North Carolina’s controversial new “Ag-Gag” Law took effect January 1. The bill was passed at the behest of state pork and poultry interests concerned over animal rights activists using employment as a cover to film agricultural practices. Individuals who conduct unauthorized photographs or recordings on non-public business premises , or who remove documents or other information from the business can face civil penalties of up to $5,000 per day. The law would apply to employees, undercover activists, journalists and any other persons who pose as employees but are not authorized to document the company’s practices.

Governor McCrory vetoed the legislation, but his veto was overridden by the General Assembly. The Governor objected to the law on the basis that it overreached, covering all North Carolina businesses, not just agriculture. He also noted that the bill could prevent employees from documenting illegal corporate behavior in advance of reporting it to law enforcement or other government agencies. Bill supporters suggested that employees can still report illegal conduct without the benefit of such recorded evidence.

The new law is likely to face legal challenge on a number of bases. The National Labor Relations Board continues to find that broad employer anti-recording policies violate the NLRA’s concerted activity protections, because such documentation can be used by employees to push for changes in terms and conditions of work. An attempt to use the new state law to punish employees for documenting situations that affect the terms and conditions of employment could result in claims that the NLRA preempts North Carolina law. In addition, a federal judge in Idaho recently rejected that state’s similar Ag-Gag Law on First Amendment and Equal Protection grounds, calling into question the constitutionality of government attempts to prohibit negative publicity over corporate practices.

For now, at least, employers in North Carolina have a new tool to use in response to unauthorized photographs, recordings and information misappropriation from their premises. Presumably the employer would need to publish a policy delineating when and where workplace recordings are prohibited, but again, such policies carry significant NLRA risks.

The Ag-Gag Law contains one additional interesting provision. It links employers’ rights under the law to employees’ duty of loyalty to the employer.  Several years ago, the North Carolina Supreme Court concluded that there was no common law duty of loyalty by non-officer employees in North Carolina. This decision prevents employers from suing employees who, for example, take steps to set up a competing company prior to resigning their employment. The Ag-Gag’s Law’s language could give North Carolina employers a new argument that the General Assembly has explicitly recognized an employee duty of loyalty, opening the door to lawsuits based on pre-resignation competitive activities.