the employer’s failed to have a policy advising employees that computer Cloud computing vendors can choose the to diagnose and resolve issues. It should can be contracted on an as-needed, when- electronic communications policy and also knew that recipients Once a month, the Corporate Department at Jeffer Mangels Butler & Marmaro LLP, hosts an informative breakfast usage would be monitored nor was there any indication that most efficient locations for services, and be noted that reductions in personnel needed basis, without requiring the client to of their e-mails could forward them to third parties, no valid roundtable addressing current issues affecting the Corporate world. There is no charge for in-house counsel to attend company personnel had routine access to employee computers. share resources among multiple clients (without, presumably, a reduction in service) create substantial infrastructure which may reasonable expectation of privacy existed. the MCLE approved Corporate Counsel Roundtable. Complimentary parking and breakfast is provided. GROUP EMPLOYMENT & LABOR JMBM’S Again, this case hinged on the existence and communication of that would otherwise have to be replicated not only reduce direct personnel costs for not be needed. And as companies grow, they a company policy. by each individual client. Vendors can also salaries, benefits, office space and the like; can quickly add resources which allow them December 9, 2009 Roundtable: Techniques for Renegotiating Real Estate Leases focus on utilizing their resources more the personnel issues related to having a to take advantage of business opportunities “Techniques for Renegotiating Real Estate Leases,” featured a discussion giving in-house lawyers a practical frame of reference efficiently. Inherent in this thought is data center move from the customer to the and secure additional revenue, often at a on common opportunities, issues, interests, techniques and problems in attempting to renegotiate real estate leases in the 35 percent of employees indicated The Conflict Of Employee Monitoring that companies that limit their services to vendor can shift potential liability associated marginally additional cost. current depressed economy. The roundtable was conducted by Bill Capps, Chair of JMBM’s Corporate Department and Gray The cost and disruption of litigation by disaffected employees providing computing resources are experts; with a workforce. DeFevere, Senior Vice President of PAR Commercial Brokerage. If you would like to request a copy of presentation materials from that they resented employer (or former employees) is just one downside to not having and companies that use computers to support Mobile Workforce this roundtable, please contact Bill Capps at 310.201.3513 or [email protected]. communicating an effective Internet and e-mail policy. Even their core businesses cannot focus as clearly Scalability Cloud computing accommodates monitoring and felt it hurt their if a company is lucky enough to avoid litigation, employee on a support service. Particularly important in uncertain mobile users and mobile applications quite January 19, 2010 Roundtable: How to Effectively Plan and Execute Employee Terminations in Uncertain Economic monitoring may be damaging to employee productivity if it is economic times, cloud computing is typically effectively because it is accessible through Times productivity. not implemented effectively. While monitoring might deter Reductions in Personal Staff scalable. Customers can, with relative ease the Internet, a factor that is particularly “How to Effectively Plan and Execute Employee Terminations in Uncertain Economic Times,” will feature a roundtable discussion company provided Internet and e-mail abuse, it may also cause Along with economies of scale, customers and speed, increase or decrease resources important as a workforce becomes more on issues confronting in-house counsel when faced with an employee termination, as well as techniques for managing them. resentment in employees if they do not see the justification of of cloud services are able to reduce their to reflect their needs. The cost of the mobile. While much of the evidence is The discussion will be led by Bill Capps, Chair of JMBM’s Corporate Department and Scott Brink, Partner in JMBM’s Labor & Em- Similarly, in TBG Insurance Services Corp. v. Superior Court, monitoring. In a recent survey, 35 percent of employees indicated technical staff. The technical personnel cloud service typically fluctuates with the anecdotal, as companies seek ways to reduce 96 Cal. App. 4th 443 (Cal. App. 2d Dist. 2002), an employee that they resented employer monitoring and felt it hurt their EVENTS ployment Group. If you would like to attend this roundtable, please contact Jessica Hekmatjah at 310.201.3567 or [email protected]. required to maintain the data center move increases and decreases, subject to contract costs, reducing their terminated for accessing pornographic websites consented to productivity. Knowledge of Internet and Continued on Page 3 Continued on Page 5 corporate law corporate law 2 NEWSLETTER Winter 2010 3 corporate law NEWSLETTER Winter 2010 4 NEWSLETTER Winter 2010 Winter 2010 Employee Monitoring continued from page 4 e-mail use policies is essential for companies and employees alike. to deal with Internet and e-mail abuse. They are implementing If a company approaches the situation from a realistic and business and enforcing Internet and e-mail use policies prior to the perspective and explains the reasons why it imposes monitoring threat of litigation. The key to an effective policy is consistently corporate law policies, then it becomes less personal and more work oriented enforcing a realistic plan that takes into account the realities of the What’s Inside? and employees are more apt to accept this reason. Moreover, since workplace. A good policy should take into account the following NEWSLETTER employees often spend the better part of their waking hours in components:

