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Employer Liability for Improper Computer Use by Employees

Many employers, recognizing the business advantages inherent in its use, regularly provide their employees with access to the Internet. Increased employee access, however, has resulted in increased employer liability. Employee misuse of the Internet can expose employers to civil and criminal liability in both state and federal courts.

Respondeat Superior

Respondeat superior is not a new doctrine; vicarious liability of an employer for the actions of an employee was established early in the 1900’s. Under the doctrine, an employer can be held liable for damages resulting from employee actions occurring within the course of employment or while “furthering a purpose of the employer.”

Historically, liability did not extend to acts motivated purely by the employee’s personal interests. Nor was the employer traditionally liable for employee acts that were so outrageous as to be considered outside the scope of employment.

More recently, however, courts have been increasingly willing to expand employer liability in situations where the employee acts purely for his own benefit. For example, courts may hold the employer liable when the employee harms a third party through an opportunity provided by the employer.

Employer Liability for Internet Misuse

Not surprisingly, the expansion of vicarious employer liability for employee actions has been extended to employee Internet usage. For example, foreseeable acts arising from Internet usage, even if they only benefit the employee, can result in employer liability for damages. Furthermore, employer knowledge of the conduct may not be required to impose liability.

Consider the situation where an employee sends sexually explicit or harassing e-mails to a co-worker. Although this conduct does not benefit the employer, and does not further any business purpose, the co-worker can bring an action against the employer (e.g., for hostile environment sexual harassment). Ultimately, the employer may be liable for damages, even if it knew nothing of the e-mail. Here, the employer provided the opportunity to send the e-mail and may have the duty to monitor the employee’s activities.

Employers can similarly be found liable for unlawful Internet use by employees and/or damage to third parties.

Case Imposes Liability on Employer

In December of 2005, the New Jersey Appellate Division ruled that an employer who was on notice that an employee was using workplace computers to access pornography, possibly child pornography, had a duty to investigate the employee’s activities and to report such activity to the police. Failure to do so can render the employer liable to all third parties who may be affected by the employee’s internet activity.

In this case, the employee took nude photographs of his 10 year-old stepdaughter and disseminated the photos from his workplace computer. The mother of the child sued the employer. The court held that the employer breached a duty of care to the child and imposed liability on the employer, even though there was no evidence that the employer had knowledge that the employee’s actions posed a threat to the child.

Potential Internet Misuses

Employees may use the Internet in improper or unlawful ways, including:

  • Copying and distributing confidential company information
  • Engaging in fraudulent activities such as larceny, embezzlement, fraud, libel and securities fraud
  • Obtaining unauthorized access to another’s computer
  • Transmitting computer viruses
  • Infringing copyrights or trademarks
  • Engaging in Internet gambling (illegal in some states)
  • Sending threatening or sexually harassing e-mails

Possible Measures to Minimize Exposure

Precautionary measures that may minimize or eliminate liability include:

  • Adopting policies and procedures regarding Internet usage which forbid illegal and wrongful use
  • Giving employees notice of Internet use policies and implementing training procedures
  • Encouraging early reporting of violations
  • Promptly investigating and enforcing the policies in the event of known or reported illegal or wrongful employee use
  • Adopting and enforcing policies and procedures for e-mail usage
  • Monitoring Internet and e-mail use, after giving notice to employees
  • Generally requiring and enforcing Internet use only for business purposes
  • Installing filtering software
  • Ensuring insurance coverage is in place for liability related to improper or illegal Internet and e-mail use by employees
  • Consulting an attorney regarding potential liability and effective measures to minimize such liability
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