Employers who have their Internet and cellular access outsourced will now need to have clear contracts governing privacy expectations when it comes to employee text-messaging and e-mails.

A new ruling by a 3-judge panel in the U.S. 9^th Circuit Court of Appeals has established new privacy rights for employees who use employer-issued cell phones, computers, and pagers to send personal test messages.

The judges’ upheld the verdict in Quon vs. Arch Wireless, which concluded that if an employer contracts with an outside provider for messaging, it does not have a right to ask the service provider to hand over transcripts of employees’ text messages. The same verdict can apply to e-mail if the employer outsourcers Internet access.

The case is a win for privacy rights advocates. In the past, courts have established that employees should have no expectation of privacy when sending e-mails from employer’s computers. Now with this new ruling, this is only an option for companies that use internal servers.

This new ruling is also a bit of a trend setter; it is the first time that the Fourth Amendment – protection against unreasonable search – has been applied to electronic communications.

In Quon vs. Arch Wireless, Jeff Quon, a police sergeant for the city of Ontario, California, and three other officers (including his wife), sued Arch Wireless because it handed his over text messages to his supervisor. The supervisor, who was tired of Quon going over the 25,000 character limit set up in the police department’s contract with Arch Wireless and having to  pay over-limit fees as a result was eventually ordered by the department to collect transcripts from the wireless provider to see if Quon sent the text messages for personal reasons.