What are our obligations for employee privacy and data?
Takeaway: Even in a startup, employees have a right to privacy; you must be transparent about any employee monitoring and have a clear, documented business justification for collecting and retaining all employee data.
As a founder, you are accustomed to thinking about the privacy rights of your users. The GDPR and the CCPA have made it clear that you have a duty to be a responsible steward of customer data. However, there is another, often overlooked, area of privacy that carries significant legal risk: employee privacy.
While employers have a legitimate interest in monitoring the workplace and ensuring productivity, this right is not absolute. Employees do not check all of their privacy rights at the door. As you build your team, you must be mindful of your legal and ethical obligations regarding the data you collect from your own employees and the extent to which you monitor their activities.
Employee Monitoring: Transparency is Key
In today's digital workplace, it is common for employers to monitor employee activity on company-provided devices and networks. This can include monitoring email, web Browse history, and Slack communications. While this is generally permissible for business-related reasons, the key to avoiding legal trouble is transparency.
The Computer Use Policy: You must have a clear, written policy in your employee handbook that explicitly states that employees have no reasonable expectation of privacy when using company equipment or the company network. The policy should clearly state that the company reserves the right to monitor all electronic communications and activity. Every employee should sign an acknowledgment that they have read and understood this policy.
Avoid "Creepy" Surveillance: While you can monitor work-related activity, you must be careful not to cross the line into overly intrusive surveillance. Secretly recording audio or video in the workplace, or using keystroke loggers to capture every single thing an employee types, can lead to significant legal claims. Any monitoring you do must be for a legitimate, documented business purpose.
Collecting and Retaining Employee Data
During the hiring process and throughout the employment relationship, you will collect a large amount of sensitive personal information about your employees, from their social security numbers and home addresses to their health insurance information.
Data Minimization: Just as with user data, you should only collect the employee data that you have a clear legal or business reason to collect.
Secure Storage and Access Control: Employee data, particularly sensitive HR and medical information, must be stored in a secure, access-controlled system. Access to this information should be strictly limited to only those HR and finance personnel who have a legitimate "need-to-know."
Record Retention and Deletion: You must have a formal record retention policy. While you are required by law to keep certain employee records (like payroll and tax information) for a specific number of years, you should securely delete other, less critical data once it is no longer needed.
Offboarding and Data Security
The termination of an employee is a moment of high security risk. Your offboarding process must include a clear, immediate procedure for:
Deactivating All Account Access: Immediately disabling the employee's email, Slack, and all other company accounts.
Recovering Company Assets: Securely recovering the employee's company-provided laptop and other devices.
Your employees are your company's most valuable asset. Treating their data and their privacy with the same level of care and respect that you show your customers is not just a legal requirement; it is a fundamental part of building a culture of trust and professionalism.
Disclaimer: This post is for general informational purposes only and does not constitute legal, tax, or financial advice. Reading or relying on this content does not create an attorney–client relationship. Every startup’s situation is unique, and you should consult qualified legal or tax professionals before making decisions that may affect your business.