Downloading Issues

Related Terms: Internet Security

Downloading issues are the risks and liabilities to which a small business may be exposed as a result of providing Internet access and e-mail service to its employees. Many companies provide Internet access to employees for legitimate business purposes—such as conducting research—and find that such access improves productivity. But connecting employees to the Internet also brings up a number of potential problems for small businesses. "In ever increasing numbers, employers are providing employees with access to voice mail, e-mail, facsimile machines, cellular telephones, the Internet, intranets, laptop computers, and integrated computer networks," Lisa Berg wrote in South Florida Business Journal. "While the productivity benefits of an electronic workplace are undisputed, companies must take steps to guard against the enormous risks associated with it."

Many of the potential problems associated with employee Internet access involve downloading of information. For example, employees may download copyrighted software, offensive material, or files that are infected with harmful computer viruses. The small business may be legally liable for damages resulting from claims of copyright infringement, racial discrimination, or sexual harassment based on such downloads. Another potential problem in granting employees access to the Internet is personal use that detracts from productivity. According to Debbie Kelley, writing in The Gazette (Colorado Springs, CO), 85 percent of employees use computers at work for fun. "Problems arise when personal activity on the work computer affects employee productivity," Kelley writes. "Websense Inc., a San Diego based seller of Internet-filtering software, estimates that Internet misuse in the workplace costs American companies more than $178 billion annually in lost productivity. That translates to more than $5,000 per employee each year."

A rapidly increasing number of companies are responding to such risks by monitoring their employees' online activities. According to a survey cited in Training, 54 percent of companies monitor their employees' Internet connections, while 38 percent monitor their employees' e-mail. "Monitoring is essential," software company CEO Ray Boelig told Sarah Boehle in Training. "Organizations need to look at the proper use of their assets." At the same time, however, wholesale monitoring of employees' communications can cause a different set of problems for small businesses. For example, employers can be held liable for invasions of privacy under the Electronic Communications Decency Act of 1996. Furthermore, employers who develop a reputation for excessive monitoring of employee communications may have problems attracting and retaining today's valuable tech-savvy workers. Finally, it takes time to monitor employees communications, time that could be used in any number of more productive tasks.

RISKS ASSOCIATED WITH EMPLOYEE INTERNET USE

In his book Clicking Through: A Survival Guide for Bringing Your Company Online, Jonathan Ezor mentioned several risks companies might face as a result of employee Internet use. These risks include liability for copyright infringement resulting from downloads of proprietary documents or software; criminal liability for online gambling, fraudulent acts committed online, or downloads of illegal materials; exposure to sexual harassment or racial discrimination charges based on downloads of offensive materials; and breaches of company confidentiality or security.

Internet users have an implied license to copy the information for the purpose of viewing it on their computer screens. But this implied license applies only to a single user and a one-time use. Many people, failing to understand this condition, save copyrighted documents or software to a hard drive and reuse them without permission. In addition, some Web sites—known as pirate sites—routinely display and distribute information for which they do not hold copyright. A small business's employees might download proprietary software from a pirate site and mistakenly believe that they are allowed to use it. Since the rightful copyright owners have little legal recourse against the pirate sites, which are often operated by poor students, they may instead choose to enforce their rights against larger offenders, like businesses. Small businesses can be held liable for copyright infringement if illegal software is found on company computers, or even if employees use network PCs to play pirated music or watch pirated movies, and the monetary damages can be substantial.

Small businesses may also be exposed to criminal liability resulting from employee Internet use. One such risk involves online gambling. Ezor noted that online casinos are commonplace, which may tempt employees to place bets using company machines during work hours. As with other types of gambling, a wide range of state laws and local regulations apply to this practice. Small businesses may be held liable when employees break these laws. In fact, regulators, casino debt collectors, and affected family members are likely to make the company the target of lawsuits rather than the individual employee.

There are several other ways in which employees' online activities may expose a small business to criminal liability. For example, the company may be implicated if an employee commits stock fraud by posting insider information or misleading data on investment Web sites. Likewise, the company may be responsible if an employee uses the Internet connection to conduct electronic commerce and makes false claims about the products sold. Employees may also use workplace computers to acquire documents or images that are illegal to produce and possess. Examples include child pornography, military secrets, bomb-making instructions, or data encryption algorithms (which cannot legally be sent overseas). Many people are not aware of the distinctions between legal and illegal materials, so downloading from the Internet may put employees at risk of arrest or imprisonment. Furthermore, as Ezor pointed out, companies may be under a legal obligation to report an employee's illegal online activities, regardless of whether doing so might make the company liable to prosecution as well.

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