Employers Need to Protect Themselves Against Criminal Charges and Financial Losses Resulting from Illegal Employee Faxing
Employees sending unsolicited faxes can cost employers hundreds of thousands of dollars
PLANO, TX – JANUARY 2, 2003 --- Richard L. Armstrong & Associates, a business boutique law firm in Plano, TX, said employers are at risk for criminal charges and significant financial loss from employees that send unsolicited faxes in violation of the growing number of laws designed to stop unwanted faxes.
As 2004 begins companies should institute a formal employee policy regarding the distribution of unsolicited faxes that requires employees to sign a formal release of liability making workers responsible for fines resulting from their actions in violation of these laws. In addition, they need to make the policy part of their personnel manuals, company orientations and post warning signs on or near company fax machines.
The practice of advertising goods or services through unsolicited faxes has been illegal since 1991, however, a multi-million dollar industry in mass faxing nonetheless continues to send unsolicited faxes on behalf of its clients. In 1999, the Federal Communications Commission (FCC) announced it had received nearly 1,300 complaints from consumers about unsolicited faxes. As a result, the FCC declared that it would step-up enforcement of the law and educate consumers about their rights under the law. During recent years, the FCC, state attorney generals, and consumer groups have initiated litigation against companies engaged in mass faxing of unsolicited advertising, resulting in large verdicts and settlements.
"Employers need to understand they are at risk for criminal charges, fines and other punishments for employee generated faxes that might violate any of the existing laws prohibiting such activity,” said Richard L. Armstrong of Richard L Armstrong & Associates. “One unsolicited fax could result in fines up to $1,500 and a criminal charge against the employer. Multiply that by hundreds of employees and then hundreds or thousands of faxes.”
The Telephone Consumer Protection Act (TCPA), 47 U.S.C. Section 277, prohibits unsolicited fax advertisements. The federal law also applies to automated telephone dialing systems and prerecorded void messages. Damages are a minimum of $500 per fax and if the violation is willful, damages can be up to $1,500 per fax. Remedies include both monetary damages and injunctions against future unsolicited faxes. Not only can the fax sender be cited, but the entity transmitting the fax can be cited as well if the transmitter has “a high degree of involvement or actual notice of an illegal use as well high degree of notice” and took no action to prevent such transmissions.
Not all unsolicited faxes are prohibited by the laws. The key is whether the unsolicited fax constitutes an “unsolicited advertisement”. There are two aspects to what constitutes and unsolicited advertisement. First, the fax must have been sent without the express prior invitation or consent for the recipient. The FCC has taken the position that an established business relationship constitutes prior consent. To be safe, document consent if it was given. Second, the fax must be “material advertising the commercial availably or quality of any property, goods or services.” Would a company press release qualify? Very likely it will not qualify, as it is “news”, and not an advertisement or solicitation to purchase goods or services. In addition, it being news has protections under the First Amendment. If a company is considering engaging in a mass unsolicited faxing campaign but thinks it doesn’t constitute an advertisement, it is recommended that their attorney be consulted.
In addition to the Federal law, many states have their own laws against unsolicited fax advertisement with comparable, and in some cases greater, penalties, including the right to court costs and attorney fees.
Below is an outline of the laws which govern the distribution of unsolicited faxes which employers need to be aware of.
Federal : Title 47, United States Code § 227 grants a private right of action to anyone who has received more than one telephone call in any 12 month period from the same entity in violation of the anti-junk-fax statute.
State: Texas Business & Commerce Code § 35.47 (f) incorporates the federal statute by reference and provides a similar right of action, with penalty of “the greater of” $500 or actual damages.
- Worse, the above can be trebled to $1500 or 3 times actual damages if committed knowingly or intentionally.
- Finally, if unsolicited faxes are made at unreasonable hours or result in charges to the recipient, it is a Class C misdemeanor.
State Law is more restrictive than federal, easier to bring, and more potentially harmful for employers.
Practical Effect to Employers
Tremendous liability and damages exposure to high volume fax advertisers; e.g., financial services; travel agencies; others.
- Because most of them use automatic dialers and deliberately target certain individuals or businesses, a finding of “knowing and intentional” is a significant risk.
Class actions are a distinct possibility because of the large numbers of individuals affected and the relatively small amount at stake for each individual complainant. It could be argued that class actions are the actual intent of the legislature.
Employees who use the fax machine for their own purposes (e.g., salesmen in a real estate office; stockbrokers) could subject their employer to significant risk of huge judgments and bankruptcy.
Only 5 employees faxing to 10 people would cost an employer $25,000 (charged on a “per incident” basis). In reality, employees usually fax to far more, and this doesn’t even include the “knowing and intentional” aspect.
What Employers Should Do
- Include section in employee manual/materials explaining the law in simple terms, including the need for a prior business relationship or contact. Test employees on knowledge of the provision, and require a signed agreement for their file.
- Penalize employees who violate, including sanctions all the way to termination.
- Post notices near fax machines
- Tell employees they will be held liable to reimburse the company for any fines resulting from violative behavior----and let them know litigation is a possibility if fines not voluntarily repaid can be withheld from paychecks and bonuses.
- Place notices on Fax Cover Sheet language stating it is company policy not to send unsolicited faxes and encouraging contact by recipient at a stated phone number if they don’t want “the fax.”
- Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM” Act), to take effect 1/1/04 does not contain a private right of action, relying solely on government enforcement
###
