DISCLAIMER: This information is for informational purposes only and is not legal advice. Please consult your legal counsel with specific questions on compliance.
There’s nothing more boring than discussing call recording laws. (That, except possibly watching paint dry.) And there’s a lot of confusion on the topic.
That’s why in many organizations call recording remains turned off even though Sales Managers and VPs desperately want to record all calls.
But if you don’t record your sales calls, you miss out on the major benefits that come from call recording:
- Reference materials for your coaching (both good and bad examples)
- Less reliance on note-taking to get details right
- Ability to gather insights on what’s being said on calls as an additional data point behind rep and team performance
Here’s a quick overview of the current call recording laws as of 2021 to help you stay compliant and maximize the value of your calls.
Single-Party vs. Multi-Party Consent
Call recording laws in the U.S. are divided into federal and state statutes, and state laws take precedence over the federal in the cases where they differ.
Federal law in the U.S. (18 U.S.C. § 2511(2)(d)) requires Single-Party Consent for call recording, so long as the consenter only does so after having full knowledge that the conversation will be recorded. This party must be an active participant in the call; recording a call you aren’t participating in is known as wiretapping, and that’s illegal.
However, in the cases where state law differs from federal law, you may need to obtain Multi-Party Consent. This is exactly what it sounds like: all parties have to express explicit consent to being recorded.
The key here is to have the consent of all your sales reps to record via a signed call recording consent document and/or a portion of the employee handbook dedicated to this topic.
Once you have this, you have the consent of one party. Your risk is lowered significantly.
Which States Require Multi-Party Consent?
The following states only require Single-Party Consent for call recordings:
Alabama, Alaska, Arizona, Arkansas, D.C., Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, and Wyoming.
These states, on the other hand, require Multi-Party Consent:
California, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, Montana, New Hampshire, Pennsylvania, and Washington. Three of these states (Michigan, Massachusetts, and Maryland) have ‘carve outs’ in their state statutes for call recording for business purposes. You’ll definitely want to discuss this with your GC or outside counsel first.
And just to screw things up, Oregon, Nevada, and Vermont have either obscure regulations or none at all.
Keep in mind that each participant in the call is protected by the law that governs their current location. As a result, you’ll have conversations governed by multiple laws.
When you have the consent of your sales reps to record, then the call recording laws that apply are for the state where your prospect or customer is located – the person receiving the call from your rep.
For more detailed insights on one vs. multi-party consent states, click here to access our two-page call recording primer.
If you record calls from outside the U.S., the laws tend to get even more complicated. Let’s run through what you can expect when calling internationally.
Some European nations permit Single-Party Consent, and others require Multi-Party Consent. Under the General Data Protection Regulation (GDPR), you need to have a legal basis to collect, store, and share the personal data of EU residents. This is understood to require active consent from all parties.
If you collect data from an EU resident without an appropriate legal basis for doing so, you’ll be subject to fines and other penalties.
In most other international jurisdictions, you require two-party consent. Here are the laws for other English-speaking countries:
- UK and Ireland: Multi-Party Consent
- South Africa: Multi-Party Consent
- Canada: Multi-Party Consent, and all parties must be explicitly told why the call is being recorded
- Australia: In most cases, call recording is illegal, including for employee training
How to Implement a Call Recording Policy
Your organization’s call recording policy will depend a lot on the kinds of lawyers you have. Some lawyers are more risk-tolerant, while others are very risk-averse.
Most lawyers will agree that you should have some general best practices in place:
- Adjusting your Zoom settings so it automatically requests consent to recording before the person logs on
- Sending out advance notice via email that your call will be recorded
- Verbally notifying attendees that the call is being recorded
All of those methods work great for scheduled calls. But what about unscheduled calls, namely when you’re cold calling prospects?
One common solution is this: you have a dialer that looks at the area code of the phone number and determines whether that state requires Single-Party or Multi-Party Consent. It will automatically record both sides in Single-Party states, and only one side (the rep’s side) in Multi-Party states. (Here’s a real life example of what that looks like.)
Sounds simple and easy, right?
Except that two-party consent applies to the state where the conversation is being held, not the area code of the phone. So you could have someone from Alabama who’s on a business trip to California, and thus Multi-Party Consent would apply.
This raises the question of managing business risk vs. business benefit.
Some lawyers will see the Alabama-area-code-in-California example as an edge case that represents an acceptable level of risk. The burden of proof to show that the person receiving the call was on a business trip in CA would require one to subpoena the geolocation records from the cell phone company. Though this is possible to do, it would require a lot of effort on the part of a prosecutor to do so. This is why many attorneys are willing to accept this level of risk.
