How to Limit Wearable Technology's Legal Risks

​Companies may want to require employees to use "wearable technology" for productivity or health reasons, but they first must minimize their legal risks by having legitimate business reasons for requiring its use.

Legal risks of using wearable tech in the workplace include loss of privacy, wage and hour violations, and Americans with Disabilities Act (ADA) claims. These risks may be outweighed by business interests, such as ensuring employees are where they are supposed to be during business hours, are fit for duty and are aware of safety risks.

The number of wearable tech devices is supposed to double by 2021, according to Forbes. Already, smart watches that allow users to connect to the Internet and store GPS tracking information may show, for example, whether an employee accessed his or her calendar at a certain time.

Employers can use the information that an employee's wearable technology gathers—even if that employee is wearing the tech voluntarily. Say an employer wants to prove where an employee who has filed a suit against the company was at a certain time, noted Trina Fairley Barlow, an attorney with Crowell & Moring in Washington, D.C. 

Wearable technology can demonstrate if the employee attended a scheduled off-site meeting, how long the worker stayed at the meeting and where he or she went after leaving.

In addition, some companies have begun using wearable technology with applications that track productivity and have mechanisms that document how employees are spending their time, she noted. "Such information may be critical in a wage and hour employment matter, as well as in an employee termination or disciplinary matter," Barlow said.

In a noncompetition case, this type of tracking information may demonstrate whether an employee visited a competitor, she noted.

Whether tracking an employee's whereabouts during the workday to confirm that off-site tasks are being performed in a timely manner, monitoring sleep patterns to ensure that members of the sales team are properly rested leading up to the big pitch meeting, or even monitoring posture and hydration levels to determine if employees are fit for duty, technology can arm employers with a significant amount of data, noted Keith Kopplin, an attorney with Ogletree Deakins in Milwaukee.

Wearable technology can be used to warn employees who work in hazardous conditions about potential health risks, such as exposure to toxic fumes, said Philip Gordon, an attorney with Littler in Denver. Employers who use wearables for this purpose should have procedures to ensure that employees promptly respond to the warnings. If employees are required to work after the technology reveals a health risk, the employer's liability for a workplace injury would increase significantly, he observed.

Limiting the Risk of Abuse

Virtually any technology that collects personal data about employees, including wearable technology, has the potential for abuse, Gordon cautioned. Employers can reduce the risk of abuse with wearables in several ways, he noted.

First, employers should conduct a demo of the wearable technology before roll-out to understand what personal data it will collect. To the extent the technology permits adjustments to settings to limit collection of data to the information needed for work purposes, the employer should make those tweaks, he observed.

"In addition, the employer should evaluate how access to data collected can be limited to those with a need to know as well as training of authorized employees on the proper use of the information," Gordon said.

Another important risk-mitigation measure is notice. Gordon said that employees asked to don wearable technology should be provided with prior notice of the information that the technology will collect about them, how it will be used and to whom it will be disclosed.

Many breach notification laws require employers to alert employees, and in some jurisdictions state attorneys general or regulators, when workers' health information is compromised. As a result, an employer implementing wearable technology that collects health-related information should evaluate the physical, technical and administrative safeguards of the system where that information is stored, he noted.

Liability Risks

When mandating the use of wearable technology, privacy, wage and hour, and ADA risks are possible.

Even just tracking an employee's location could lead to claims for invasion of privacy, Kopplin said, adding that notice can help avert such claims. "Employers should also consider suspending geolocation and other monitoring of employees when they are off premises and off duty," he said

To further account for privacy rights, employers may want to describe how the information will be stored and when it will be destroyed, he added.

Wearables with cameras also introduce privacy issues in the workplace, said John Lai, an attorney with Fisher Phillips in Irvine, Calif.

Wearable technology could make employers vulnerable to wage and hour liability under the Fair Labor Standards Act and state law, noted Nicole Clark, co-founder of Trellis Research in Marina del Rey, Calif. She noted that California Industrial Welfare Commission defines "hours worked" as "time during which an employee is subject to control of the employer" and/or time when the employee is "suffered or permitted" to work.

The more control an employer exerts over employees, the more likely it is that an employee will be on the clock. That means any time an employee is wearing tracking technology could be considered compensable time, she said.

The same principle would arguably apply to employee's meal and rest breaks during work shifts, creating a potential minefield of wage and hour claims related to an employer's use of such technology in its workforce, Clark observed.

Wearable technology raises ADA concerns, Kopplin noted. Because some wearables gather information that could reveal the existence of a disability (e.g., by monitoring heart rate, sleep patterns, hydration or glucose levels), the monitoring employees' health through such technology could constitute a medical examination or inquiry under the ADA. Any such examinations or inquiries must be job-related and consistent with business necessity or else they are prohibited by the ADA, he said.

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Wearable technology in the workplace also can trigger National Labor Relations Act protections, such as the right of employees to use devices to record unsafe working conditions, he noted.

Employers should monitor federal, state and local legislation for possible additional regulation in this area of the law, Kopplin recommended.