We have posted a few times about call recording and the laws that bind them. It can be a bit tricky, considering each state has their own set of rules and regulations.
California in particular is known as a two party state, thus, both parties on the phone need to know the conversation is being recorded. Recently, a number of class action suits have come up involving this issue, with claims that the customer never gave consent nor knew that the call was being recorded. This type of claim can result in a very hefty cost for any company to bare.
Luckily, there may be hope with the financial burden if such a claim is made against your business. One recent article by John Green, JD of Farella Braun+Martell LLP spoke about how your general liability policy may actually cover these call recording class actions.
Insurers also take the position the claims are not covered on the ground that the claim is not for money damages, but only penalties. The Act, however, specifically provides for damages. Section 637.2(b) states that any party bringing an action may “seek damages as provided by subdivision (a).” (Emphasis added.) Subdivision (a) provides that damages are the greater of:
- Five thousand dollars ($5,000).
- Three times the amount of actual damages. . .
Thus, the minimum award of $5,000 is “damages,” not a penalty, and plaintiffs may also seek “actual damages” in a greater amount if they exceed the minimum.
We encourage all companies who do implement call recording within their business to seek legal counsel when it comes to these laws and regulations and to review their CGL policy. For more details on how your companies general liability policy may actually cover these claims please read the post by John Green, JD.
Parts of this article re-posted with permission from John Green, Farella Braun+Martell llp.