Seyfarth Synopsis: With the availability of new vehicle GPS devices and smart phone tracking applications, employers need to be mindful of employee privacy rights when using location technologies in the workplace.

It Doesn’t Take A Magellan To Map Routes Anymore

Employers now have available the technology that concerned parents of wayward teenagers have often wished for. Thanks to technological advances, one can now monitor another’s movements in ways that could only be imagined a couple of decades ago.

The benefits of tracking employee activity through GPS (Global Positioning Systems) include: (i) verifying routes and locations for mobile employees, particularly in the transportation or delivery industry, (ii) ensuring that employees are not violating traffic laws, (iii) monitoring employee overtime, (iv) verifying that employee time records are accurate, (v) locating company-owned stolen vehicles, and (vi) verifying that employees are not misusing company vehicles by, for example, driving to inappropriate locations or at inappropriate times.

With the advent of GPS smart phone applications, companies have begun to install GPS tracking apps on company-issued smart phones, which monitor not only the employees’ transportation in vehicles, but may allow for out-of-vehicle monitoring as well.

So with all of this great new technology, where (if at all) must employers draw the line when it comes to tracking employee mobility?

Navigating The Nexus of Privacy and Employer Needs

At the center of the debate on the lawfulness of tracking employees via GPS is the employee’s right to privacy vs. the employer’s need for productivity and business-related information. California has a strong tradition of protecting individual privacy rights. Article I, Section 1 of the California Constitution provides that “all people” have an inalienable right of privacy. This provision applies to private as well as public employers. California employers thus must be wary of infringing on employee privacy by learning too much about private time and lawful off-duty activities.

Litigation Beginning To Moovit Related To GPS Tracking

Of major importance is whether the GPS tracking information is related to job performance: if it is not, then cataloging off-duty activities may violate constitutional rights to privacy. Consider this recent cautionary tale: In Arias v. Intermex Wire Transfer, an employee sued her former employer, claiming she was fired for uninstalling a GPS tracking app from a company-issued smart phone that was tracking her movements even when she was off the clock. The employee objected to being tracked on her own time and compared the GPS to the ankle bracelet placed on someone under house arrest. She sued for wrongful termination, invasion of privacy, unfair business practices, retaliation, and other claims, seeking over $500,000 in damages. This suit, privately settled, is likely not the last of its kind.

An additional source of legal restriction on remote employee monitoring is California Penal Code section 637.7, which prohibits the use of “an electronic tracking device to determine the location or movement of a person” via a “vehicle or other moveable thing” unless “the registered owner, lessor, or lessee of a vehicle has consented to the use of the electronic tracking device with respect to that vehicle.” So while an employer arguably can install GPS tracking on company-owned vehicles, and even on employee-owned vehicles used for work purposes (with advance consent as we’ve blogged previously), there is currently no such carve-out allowing employers to require GPS tracking through smart phones.

In What Waze Should Employers Be Mindful About Using GPS?

A California employer using GPS to monitor employees should have policies carefully considering employee privacy issues. As with other kinds of workplace monitoring (e.g., cameras in the workplace, use of email and Internet systems), we recommend (a) full disclosure to employees, and (b) obtaining employee consent, including implementing a separate GPS tracking policy. The policy should:

  • Outline the legitimate business reasons for using GPS tracking (e.g., increasing operational efficiencies, improving customer service, maintaining accurate timekeeping records, improving safety).
  • Provide clear notice of the company’s right to monitor employee locations while the employee is using company-owned property, describe when and how employees should expect to be monitored, and tell employees they should have no expectation of privacy while using the company property.
  • Explain how the employer will use and safeguard data collected.
  • Notify the employee of the consequences that could lead to discipline for disabling a GPS device without the employer’s permission.
  • Communicate the policy to all employees, and have them provide written acknowledgement of their receipt and understanding of the policy.

Other best practices to consider include:

  • Limit monitoring of activity to work hours, and monitor an employee’s location only for a specific business purpose in compliance with the GPS tracking policy. The collected data should not reveal details of the employee’s private life.
  • Limit access to the GPS tracking information to company personnel who have a clear business need to know that information.
  • Make sure that you store any GPS-related data securely.
  • Where employees are unionized, consider whether there is a duty to bargain before implementing the use of GPS tracking, depending on the language of the contract and the parties’ course of dealing. The NLRB has advised that a complaint would issue when an employer failed to bargain before unilaterally implementing a vehicle data recorder system to monitor employee compliance with driver safety rules.