SPOTLIGHT ON DISTRESSED ASSETS & REAL ESTATE the office, conducting some personal business via e-mail or the Jeffer Mangels Butler & Marmaro LLP is a full-service law firm. This column features anarticle from the Chair of our Special Assets Team. Internet (such as online banking) may be a convenience that Step 1 Creditors’ Rights: employees’ cannot do without. Company policies must consider Place Restrictions On Internet and E-mail Use Cloud Computing by Robert E. Braun the practical detriment of an overly restrictive policy. Policies should include specific restrictions pertaining to n October 29, 2009, the City California Now the content of electronic messages, prohibiting messages that of Los Angeles announced are defamatory, abusive, profane, obscene, sexually oriented, that it is outsourcing its e-mail Allows Personal The key common element to each of threatening, racially offensive, tortuous, or wrongful. A successful Oservices to Google, becoming the largest e-mail and Internet policy should also contain procedures governmental body to outsource such a key Property these cases is that the employer had a encouraging early reporting by employees of offensive conduct. computer function to an Internet-based provider. Before and since, companies large Judgment Liens pre-existing policy, so that employees Step 2 Cloud Computing Judgment Liens to be Employee Monitoring and small have elected to move key entity Communicate The Policy To Employees Extended in an Electronic Age functions to services that are accessed to be Extended for understood the scope of their The company should employ internal procedures to perform through the Internet. This growing a prompt investigation of complaints regarding the misuse of Robert Braun Richard A. Rogan Maryam Maleki trend toward Internet-based computing More Than Five employer’s intentions. Internet and e-mail communications, informing employees that 310.785.5331 415.398.8080 310.201.3511 services - commonly referred to as “cloud Years by Richard A. Rogan inappropriate conduct will lead to disciplinary action, up to and [email protected] [email protected] [email protected] computing” - is one of the most significant including termination. developments in computing services. This ou’ve gotten a judgment against that Another issue arises with regard to what an employer can do is the first of a series of articles that will however, is different because companies use troublesome borrower who hides with information that it gathers through employee monitoring. Step 3 examine cloud computing as it impacts it to transfer essential business functions assets and plays games, but you are While employees might come to accept monitoring of work by a users of those services. This article will from in-house operations to Internet-based Yafraid that it will be many moons before you Reserve the Right To Monitor corporate employer, the thought that employers might have access Most importantly, a corporate employer should reserve the define cloud computing and discuss some services. are able to collect. You know that one of the to their private information via monitoring e-mail and Internet right to monitor, have employees consent to monitoring, and state of its benefits; future articles will review the best ways to get this kind of person to deal use might not be accepted as easily. Does an employer assume any that a failure to monitor in particular situations is not a waiver of business and strategic challenges of cloud Benefits of Cloud with you is to get a statewide judgment lien responsibility to safeguard confidential employee information not the company’s right to monitor. A good corporate policy should computing, the legal challenges, and tips Computing against him. This is because that judgment of a public nature? There is a growing body of case law and state warn employees that company computers and e-mails stored on for addressing those challenges. Users find cloud computing is attractive lien will show up on his credit reports and statutes requiring employers to do just that. Among other things, the company server are company property and that employees because of some clear benefits: effectively block him from getting a car loan

employers must take reasonable steps to protect the confidential have no reasonable expectation of privacy in same. Corporate [email protected]. or a credit card. Faced with the prospect of

information of their employees and disclose when that information employers should also be sure to periodically review e-mail and at Capps William contact feedback, provide to or information paying cash for a clunker, this borrower would This newsletter is also available in electronic format. For more more For format. electronic in available also is newsletter This Using cloud computing Cost Savings has been accessed without authorization. Consequently, employers Internet policies to ensure compliance with current law, update First and foremost, promoters and rather pay you off than pay cash for a new

