Employers have recourse for deletion of important files by exiting employee

By G. Phillip Shuler

A departing employee who scrubs clean the hard drive of an employer-provided computer may face civil and potentially criminal liability under the federal Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq.

Employers thus have a potential new tool to deal with malicious departing employees.

In International Airport Centers, O.K. v. Citron, the plaintiff employer provided its employee with a laptop computer for business use. Citrin's job was to find real estate locations for International Airport Centers (IAC) to purchase and he entered information on prospective properties onto the IAC laptop given to him.

Just before quitting his job to start a competing business and before returning the employer's computer, Citrin used a "secure-eraser" program to permanently delete files on the laptop.

According to the complaint, the deleted files included work-related materials as well as evidence of the employee's disloyalty in planning a competing business while still working for IAC.

The district court in the Northern District of Illinois dismissed the Computer Fraud and Abuse Act claim, holding that the installation of a program to delete the material off the computer did not constitute a "transmission" as contemplated by the Act. The Computer Fraud and Abuse Act imposes liability upon a person who "knowingly causes the transmission of a program, information, code or command, and as a result of such conduct intentionally causes damage without authorization to a protected computer."

The Seventh Circuit, in a 3-0 decision authored by Judge Richard Posner, reversed the decision of the lower court and disagreed with the conclusion by the trial court that a "transmission" under the Computer Fraud and Abuse Act requires physical "shipment or delivery of a code or a program." The Seventh Circuit concluded that how the transmission of the program onto the computer occurred was unimportant.

The court found that the installation of the program, through a download over the Internet, or through use of a CD or disk, was enough to constitute a "transmission." The court also concluded that a contractual provision allowing Citrin to "return or destroy" data was nullified by his disloyalty in planning a new business and, in any event, this provision was not intended to cover malicious destruction of irretrievable and important business information.

Instead, this provision only was intended as a control over routine data. It also addressed the issue of Citrin's "authorization" to access the computer, concluding that such authorization (which could be a defense under the act) ended when he engaged in self-dealing.

In the era of laptops, PDAs and the Internet, employers faced with disloyal departing employees should keep in mind the Computer Fraud and Abuse Act and its extension in Citrin to employee misuse of technology. While the Act does not provide for exemplary damages or attorneys fees, it does permit federal court jurisdiction and injunctive remedies, as well as compensatory damages, and also raises the spectre of criminal prosecution, since the act has both criminal and civil components.

Construction supervisors face charges of harboring illegal immigrants. Four construction site supervisors employed by northern Kentucky's largest home builder will appear in federal court to face charges that they knowingly harbored unauthorized immigrants for commercial advantage or private financial gain United States v. Wit, (E.D. Ky.), No. 2:06-mj-02058-JGW, 5/8/06).

The four Fischer Home employees, along with 76 suspected undocumented aliens, were arrested May 9 following a two-year investigation by the Immigration and Customs Enforcement Division of the U.S. Department of Homeland Security (ICE). Three Hispanic subcontractors for Fischer Homes, accused of providing most of the illegal workers, were arrested the following day.

Fischer Homes, based in Crestview Hills, Ky., has denied any wrongdoing, but federal investigators say the firm used subcontractors to separate itself from workers it knew to be illegal. The alleged undocumented immigrants were working as laborers at three Fisher Homes' developments in Hebron, Union and Florence, Ky. All were arrested in pre-dawn raids at apartment complexes where they lived or at the construction sites.

According to the court affidavit outlining the charges filed by senior ICE special agent James Bellamy, one subcontractor used his companies as a buffer between Fischer Homes and the undocumented workers, who laid bricks, installed roofs, did framing, and hung drywall for the local developer.

This subcontractor, Robert Pratt, also pro vided housing for these workers and coordinated all Fischer Homes' employment with the four supervisors, which indicates that they were aware of "Pratt's business structure," according to Bellamy's affidavit.

While "an important indicator" that Fischer Homes had knowledge that Pratt was using his construction companies "to provide a layer between Fischer and the illegal alien subcontractors and workers," according to the affidavit, "this layer does not relieve Fischer of the responsibility to ensure that their contractors are employing a legal workforce." Court documents indicate that the workers were paid $7 to $10 an hour. Area labor organizations indicate average pay for union carpenters and drywallers was $20.45 and $17.93, respectively, six years ago, with their nonunion counterparts earning $13.51 and $12.19.

At their initial court appearance May 9, the four Fischer Homes supervisors pleaded not guilty to the charges and were released on their own recognizance. If convicted, each faces a maximum sentence of 10 years in prison and a $250,000 fine. The three subcontractors pleaded not guilty on May 12 and were released on bond. The 76 suspected undocumented immigrants remain in the custody of the U.S. Marshals Service, charged with entering the country illegally; hearings for most are scheduled for May 24.

Each faces a maximum sentence of six months in prison and deportation.

"ICE has no tolerance for corporate supervisors who harbor illegal aliens for their workforce and deny labor opportunities for legitimate American employees," assistant secretary of the agency, Julie L. Myers, said in a statement. "This enforcement action demonstrates how we will use all our investigative tools to bring these individuals to justice, no matter how large or small the company."

Fischer Homes President Robert T. Hawksley, said in a May 10 statement that the company rigorously screens all employees, a process that includes citizenship verification, and requires "all subcontractors to sign a comprehensive document that warrants and represents they will use no illegal immigrants as employees." Hawksley said the company does not condone the hiring or use of undocumented immigrants, adding that Fischer Homes supports "all governmental employment regulations."

Gulf Coast employers liable for overtime to improperly classified independent contractors. Three companies have agreed to pay $362,673 in overtime wages to 680 employees who were misclassified as independent contractors while working to rebuild casinos in the Gulf Coast region damaged by last year's hurricanes, according to a June 12 statement from the Department of Labor's (DOL) regional office in Atlanta.

The department's Wage and Hour Division found that the three companies - Remza Drywall & Construction Inc. of Lewisville, Texas, Atlantida Construction Inc. of Duluth, Ga., and H&H LLC of Biloxi, Miss. - failed to pay employees 1.5 times their regular rate of pay for working more than 40 hours per week.

According to the DOL, all three firms misclassified employees as independent contractors and failed to pay the required overtime compensation. The settlements were reached in the latter part of May, a DOL representative told BNA. The settlements covered 451 employees at Remza, 182 employees at Atlantida and 47 employees at H&H, she added.

Investigators from the DOL's Wage and Hour Division found that the workers did not meet the legal test for independent status, DOL said. DOL's regional office is conducting an ongoing hurricane-related initiative "to better protect workers helping with hurricane recovery and rebuilding," Secretary of Labor Elaine L. Chao said in a statement. "This stepped-up and targeted enforcement has resulted in the recovery of more than $362,000 in back wages for these workers."