The Surprising Truth of Recording Employers Without Consent
Recent drama playing out in our nation’s capitol has highlighted the use of secret electronic audio recordings of conversations. When a recording is offered as evidence of a person’s agreement, motive, intent, attitude, opinion or activity, it can create an “oops” moment that may be embarrassing and difficult to defend. Recordings can also be taken out of context, edited, and with the help of today’s media geniuses, they can be creatively distorted.
Recordings between an employee and employer are becoming a common occurrence in the workplace. Because of the availability of hidden recording devices, such as cell phones, employers and employees are able to record in secret. Performance or disciplinary conversations are a frequent target.
Most states allow recordings if only one-party consents. In those states, an employer can be blindsided by a cell phone recording secretly made by the employee. Such a recording is legal. In a minority of states, including Maryland, it is a criminal act to make a recording without the consent of all active participants. See Maryland Annotated Code, Criminal Law Volume, Section 7-308. Yet, while it may be a crime, the recording can still be used and shared- but at the risk of prosecution.
An employer is able to limit unwanted recordings by having a prohibition as a policy in the employee handbook or employment contract. A violation of the policy would be grounds for disciplinary action that could include termination. Yet, while the criminal threat and violation of an employment policy will be a deterrent to secret recordings, an employee under disciplinary threat may take the risk in hopes of preserving a defense or cause of action for wrongful termination, discrimination or some other grievance.
An employer should be aware that a broad prohibition of the recording of any conversation among employees in the workplace could run afoul of the National Labor Relations Act. A recent case held that such a broad prohibition could be construed to have a chilling effect on an employee’s rights “…to engage in…concerted activities for the purpose of collective bargaining or other material aid or protection.”” See Whole Foods Marketing Group, Inc. v. N.L.R.B., 691 F. 2d Appx. 49 (Memo, 2d Cir. 2017), 2017 WL 237483; Ewing v. N.L.R.B., 768 F. 2d 51 (2d Cir. 1985); 29 USC Sec. 157.
While a policy is not foolproof, it will mitigate against unwanted recordings and a carefully drafted policy should be seriously considered for inclusion.
Trust But Verify
As anyone in the construction industry knows, Maryland has a Construction Trust Fund Statute (“Trust Fund” statute), the purpose of which is to protect subcontractors from dishonest practices by general contractors and other subcontractors for whom they might work. The Trust Fund statute is designed to ensure that funds disbursed by an owner or contractor for payment to a subcontractor for work done are actually paid to the subcontractor. The statute accomplishes its purpose by imposing a trust on funds paid to a contractor and by imposing personal liability on the directors, officers, and managing agents of a contractor when they improperly use the funds held in trust for purposes other than the payment of the intended subcontractors.
However, the Trust Fund statute by its terms is limited in its application only to contracts that would be subject to the Maryland Little Miller Act or the Maryland Mechanic’s Lien law. In C&B Construction, Inc. v. Dashiell, 2018 Md. LEXIS 381 (July 30, 2018), a subcontractor completed work on six construction projects and the general contractor received payment from the project owners for that work. However, the general contractor failed to pay the subcontractor with the funds received for the work performed. The subcontractor alleged that the general contractor either misappropriated those funds, diverted the funds to themselves individually, or paid other expenses. As a result, the subcontractor filed suit against the general contractor and its owners individually, pursuant to the Trust Fund statute. The general contractor contended that the Trust Fund statute did not apply because none of the projects were subject to the Maryland Little Miller Act or Mechanic’s Lien law. The trial court and intermediate appellate court agreed and held that the Trust Fund statute did not apply. The Court of Appeals agreed and noted that there was no dispute that the projects were not subject to the Little Miller Act and because the subcontractor failed to establish that the renovation work on the projects was for at least 15% of the value of the projects, the Mechanic’s Lien law did not apply. Thus, while Maryland has a Trust Fund statute, one must verify if it will apply.
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