The Privacy Perils of Employees’ Personal Phone Calls

Background
Federal law and the law of most states permit the recording of telephone calls if at least one party to the call consents. But California law requires the consent of all parties, at least if one party to the call “intentionally” records the call. See California Penal Code sections 632(a) and 632.7(a).

This has been the law in California for decades. But issues still arise as to what constitutes consent and what constitutes intent. A recent opinion illustrates how an employer’s clear statement of its ground rules may not suffice, or may even make things worse.

The Rojas Case
Plaintiff Dalia Rojas telephoned her daughter at work—a lot. Typically the daughter would get a call from mom on her cell, then return the call using her work phone. Hundreds of calls followed this pattern.

HSBC, the daughter’s employer, “authorized its employees to use company telephones for personal calls, expressly advising them in writing that their ‘personal calls may be recorded’” and that they therefore had no right of privacy with respect to such calls. HSBC had two recording systems, one of which recorded all calls for a variety of business and compliance purposes.

Rojas sued HSBC under California Penal Code sections 632(a), 632.7(a) and 637.2(a). Section 632(a) prohibits one party to a telephone call from intentionally recording a confidential communication without the knowledge or consent of the other party. Section 632.7(a) prohibits the intentional recording of a communication using a cellular or cordless telephone (without regard to whether the communication was confidential). And section 637.2(a) provides for a civil penalty of $5,000 per “violation” or three times any actual damages. As Rojas had received 317 recorded calls from HSBC company telephones (316 from her daughter and one from a friend), she sought a cool $1,585,000 in civil penalties.

HSBC moved for summary judgment, arguing that it had not intentionally recorded any of the calls to Rojas. The trial court granted the motion. Rojas appealed.

The Rojas Opinion
HSBC argued that it had no intention of recording employees’ personal calls and no expectation that it would record such calls, because it had warned employees they would have no “right of privacy” if they made personal calls using company phones. But HSBC’s policy did not bar personal calls using company phones. Nor did it tell employees they must tell their call recipients about the recording system or provide a recorded message at the beginning of outgoing calls giving notice of the recording.

The Court of Appeal rejected HSBC’s arguments. It reasoned that HSBC knew it was recording all employee calls and authorized employees to make personal calls, albeit with the warning that they would have no right of privacy. It also distinguished the case law on which HSBC principally relied as involving situations where the recording had been “by chance,” “innocent” or “inadvertent.” Here, in contrast, HSBC had a policy of recording all calls.

While buried in a footnote, the key point seems to be that HSBC had warned the employee about the recording, but not her mother, the plaintiff. While HSBC argued that its warnings to the employee negated the intent required by the statute, the Court was unconvinced, reasoning that by recording all calls and giving employees permission to make personal calls, HSBC had at least raised a triable issue as to its intent. Accordingly, the Court reversed, directing the trial court to enter an order denying HSBC’s motion for summary judgment. The case will now likely go to trial.