Workplace Solution: Because this area of law is still developing as new technologies emerge, employers should continually revisit their GPS policies for compliance. We monitor developments in this area and will provide our readers with further information as it becomes available. In the meantime, if you have any questions, please contact the author or your favorite Seyfarth attorney.

Edited by Coby M. Turner.

In addition to the numerous and often mind-numbing requirements placed upon employers in the Golden State, Labor Code Section 2802 requires that an employer “indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.”  The most common employee “expenditure” seen by businesses relates to the use of an employee’s personal vehicle in connection with his or her job duties, such as driving a personal vehicle to an outside sales call.  

Section 2802 itself provides little guidance on how employers can properly reimburse employees for such expenses, but we offer the following clarification on some frequently asked questions:

Do I Have To Pay My Employees For The Amount They Actually Spent On Gas And Their Cars? 

          Not necessarily. While employers are permitted to reimburse employees for their actual vehicle expenses (fuel cost, maintenance and repairs, and vehicle depreciation), this is often incredibly burdensome.  Reimbursements vary widely between employees for the same business trip and require hyper-individualized calculations.  For example, one employee may drive a reliable and fuel efficient hybrid car, and another may drive a vintage SUV with a large V-8 engine that gets 10 miles per gallon.  It is burdensome to track the actual costs associated with these different vehicles and changes in fuel costs, let alone provide an itemized statement on how these costs were calculated.  Most employers find this method of reimbursement untenable.  Fortunately, there are other options

Can I Pay My Employees By The Mile For Their Vehicle Expenses?  

          Yes. One common road employers take to reimburse vehicle expenses is the mileage reimbursement method.  The employee keeps track of the miles he or she drives a personal vehicle for work related duties and the employer then multiplies the number of miles by the current IRS mileage reimbursement rate ($0.565 per mile for 2013), which is presumed to be sufficient,  to determine how much is owed to the employee.  (You could choose to reimburse with a different mileage rate, but would then have the burden of proving that it sufficiently reimburses for the costs incurred.)  The chosen rate takes into account factors such as depreciation, maintenance and repairs, and actual fuel costs without having to actually calculate these costs for each particular vehicle.  However, when using this method, there are additional important considerations for employers:

  • Constantly keeping track of miles is burdensome for both the employer and the employee and distracts from the core mission of an employer’s business.
  • The employer needs to provide an itemized statement for the reimbursement that includes how the reimbursement was calculated.
  • The employer needs to maintain the mileage records for at least three years.

Tedious Monthly Calculations And Recordkeeping Of Mileage For Each Of My Employees Places A Real Burden On My Staff.  Is There A Different Path I Can Take? 

          There is. The California Supreme Court has confirmed that the actual expense and mileage reimbursement methods discussed above are not the only acceptable ways to reimburse employees for vehicle expenses.  Instead, you may also pay employees additional compensation in the form of an increased base salary, increased commissions, lump-sum payments such as a per diem, a car allowance or a gas stipend to cover vehicle expenses.  This alternative method of reimbursement has several potential advantages including increased ability to forecast business expenses, simplified payroll calculations, and decreased need to collect and maintain records regarding employee vehicle expenses. 

If you chooses this route, there are a few things to keep in mind:

  • You must designate which portion of the employee’s wages are intended to cover vehicle expenses.  Employers should have a written policy that specifically identifies how the expenses are to be reimbursed (through a lump sum, increase in salary, etc.), and distribute that policy to employees before implementing it.
  • The additional compensation, regardless of what form it takes, must be sufficient to cover the employee’s anticipated expenses after payroll deductions are taken from that compensation. 
  • It is also a good idea to have a mechanism in place where an employee can seek additional reimbursement of expenses if the employee ends up significantly exceeding the number of miles that he or she normally drives in a work month.

Workplace Solutions:  All California employers should maintain written policies that address reimbursement of their employees’ necessary business expenditures.  While it may seem that this is just another administrative nightmare facing your company, those policies can be focused to meet the needs of your company.  Reviewing and tailoring your expense reimbursement policies with the assistance of counsel can streamline the reimbursement process for your staff and prevent headaches down the road.