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Courts Split on Meaning of California Call Recording Statute

June 21, 2016

Most businesses find it necessary to record calls and other communications at least some of the time. Call recording is particularly important in contact centers, where companies choose to record for a variety of reasons: to help train agents and evaluate their performance, to avoid “he said, she said” scenarios, or because their industry mandates it, as is the case in healthcare and financial services. But if a company’s going to record communications, it needs to understand the privacy laws that govern recorded or intercepted calls or other contacts.

When it comes to communications privacy laws, few places in the U.S. are more stringent than the State of California. States are able to set their own privacy laws, and some choose to be more flexible – many states are “one-party consent” states that require only one party to the conversation to know it’s being recorded. California is a different story. The state requires the permission of everyone participating on a call before the call may legally be monitored or recorded. The law is based on California’s much-litigated California Penal Code Section 632 and Section 632.7 (the “California Eavesdropping Statutes”).

Section 632 of the California Penal Code requires consent from all participants in a telephone call that may involve confidential communications (which means it’s a given that the law applies to customer communications, which may involve personal or financial information. Companies found to be in violation of this statute could be hit with fines of $5,000 per call or three times the actual damages suffered, whichever is greater. The statute is “oft-litigated,” because it has some hazy definitions, according to a recent article by Wendell Bartnick, Whitney Costin and Tonia Klausner of Wilson Sonsini Goodrich & Rosati writing for the Web site JD Supra Business Advisor. As a result, there have been some conflicting rulings from courts.

“First, there is disagreement among the courts as to whether Section 632 applies at all to calls monitored by the employer of one party to the call,” wrote the authors. “In one case, the U.S. Court of Appeals for the Ninth Circuit concluded that Section 632 does not apply to call monitoring by an employer where there is no third party (i.e., someone not employed by the employer) listening in on the call. It reasoned that California courts had interpreted ‘eavesdrop’ to refer to a third person secretly listening in on a conversation between two parties, and that the employer was one of the parties to the call, not a third party. A California appellate court held, however, that an employer is not a party to a call between employees and non-employees; therefore, business call monitoring violates the eavesdropping law when done without consent from all parties to the call.”

Going forward, court cases are likely to focus on the meaning of a “confidential communication” under the statute. It may hinge on customer expectations of privacy during the call, or even the purpose of the call. (Bartnick, Costin and Klausner point out that the Ninth Circuit recently concluded that there may not be an objective expectation of privacy for calls to customer service representatives to dispute charges.)

The point is that the law remains unsettled and undecided in an unambiguous way. For now, it remains a smart decision for all companies monitoring calls or other contacts in California to ensure they treat every customer call like a confidential call. 

Edited by Stefania Viscusi

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