How to Monitor Employees for Regulatory Compliance without Violating Employee Privacy

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Privacy Matters:
How to Monitor Employees for Regulatory Compliance
without Violating Employee Privacy
An ObserveIT Whitepaper | Gabriel Friedlander

Executive Summary
Under the increasing burden of regulatory compliance such as PCI, HIPAA, SOX, NERC and ISO 27001, companies
are more and more seeking some form of monitoring platform for recording employee activity. Not surprisingly,
this has been met with concern on the part of employees, who fear that employee monitoring is stepping on
their rights to privacy in the workplace.

However, a combination of transparency and common sense can bridge these two seemingly diametric
positions. After all, if an employer seeks to simply meet regulatory compliance, and can do so without infringing
on employee rights, then botdh sides will benefit from greater efficiency, clarity and profitability.

This whitepaper highlights the legal issues driving the employer and employee concerns, and follows that up
with a detailed checklist of how to effectively deploy a monitoring platform, achieve regulatory compliance and
maintain employee trust and support, all at once.

Opposing Forces?:
Finding Common Ground in the Employee Monitoring Argument
Employee’s Fears
The advent of technology in the workplace has made it much more feasible than ever before for employers to
electronically monitor the activities of their employees, including phone conversation recordings, video
recordings of the workplace premises and computer activity recording.

The threat of being constantly monitored immediately brings to mind (thoughts of Big Brother: “We are being
spied on, so that the boss can squeeze even more work out of us!” And employees indeed are right in being
concerned about their own personal privacy.

Unfortunately, these concerns often overshadow the larger issue at hand. For this reason, it is critical that
employers take great efforts in order to ease the employee concerns.

Employer’s Needs
In reality, employee efficiency is a much smaller concern to employees than the much more threatening issue of
corporate accountability and security of sensitive information.

Privacy Matters: How to Monitor Employees for Regulatory Compliance without Violating Employee Privacy
© copyright 2011 ObserveIT Ltd. | www.observeit-sys.com

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Of course, employees would like to improve efficiency wherever possible. But in more cases than not, employee
training, trust and standard management oversight are effectively applied to meet these needs.

Accountability, however, is not so easily managed away. In almost every industry segment, compliance
regulations such as PCI, SOX, HIPAA, HITECH, NERC, ISO 27001 mandate very explicit accountability of all user
access to sensitive data. And even where regulations are not applicable, internal security controls will often
raise the exact same needs.

Recording user activity is the most straightforward way to answer this need. Here, we focus on the aspect of
computer activity recording, leaving aside the productivity orientation of phone conversation recording and the
physical security orientation of closed-circuit video.

The Legal Factors
Regulatory Mandates for User Tracking
While each compliance regulation is unique in its requirements, the core need surrounding sensitive data
typically boils down to: “Make sure your data is secure, and make sure you can show exactly who did what do
the data.” Some examples of accountability requirements include:

 PCI-DSS
The Payment Card Industry Data Security Standard regulation provides 12 high-level requirements covering
a wide range of issues related to credit card and financial information management, from access rights to
data storage to audit monitoring. These include “Requirement 10: Track and monitor all access to network
resources and cardholder data”, with explicit details of what must be done. For example, Section 10.2
requires parties to “Implement automated audit trails for all system components to reconstruct the
following events: … 10.2.2 All actions taken by any individual with root or administrative privileges … 10.2.7
Creation and deletion of system-level objects.”

 HIPAA & HITECH
The U.S. Health Insurance Portability and Accountability Act (HIPAA) specifies how organizations should
manage Protected Health Information (PHI). This includes Security provisions (Subpart C) and Privacy
provisions (Subpart E). These requirements are then further detailed in the subsequent Health Information
Technology for Economic and Clinical Health Act (HITECH), which requires entities to “clearly identify
employees and business partners” who access PHI, to “ensure that the data within its systems has not been
changed or erased in an unauthorized manner”, and “make documentation of their HIPAA practices
available to the government to determine compliance.”

 ISO 27001
ISO 27001 is an Information Security Management System (ISMS) standard published by the International
Organization for Standardization (ISO). Businesses that implement ISO 27001 can demonstrate reliable
security practices to customers and business partners, thus establishing trust, meeting regulatory oversight
requirements of many nations and saving costs by reducing the needs for ad hoc auditing processes. ISO
27001 calls on any compliant business to examine information security risks; implement comprehensive
information security controls for risk treatment; and incorporate management processes in order to ensure
the controls on an ongoing basis.


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 SOX
The U.S. Sarbanes-Oxley Act (SOX) is a wide-ranging act that requires all publicly traded companies to
deploy internal controls for accountability and integrity of the financial reporting process. This broad issue
includes Section 404: Assessment of internal control, which many assess to be the most difficult and costly
to satisfy. Fulfilling Section 404 is often achieved by adopting the COSO Framework, which include methods
for Risk Assessment, Control Activities, and Monitoring, among others. “If management fails to establish a
monitoring process for its internal control system, either in the form of independent evaluations or ongoing
monitoring, then a satisfactory rating for this control component normally would be inappropriate.”

