It has been more than three years since a security dealer in California became involved in litigation stemming from surveillance cameras he installed in the men’s restroom of a trucking company. And sources involved in the case say there is no telling when it might finally be resolved.

The dealer had initially turned down the company’s request to install cameras in the men’s restroom – which, the company says, includes a common area – in order to catch some of its employees allegedly distributing and using drugs. Yet, through a series of events, the dealer reluctantly agreed to do the job, without a sales contract and without consulting a lawyer.

In the end, the suspected employees were caught on tape and were fired from the company. But as other employees found out about the sting and the covert cameras, they complained to management. They eventually united, hired an attorney, and filed a class-action lawsuit against the trucking company and the security dealer.

Cases like this one are not too common, but the legal consequences security dealers can face for installing CCTV or surveillance systems in certain areas are far-reaching. Whether at the federal or state level, the expectation of privacy in the locations where cameras are placed has been the underlying theme for laws regarding video surveillance.

Liability Protection Starts With Sales Contracts

The security dealer involved in the trucking company incident has been in the security industry for more than 20 years and has never been involved in a case like this before, says Rick Gombar of Gombar Insurance Services in Los Angeles, who has been following this case since the beginning.

Yet the dealer essentially risked his business and his reputation when he agreed to do the job after returning to the company for a second time to meet with the company’s president, attorney and even the local sheriff, who all insisted that placing cameras in the men’s restroom was not illegal and that it would be a good deed because it would help catch illegal activity.

The dealer knew that restrooms are considered private places and, as a result, there is an expectation of privacy. He also knew that the trucking company did not want to sign a sales contract as well as inform its employees about the placement of the cameras because they wanted to keep the operation covert. In this case, not having a sales contract prevented the dealer from being indemnified in the class-action lawsuit that was filed by more than 100 of the trucking company’s employees.

“Had he [the security dealer] had a sales contract with a third-party indemnification clause, it would have required the trucking company to indemnify him,” says Gombar. A second opinion from a qualified independent lawyer reaffirming the dealer’s initial beliefs could have also helped him.

Liability issues for surveillance installations are, to an extent, somewhat different than those related to burglar and fire alarm system installations. And the sales contracts for those systems should reflect that.

Complaints or issues with burg and fire alarm systems are usually related to system failure, resulting in property damage or loss by the third party. Issues with CCTV, however, are related more to how the system affects, or can affect, the way people conduct themselves.

As with the class-action lawsuit mentioned earlier, even if the employees had been notified beforehand that cameras would be installed in the restroom, the company would have still run the risk of violating its employees’ privacy rights, if a court rules it so. Although the company alleges that a portion of its restroom is a common area, that may not be acceptable in the eyes of the law.

Clearing the Gray Areas of Public, Private Places

Areas considered public or private vary somewhat from state to state, and there is a strong body of laws at the federal level, with the prime statutory law being The Electronic Communications Privacy Act of 1986, commonly known as the wiretap law.

In public places, some people may not like the fact that cameras can be recording their every move, but the use of continuous video surveillance in public areas does not really raise significant legal obstacles because there is no expectation of privacy. It can raise legal issues if the cameras in public areas are being used to watch someone or some activity taking place in a private area, such as through a person’s window, or if the cameras are enhanced in some way (like cameras with infrared capability, for example).

Aside from civil penalties for violating someone else’s privacy rights, there are also criminal consequences with installing video surveillance systems. (In this case, sales contracts do not protect security dealers.) The federal wiretap law provides criminal penalties aside from various state laws.

Although the class-action lawsuit with the security dealer in California is a rare yet substantial case, there have been some close calls where dealers have been partially liable of placing cameras where they shouldn’t be installed.

Most States Allow 1-Party Consent for Audio Recording

With video surveillance systems that include audio, the federal wiretap law also governs the sound portion of any videotape recording and states that it is legal if the person being recorded knows about it and approves. State laws and statutes vary, but adhere closely to the federal law.

In more than 30 states, electronic surveillance laws accept the consent of one party to audio surveillance and telephone conversations; 16 states require the consent of all parties. (Vermont doesn’t have a law specifically addressing the interception of communications, but the state’s highest court held electronic monitoring of communications in a person’s home an unlawful invasion of privacy.)

Whether in public or private places, audio-capable cameras are considered listening devices. That makes their use illegal unless the people who are being monitored are notified in some way; most likely, by a posted sign stating that audio monitoring is taking place. Audio is also referred to as an enhancing device, so even in public places, it can infringe on the privacy rights of people.

As a result of the terrorist attacks, Congress has passed legislation significantly broadening the scope of federal electronic surveillance laws regarding terrorism, computer fraud and more, for the sake of Homeland Security. But this has also enhanced people’s awareness of electronic security in various places, including the workplace, which could lead to a higher risk of liability for businesses and security dealers.

In addition to this increased awareness, the technology behind video cameras and surveillance systems has improved with greater sophistication, especially with the use of digital cameras and digital video recorders (DVRs). These developments have raised new challenges.

State What Can, Can’t Be Done in Writing

Dealers who install a lot of CCTV and surveillance equipment typically have some customers who question the legality of where the system is being installed. This often occurs more commonly than a dealer asking the customer what their intented use is for the systems. In some cases, dealers will consult with people they know who are working or have worked in law enforcement or the government.

In these situations, dealers are careful to explain to their customers what a CCTV system can actually deliver vs. what the customer expects from the system, especially for outdoor applications. Customers also want to have all the latest and greatest features for the least amount of money.

For the most part, the issues concerning liability have not changed for dealers as a result of the terrorist attacks. “I don’t believe any liability issue has changed,” contends Ira Weiss of Phoenix Security in Brooke, Va. “There

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