The new law comes amid a global push for stronger privacy protections for consumers and workers, imposing new compliance obligations on businesses that must deal with both general consumer privacy laws and employee-specific statutes.
In recent years, particularly during the coronavirus pandemic, white-collar businesses have turned to online tools—video-conferencing, workflow management software, and the like—to boost worker productivity.
"We've gone through an unprecedented electronic and digital transformation in the workplace over the last 20 years," said Mark Goldstein, a partner at Reed Smith LLP in New York. "This is an attempt at a counterbalance."
The law, which goes into effect on May 7, requires employees hired on or after that date to make disclosures. It is applicable to phone calls, internet searches, and online calls made via platforms such as Zoom Video Communications Inc.
The attorney general of New York may seek fines of up to $500 for the first offense, $1,000 for the second offense, and $3,000 for the third offense.
Obligations to Comply
According to Katharine Liao, a partner at Squire Patton Boggs in New York, businesses should review hiring and onboarding documents and use standardized language that tracks to the statute if appropriate.
"In practice, this is a reminder to make your policies clear in employee handbooks, as well as to review offer letters or employment agreements, confidentiality agreements, and electronic communications policies," Liao said. "Small and large employers, including those with strong practices, may want to revise the text of their policies."
Large companies with strong legal teams and employment law expertise are likely to be aware of the law, but smaller businesses may be unaware of the statute or that it applies to them, according to 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 New York location, regardless of the number of employees or annual revenue.
"As May approaches, we will remind clients of their new responsibilities," Patin said. "For larger companies, we'll also contact HR departments to ensure that the requirements are incorporated into their onboarding procedures."
Litigation Possibility
Because the law lacks a private right of action, plaintiffs are unlikely to succeed in bringing suit against companies that violate New York law.
Still, attorneys will try to bring claims under the law, according to Kristin Bryan, a senior associate at Squire Patton Boggs in Cleveland.
Plaintiffs in the privacy arena, in particular, have sought to "piggyback" on various privacy statutes, and some plaintiffs will argue that those laws impose various obligations and duties on employers, according to Bryan. Employees may seek to bring common law tort or related claims by alleging that a defendant failed to meet its statutory obligations, she said.
However, New York is not regarded as a particularly welcoming forum for class action plaintiffs, according to Bryan.
"While there is still a risk," she said, "I don't see it as the next California or Illinois in terms of privacy litigation." "It is unlikely that violations of this new law will be used as the basis for developing new theories of liability in data privacy class actions."
According to Victoria Jaus, an associate at Vedder Price P.C. in New York, the statute itself is short, and no additional guidance has been posted since the law's passage. She added that enforcing the statute once it goes into effect may help businesses better understand the technical specifications of the law.
According to Jonathan Wexler, a partner at Vedder Price in New York, the passage of the law in New York may inspire other states, such as California and Illinois, to pass similar legislation.
Connecticut and Delaware already have workplace monitoring laws in place.
"New York City is quickly becoming one of the most employee-friendly jurisdictions in the country," Wexler said. "New York State is not far behind." “This may be a trend to a limited extent in states that are like-minded, but I don’t see it sweeping the nation.”