Employee Rights in the Workplace
The right of employees to a reasonable level of privacy is quite clear, on a moral as well as legal ground. Laws
are in place in most countries on this matter. Some examples include:

 USA (Federal Law): Electronic Communications Privacy Act (ECPA)
ECPA focuses primarily on the issue of government and law enforcement access to communications, but
also includes Title II, which protects any electronic communications that are maintained in storage, typically
in the form of computer-stored messages. Employee communications are protected in theory, but it is
quite easy for employers to provide notice or show that employee actions are not in the company’s
“interest”, providing the legal right to monitor employees.

 USA (State law)
Many states enact additional restrictions or clarification via state laws. While these vary from state to state,
the heart of most of the restrictions remain in the realm of personal privacy, such as California’s Workplace
Surveillance Labor Code Section 435, which prohibits video surveillance in areas that employees can
reasonably expect privacy, such as changing rooms and restrooms. Some regulations extend these privacy
rights to computer messages, but again a certain vagueness remains regarding what is considered private
data remains. (ex: Personal messages posted on a private on-line forum during break time may be private,
but what if the forum is public, or what it is done during work hours, etc.)

 Canada: Personal Information Protection and Electronic Documents Act (PIPEDA)
As in the US laws, PIPEDA also calls for employee privacy rights, but leaves a somewhat vague definition of
when it is justified to monitor employee computer activity. The Office of the Privacy Commissioner
provides some guidelines, which call on the employer to show that the surveillance is necessary to meet a
particular need; that the surveillance will likely be effective; that privacy loss is proportional to the benefit
gained; and that no reasonable, less-invasive methods exist to meet the need.

 UK: Human Rights Act
The HRA allows employers monitor communications within the workplace only as the employee is aware of
the monitoring before it takes place. Furthermore, employees have the right to see any personal
information held about them.

 European Union: Data Protection Directive 95/46/EC
This Data Protection Directive provides a wide range of guidelines for privacy assurance, without significant
focus specifically on the employer-employee relationship within this area. The net result, as in the
countries listed above, is again a situation where reasonable employee monitoring can be justified as long
as there is a proper trail of Notification, Purpose, Consent, Security, Disclosure, Access and Accountability.


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User Monitoring Checklist
Given the push-pull effect of regulatory mandates for monitoring on one hand, and personal privacy protection
on the other, some balk at the task of implementing a monitoring platform that is legal, compliant and
maintains the good will of employees. But threading this needle isn’t as hard as it may sound. Here’s how:

State upfront the exact goals Reinforce how accountability benefits the company,
Let your employees know ahead of time why you and tie this to a benefit to each employee
need to implement some form of monitoring. You get Instead of making it a burden, show employees how
good will when employees understand your needs. compliance will make work more efficient or
To this end, be sure that you communicate in a clear profitable. Highlight points such as the elimination of
way. Don’t distribute a legal-sounding treatise about ad-hoc audit research (which is usually a highly-
regulatory oversight. Tell them in your own words, stressful activity) and improved safety of the
using examples of the type of actions that you must employee’s personal data from illegal activities.
be accountable for to auditors.
Document the downside
Let them know what is OK, and establish trust Make sure that everyone knows what will happen if
Clarify what is acceptable, when personal activity is they break corporate policy. You may not care if a
OK, and show how you respect and even encourage particular employee is shocked that s/he is being
it. If they know that Activity A is a no-no, but Activity fired for a particular violation. But what about all the
B is OK, they will feel more empowered and confident co-workers? You don’t want them in shock or angry.
in doing their day-to-day work. Again, avoid the It is better for all if their reaction is “Well, s/he knew
threatening legal-speak, and keep it personal. that this would be the result, because we all learned
it in our policy training session!”
Keep reminding them about policies and monitoring
activity Make all communications a corporate message, not
Any good will or clarity is lost if the info is hidden an IT or Legal message
among thousands of pages of corporate policy Compliance issues are a company-wide concern, not
manuals that are rarely looked at. If you can deliver a specific IT concern or a Legal Department concern.
the message in a friendly, informative manner Plus, many employees are scared of the technology
(preferably while the user is initiating a recordable team, and also of the lawyers. So make all the
activity), then you can be sure that the employee is communications from a corporate perspective, not
aware. from any specific department. This delivers a clear
message that this is a clearly defined business goal,
Tell employees how you will be monitoring them not something driven by some crazy IT manager just
Let everyone know what is being recorded. Don’t because s/he has the ability to do so.
worry about exposing potential workarounds, and
don’t try to keep the recording policy a secret, in Be Consistent
hopes of improving security. Anyone who might try to Make sure that your monitoring activities, as well as
work around the system will find the weak points any enforcement of policy violation, are all
anyway, so you are better off being upfront in letting implemented on a completely transparent and even-
everyone know exactly how it works. handed manner. Employees should know that they
are not being singled out for any reason


