New “Ag-Gag” Law in North Carolina Provides a New Tool to Fight Employee Theft

A new North Carolina law provides an additional avenue for employers to seek redress from employees who have taken company information for personal use.

 N.C.G.S. § 99A-2, which became effective January 1, 2016, provides that “Any person who intentionally gains access to the nonpublic areas of another’s premises and engages in an act that exceeds the person’s authority to enter those areas is liable to the owner or operator of the premises for any damages sustained.”  N.C.G.S. § 99A-2(a). 

The statute lists several examples of acts that exceed a person’s authority, and first among those examples is an employee who takes company information for use beyond the scope of his or her employment:

An employee who enters the nonpublic areas of an employer's premises for a reason other than a bona fide intent of seeking or holding employment or doing business with the employer and thereafter without authorization captures or removes the employer's data, paper, records, or any other documents and uses the information to breach the person's duty of loyalty to the employer. 

N.C.G.S. § 99A-2(b)(1).  The statute’s specific reference to data may make it easier for employers to seek redress from employees who have taken electronically stored information for personal use. 

N.C.G.S. § 99A-2 is not without controversy.  It was enacted over the governor’s veto, and is often called the “Ag-Gag” law by those who think that it will discourage whistleblowers in agriculture and other industries.  See, e.g., Eric Frazier, N.C.’s boneheaded ‘ag-gag’ law protects corporate wrongdoing from exposure, Charlotteobserver.com (Jan. 5, 2016), http://www.charlotteobserver.com/opinion/opn-columns-blogs/o-pinion/article53141640.html.  Additionally, the constitutionality of the law remains to be seen—a similar law passed in Idaho was held unconstitutional by a federal judge on First Amendment and Equal Protection grounds.  See Animal Legal Def. Fund v. Otter, No. 1:14-CV-00104-BLW, 2015 WL 4623943, at *3 (D. Idaho Aug. 3, 2015).  Indeed, less than two weeks after its effective date, N.C.G.S. § 99A-2 was challenged in federal court by activist organizations including People for the Ethical Treatment of Animals (PETA), the Center for Food Safety, the Animal Legal Defense Fund, Farm Sanctuary, Food & Water Watch, and the Government Accountability Project.  See PETA et al. v. Cooper et al., Case No. 1:16-CV-00025 (M.D.N.C).

 The enactment of N.C.G.S. § 99A-2 has also brought renewed attention to the seldom-used statutory provision that precedes it.   N.C.G.S. § 99A-1, which has existed since 1973, provides a civil right of action for recovery of actual and punitive damages when personal property is wrongfully taken.  Depending on the situation, employers could use N.C.G.S. § 99A-1 or N.C.G.S. § 99A-2 to seek redress from employees who have taken company information for personal use. 

We will be watching N.C.G.S. § 99A-2 closely in the coming months, especially the pending legal challenge.