must decide in advance the scope of information it will access, what them in light of changed circumstances, and continue to inform adherents of cloud computing argue ride. Fortunately, most borrowers are not circumstance of each particular situation. situation. particular each of circumstance can be part of a plan to information will kept confidential, who in the company hierarchy employees about the policy and their rights. that it is less expensive than providing like this, but there are a few, and you know

must have access to it, and who must be able to make changes to it. and facts relevant all upon based lawyer a by given be only can which the same computing services in-house. the type! as general information and may not be relied upon as legal advice, advice, legal as upon relied be not may and information general as attract and retain key, If a business develops a method to protect confidential information Maryam Maleki is an associate in the Firm’s Labor & Employment While the per-unit costs of computer

and implements those methods by ensuring employees understand Group. For more information, contact Maryam at 310.201.3511 or intended is newsletter this in information The LLP. Marmaro & Butler hardware and software — computers, Starting on January 1, 2010, California will year for the clients, business associates and friends of Jeffer Mangels Mangels Jeffer of friends and associates business clients, the for year motivated personnel. new procedures, it could go a long way to easing employees’ fears [email protected]. Louise Ann Fernandez, whose practice has servers, routers, operating systems and finally bring its personal property judgment

and avoiding costly litigation. spanned more than 25 years, is chairperson of the Labor & Employment a times several published is Newsletter Law Corporate JMBM The computer programs — have fallen over the lien into parity with its real property judgment

Group. For more information, contact Louise Ann at 310.201.3522 or FORWARDING SERVICE REQUESTED SERVICE FORWARDING What is Cloud Computing? years, it is still expensive to establish and lien. Up until then, a California real property What’s A Corporation To Do? [email protected]. While there are many concepts of cloud maintain extensive computer systems that judgment lien had a life of 10 years and could Drafting An Effective Policy computing, it generally refers to delivering are necessary for businesses. Many users not be renewed. But a judgment creditor In order to avoid litigation and better maintain employer/ computing services – whether software, find that moving computing services onto could only get a lien on personal property employee harmony, more companies are not waiting for law suits storage capacity or other products and the Internet moves those data center costs for 5 years, and renewal was not available. services — over the Internet. Cloud from the customer to the cloud computing computing makes documents, e-mails and vendor, including software and hardware Somehow, the California Legislature About JMBM’s Labor & Employment Group other data accessible from any personal acquisition, operating and maintenance passed, and the Governator signed a bill to

JMBM’s Labor & Employment Department counsels businesses and management on workplace issues, with special emphasis on reductions in [email protected] computer or mobile device with access costs. Even if the hardware and the amend Section 697.510 of the California Code

force, discrimination, harassment, wage and hour disputes, and labor-management matters including collective bargaining negotiations and fax 310.712.8513 • 310.201.3513 to the Internet. This is not really a new software is no less expensive, outsourcing of Civil Procedure that permits a judgment Corporate Department Corporate

arbitrations. Our labor attorneys work closely with employers to develop proactive compliance and dispute resolution strategies to successfully development — many things work this computer services allows companies to creditor to renew a notice of judgment lien William F. Capps Capps F. William

solve workplace problems or avoid them altogether. Each of our lawyers works closely and personally with employer clients to develop Attn: way already, from online search engines to reduce real estate costs (through reduction filed with the California Secretary of State.

Los Angeles, CA 90067 90067 CA Angeles, Los

proactive compliance and dispute resolution strategies. We believe this one-on-one counseling is far more efficient than an unwieldy team. CA Park, Canoga e-mail and photo albums to calendars and in operating space), payroll, benefits and In California, personal property judgment 1900 Avenue of the Stars, 7th Floor Floor 7th Stars, the of Avenue 1900 We work with clients to help them avoid workplace problems, but where controversy is unavoidable, we have handled literally hundreds of jury 566 No. Permit shared documents. Most of us use the cloud insurance costs. Many companies find the liens are created by filing a notice of judgment

trials, administrative trials and appeals before courts and administrative agencies nationwide. We would be pleased to discuss our experience PAID every day, by accessing search engines, social savings to be compelling. lien with the California Secretary of State U.S. Postage Postage U.S. as it relates to your specific needs. Mail Class First networks and e-mail. Cloud computing, Continued on Page 2 in a manner similar Continued on Page 2