Information Security: Not Without Its Limitations
The third of a three-part series explores the risks on both the employer and employee sides that come with BYOD.
Remember back when mobile devices started appearing everywhere? Back when the Foo Fighters were at the height of their popularity, when Tina Fey, Jimmy Fallon, Seth Myers and Amy Poehler were all regulars on Saturday Night Live, I , for one, had two devices. I used one as a mobile phone and the other as a mobile data device. My techie friends convinced me that I only needed one, and reluctantly I agreed. They were right; I only needed one. But I wasn't then -- or now -- running a multi-employee operation where things are very, very different.
About the same time, clients of mine and consultants from around the country started talking about the advantages of permitting employees to use their own, non-enterprise-owned mobile devices for work. For starters, regardless of what the employer preferred, employees were using their own devices anyway -- most often, the employee-owned devices were sexier and had greater functionality than the devices the employer offered. With a shrug and acknowledgment that if you can't beat 'em, join 'em, enterprises from all sectors of the economy moved to adapt policies and procedures for the new normal of mobile device management -- either employee-owned and employer-used, or employer-owned and employee-used.
At the time, we agonized over issues of company security, information ownership, intellectual property, and tax policy. While these were, and still are, all valid concerns, it now appears that the concept of bringing your own device (BYOD) to work, and using the same device for both work and personal communications and storage, has fallen out of favor because the conflicting concepts of enterprise security and personal privacy now outweigh the convenience of having a single device.Varying Concerns
First, as major system hacks have become almost commonplace, information security from the employer's perspective has become a much more critical issue than it ever was. (If you want to be terrified, check out www.informationisbeautiful.net to see a graphic display of the number and volume of data hacks over the past few years.) Enterprises -- particularly those that are publicly traded -- have additional obligations to maintain a high level of not only security, but knowledge of the processes and protections that exist not only in house, but between the enterprise and those with whom it has contact on the outside. Federal law, including, but not limited to Sarbanes-Oxley, absolutely requires it. In addition, senior officers have personal liability which tends to force them to focus on the issue.
Employers and enterprises generally have other obligations that are a function of the kind of work they perform. Consider, at a minimum, HIPAA, which may contain perhaps the most stringent protections of private data that's resident in the enterprise system. It's no longer just credit card information that infiltrators are seeking. It's often personal information -- notably medical and financial -- which can prove more valuable than a single credit card that can quickly be cancelled. Further, although the pretexting scandal at Hewlett-Packard occurred almost 10 years ago (when private investigators were caught searching through trash -- both paper and electronic -- in an attempt to identify an internal information leak), in fact, as recently as this year, enterprising spies have become increasingly brave and creative. Thankfully, so too has law enforcement.
Corporate spying has even hit America's game, with a former official of the St. Louis Cardinals pleading guilty in January of this year to charges relating to his breaking into the network of the Houston Astros. The alleged motivation was to secure highly confidential database information, including scouting reports and other highly proprietary statistics from an arch-rival for competitive purposes. The New York Times has suggested that the attack was motivated by revenge against a former Cardinals executive who had been "successful and polarizing," but who had left St. Louis for Houston where he has been a successful general manager. But I digress.
Other major considerations for employers to weigh include issues related to E-Discovery, where very detailed rules apply to document protection, retention, and destruction. It's very difficult (read: impossible) for the enterprise to protect data if it's gone off with an employee, ex-employee or contractor on that individual's privately owned device. The increasing reliance on electronic information has only made E-Discovery rules and processes more important than ever.
Additionally, employers must also weigh employment law concerns. When does overtime pay kick in when employees are contacted beyond work hours for work-related purposes? The Fair Labor Standards Act (FLSA) requires that non-exempt employees be paid for any time during a given work week when they work more than 40 hours unless that amount of time is minimal. In the 2014 decision in the (long but interesting) case of Mohammadi v. Nwabuisi, an employer was found liable for not compensating an employee for overtime work even though the work performed was done on an employee-owned device.
Finally, changes to the tax code were made in 2011 regarding reimbursement of mobile device expenses that continue to apply. As long as: 1) the device is necessary for the employee to perform his/her work; and 2) "substantial business reasons" exist for the employee to have such a device other than strictly as a vehicle for additional compensation, such reimbursement will not be deemed as income. The only stipulation is that even if the employer chooses to reimburse the employee for 100% of the cost of service, the reimbursable service cost -- even flat rate service -- must be reasonable for the business need.
The IRS has defined "substantial business reasons" to include 1) when the employer needs to contact the employee at all times for work-related emergencies; 2) when the employer requires that employee be available to speak with clients when the employee is away from the office; or 3) when the employee needs to speak with clients located in other time zones outside the employee's normal work day.
Michael Finneran, a well-respected wireless expert and prognosticator, assessed the situation this way: Organizations that have approached BYOD in a business-like fashion with adequate security planning, a well thought-out written mobility policy and a reimbursement plan acceptable to users have fared well. Unfortunately there are still many organizations that haven't taken those steps, and they still face unnecessary legal and security exposures."
The takeaway is this: BYOD has risks on both the employer and employee side. But an entity that's willing to consider the issues and address and revise them as circumstances change, will be well served.
For Mr. G., who taught me that using the right word in the right place is essential to any good piece of writing.