Balancing employee privacy rights and an employer's right to monitor its workplace is a challenge. In Hernandez v. Hillsides, Inc., the California Supreme Court clarified the law in this area and articulated important principles regarding workplace privacy.

The defendant employer ran a nonprofit residential facility for neglected and abused children. When the facility director learned that company computers were being used after hours to view pornography, he installed a hidden video surveillance system in the shared office of the two female plaintiffs in an attempt to catch the offender. The plaintiffs' office was chosen for surveillance because one of their computers had been used for prohibited web surfing; however, neither plaintiff was suspected of any inappropriate conduct. On three occasions over a three week period, the director activated the video surveillance system after the plaintiffs left work for the day, and disabled the system before they returned the next day. The plaintiffs were not at risk of being monitored or recorded and were never actually filmed.

The plaintiffs later discovered the hidden video surveillance system, and sued Hillsides for invasion of privacy. The trial court dismissed the case. However, a court of appeal reversed, finding that the mere presence of the surveillance equipment in plaintiffs' office created a triable issue on their privacy claims. The California Supreme Court reversed and dismissed the case, holding that, under the circumstances, "no reasonable jury could find in plaintiffs' favor."  

To succeed on an invasion of privacy claim, a plaintiff must prove that he or she had a reasonable expectation of privacy, and an intrusion on that privacy occurred that was highly offensive to a reasonable person. In Hillsides, the court first confirmed that within the workplace, employees may possess certain privacy rights. For example, an enclosed, lockable office with blinds that can be drawn "generates legitimate expectations that not all activities performed behind closed doors would be clerical and work related." In that regard, the court found that Hillsides intruded upon the plaintiffs' reasonable expectation of privacy because the plaintiffs could not have expected that they would "be the subject of televised spying and secret filming by their employer."

However, the court also found that the intrusion was not highly offensive. First, the intrusion was limited, as the camera was aimed only at a desk and computer workstation, access to the surveillance equipment was both secure and limited and the surveillance occurred outside of regular business hours. Second, Hillsides had legitimate business reasons for conducting the monitoring, including its effort to curb abuse of company computers and Internet access, which in turn could expose the company "to legal liability from various quarters." The court also held that Hillsides was not required to use "less intrusive means" (such as software filtering programs or heightened enforcement of its password protection policy) to accomplish its objectives.

Despite finding no invasion of privacy in this case, the court was quick to point out that it appreciated the "dismay" the plaintiffs felt upon discovery of the surveillance system, and that the decision is "not meant to encourage such surveillance measures, particularly in the absence of adequate notice to persons within camera range that their actions may be viewed and taped."

Employers must be particularly careful when undertaking any activities that may infringe upon work areas where employees may have a reasonable expectation of privacy. Monitoring of any kind should be supported by legitimate business reasons, and employees should receive clear notice that such monitoring may occur.