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The Notice of Electronic Monitoring Act ("NEMA") is rapidly working its way through Congress and may well become law before year-end. NEMA will regulate all electronic monitoring in the workplace. According to the American Management Association's ("AMA") latest survey, three quarters of all large US companies monitor employees' e-mail, computer files, and phone calls. This is a twofold increase in employee monitoring since the AMA's 1997 survey.

NEMA requires employers to notify their employees of any monitoring of communications or computer usage prior to monitoring. It covers reading or scanning of employee e-mail, keystroke monitoring, or programs that monitor employee Internet usage. The requisite notice must be clear, conspicuous, and given annually or whenever the employer's policies change. The notice must also specify the frequency of the monitoring, the kinds of information likely to be monitored, how monitoring will be accomplished, and how the monitored information will be stored, used and disclosed.

Violation of the Act will allow for a minimum of $5,000 in liquidated damages, punitive damages and recovery of attorney's fees. Damages are capped at $20,000 per employee and $500,000 per incident. There are no criminal penalties.

NEMA provides a narrow exception to its stringent notice requirements. An employer may monitor without notice if the employer reasonably believes a particular employee is engaged in conduct that significantly harms the employer or another employee and electronic monitoring will provide evidence of the harm. This exception entails a fact-intensive inquiry which will, in all likelihood, generate more litigation as employer and employee counsel dispute the alleged harm threatened and the employer's reasonable belief concerning that harm. Further, because of the fact intensive nature of this exception, disputes concerning this provision will not be resolved during pre-trial motions, but rather, will be left to juries to decide at trial.

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