Federal laws and many state laws prohibit employers from disciplining employees for legal activities outside the workplace. But the subject of spying is murky. If you are an employer and have a reason to conduct surveillance -- you suspect an employee is abusing the Family and Medical Leave Act, for example -- you should talk with your attorney about what actions you may take. Generally, an invasion of privacy occurs when an employer does something highly offensive to a reasonable person, but that line can change over time and from jury to jury.
Federal law prohibits companies from spying on employees they suspect of organizing a union or meeting to discuss a union. Specifically, the law prohibits employers from spying on employees if they meet to discuss workplace conditions. This language is broad enough that it covers employees who may want to address some issues with their boss, but don't necessarily want a union.
Legitimate Business Decision
Employers should have legitimate business reasons for conducting surveillance on employees. Even in the workplace, employers can face lawsuits for reading an employee's personal email in certain narrow situations. Hiring private investigators outside the workplace can be tricky. An employer who believes an employee fraudulently claimed a disability may hire an investigator to spy on employees in public places, but interviewing neighbors or golf buddies or peering into windows on private property may bring on lawsuits.
Companies often issue cellphones to employees for work purposes, and these phones often come equipped with GPS devices that employers use to determine where employees are and to defend against lawsuits. Imagine an employer who requests that an off-duty employee come into the office. The employee refuses, saying she is out of town. In reality, she is at the doctor's office, but would prefer that her colleagues not know she is facing a serious medical condition. If the employer activates the GPS, she runs the risk of violating the employee's privacy. Questions about what an employee is doing at any particular moment should be limited to workplace considerations.
Legal Activities Outside the Workplace
Even when employers have what they believe to be a legitimate business case for employee surveillance, it may cross the line into impermissible surveillance. A business may want to hold down health costs by inquiring about smoking habits, alcohol use or sexual activities. These inquiries, and surveillance to determine them, may cross the line because they are illegal.