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Solving both compliance and privacy:
An effective solution for monitoring user activity that meets legal requirements
Visual On-Screen Recording + Textual Summary Logs: Capturing the information you need
The purpose of deploying a monitoring platform is to know what took place. With ObserveIT, you have instant
audit logs and video replay that show precisely what occurred. For any issue investigation, each log entry event
is linked to a full video replay of the user session. View an exact playback of user activity, as if you were looking
over the user’s shoulder as it took place. With this level of accountability, there is no question as to what
transpired, making any attempts of repudiation or denial utterly groundless.

WHAT DID THE USER DO?
A human-understandable list
of every user action

Salesforce.com
UPS.com Quantum View
Cloud Apps
Cloud Apps
MagicISO CD/DVD Manager
Microsoft Visual Studio 2010
Commercial S/W with no logs
Skype
CustomerDetails CRM Legacy software
USER SESSION REPLAY:
Bulletproof evidence
Who, When, Where

CAPTURES ALL ACTIONS:
Mouse movement, text entry, UI interaction,
window activity

PLAYBACK NAVIGATION:
Move quickly between apps
that the user ran

Just-in-time policy reminders
Before authorizing the user to access the system, ObserveIT requires that policy status information be read and
confirmed. This eliminates the need to handle policy update validation in a separate process: No more email
trees, no more tracking spreadsheets to make sure everyone got it.

REMINDER: All activities on this computer a
being recorded.
NOTE: Corporate policy states that
employees should not open any Customer
Details pages unless necessary for handling
POLICY MESSAGING:
an explicit customer request. User must acknowledge


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Excluding private activities from being recorded
In order to maintain employee trust and to meet the legal rights of employees, you may want to enable
employees to use certain applications, such as Skype or instant messaging apps, without fear of being recorded.
ObserveIT offers fully granular policy rules that give you the monitoring oversight that you need, while ensuring
that employees still have necessary privacy.

GRANULAR RULES
Include / Exclude policy
per user group or application

Consistent monitoring policy rules
The policy rules that are defined in ObserveIT are deployed consistently across all user groups, users, computers
and applications. It is easy to specify balanced rules that ensure consistency and prevent any sense of singling
out a particular employee or group of employees.

Protecting access to user recordings
ObserveIT provides a secure platform for storing all user recordings, and it also provides a fully-auditable
process for accessing these recordings.

A clearly-defined access control hierarchy explicitly specifies who can replay which recordings. Thus, some
administrators can have access to only some recordings, according to what application was being used, or by
which employee, or on what computers.

ObserveIT monitors itself as well, so any user access to view an employee recording will also be logged and
reviewable.

Enabling employee enquiries
ObserveIT enables you to create detailed reports per user or per computer that can be delivered by email. In
addition, user session recordings can be exported and delivered to employees, thus documenting exactly what is
being recorded when they explicitly request details, as per their rights according to the the UK WRA and other
similar laws.


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Conclusion
Meeting compliance regulations requires a detailed and orderly audit of user activity that can affect sensitive
data. Achieving this level of audit details requires a certain level of employee monitoring. However, this can be
achieved without losing trust of employees and without infringing on their right to privacy.

Successful implementation of such an auditing process requires building trust and faith among employees. This
can be achieved with transparency and clarity of all monitoring policies, combined with a monitoring solution
that delivers explicit audit details but allows for proper policy rules and security oversight.

ObserveIT’s software platform for user activity recording is a central pillar in any such monitoring strategy.

Benefits of using ObserveIT within any monitoring system include:

 Accountability of all activities that can affect sensitive data.
 Reduced costs to generate compliance reports, with less effort, and faster turnaround time
 Unequivocal proof of user activity, guaranteeing authentication and non-repudiation
 Greater employee trust that comes from a transparent and consistent platform

About ObserveIT
ObserveIT auditing software acts like a security camera on your servers. It provides bulletproof video evidence
of user sessions, significantly shortening investigation time.

Every action performed by remote vendors, developers, sysadmins, business users or privileged users is
recorded. Video recordings include mouse click, app usage and keystrokes. Each time a security event is
unclear, simply replay the video, just as if you were looking over the user’s shoulder.

ObserveIT is the perfect solution for 3rd Party Vendor Monitoring, Compliance Report Automation and Root
Cause Analysis.

Founded in 2006, ObserveIT has a worldwide customer base that spans many industry segments including
finance, healthcare, manufacturing, telecom, government and IT services.

For more information, please contact ObserveIT at:
www.observeit-sys.com
sales@observeit-sys.com
US Phone: 1-800-687-0137
Int’l Phone: +972-3-648-0614


How to Monitor Employees for Regulatory Compliance without Violating Employee Privacy

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