That said other more conservative lawyers will try to manage more of the risk out of the business. In these cases the lawyers might take a hard stance on zero recording of unscheduled calls. After all even though perhaps .01% of calls will be similar to the example above, these very risk averse lawyers might advise the company not to even accept that level of risk.
The downside: all business benefit from recording outbound, unscheduled calls is lost.
This is why most companies we see are OK with the one-sided recording approach for calls placed into all-party consent states (or countries).
Announcing the Call is Being Recorded for Cold Calls (What?!?!)
However if you are a sales leader with a very risk averse GC, there is another option. You can put in place a policy where your reps say that the call is being recorded for training for all of their outbound, unscheduled calls (aka cold calls, warm calls, and any call where you catch the buyer who is not expecting to hear from you).
Now, you may be thinking: “My reps will never agree to this. This is just going to cause prospects and customers to hang up more. It’s going to negatively impact our conversion rates.”
Actually, you’d be surprised at what the data says about this.
The company TIDAL had 30 outsourced SDRs who were using the SalesLoft dialer for outbound calls. From May to July 2021, they used the setting where the reps didn’t have to ask for consent, and only one side (rep only) was being recorded. During that time, they had 13,928 conversations, and 208 scheduled meetings (a 1.4% conversion rate).
In August, however, they started to say that calls are being recorded on every call. This had a counterintuitive effect, as out of 5,445 conversations they garnered 431 meetings (a 7.9% conversion rate). This is a 464% increase from the previous period.
We’re not sure why conversion rates would go up from telling prospects the call is being recorded. One theory is that calls where you are told it’s being recorded sound more authoritative. It causes the prospect to pay attention.
You should test this out within your organization, and see if you see similar results. Because if you can improve your compliance while also increasing conversions, that’s the holy grail.
If you want an idea of how to ask for consent on an unscheduled outbound call, check out the video below:
Also here’s a typical statement:
“Hi NAME, this is Mary Smith on a recorded line for training, the reason for my call is…”
Keep in mind that if a rep messes up and forgets to say that a call is being recorded, that doesn’t automatically mean you’re liable. The important thing is:
- You have a corporate policy that requires reps to ask for consent to being recorded, and;
- When a rep violates that policy, you take steps to address it (through coaching and other activities)
This is actually a really easy thing to set up in ExecVision: we can set up an alert so that if a rep forgets to ask to record a call, the manager is automatically notified and can coach the rep on that behavior.
One thing that companies often forget is, regardless of your approach: you need to get the rep to consent to being recorded. This is as simple as signing a form during the onboarding process and keeping that on file. Remember: single-party consent means that you need the rep’s consent to record the call; if you don’t get this, you’re in massive trouble.
Ultimately, you don’t want the rep to be thinking about any of this. The recording should either run in the background for them, or it should be drilled into them that they should ask for consent toward the beginning of the call. Either way, you should have a clear and simple process so the rep can focus on selling, and your legal and management teams can focus on compliance.
For an example of a call-recording policy that you can use as a template, click here.
How Frequently Should We Purge Our Data?
Another important question to consider is: how much data should my company retain?
So many sales people get obsessed with recording 100% of their calls, when really all you need for effective coaching are three good ones and three bad ones each week.
Also, when you over-retain data, you open yourself up to some risk.
Now, don’t freak out here. It’s important to keep this all in perspective.
The only people who are going to sue you are unhappy customers and disgruntled employees. That already narrows your risk significantly. But even though it’s a small pool, you do need to protect yourself.
And here we come back to what we said in the beginning: it’s about risk-reward. What’s the reward of holding onto a call recording vs. the risk of keeping it?
Because if you hold onto calls from the last ten years and one of them decides to come after you, then you have to surrender all that data.
This is why you need to have a data retention policy in place. Come up with a cycle of purging data to protect both yourself and your customers.
Which Questions Should We Ask Our Legal Team?
While this isn’t an exhaustive list, it should help you get started?
- Where should we operate on One-Party vs. Multi-Party Consent?
- Which visual, audio, written, or verbal cues should we use?
- How will we obtain active consent from people in countries governed by GDPR?
- Can we obtain consents via email?
- How do we handle consents during cold calls?
- Does our consent archiving process comply with applicable laws and regulations?
How Should You Evaluate Call Recording Providers?
As you look for a call recording provider, here are some of the questions you should ask to ensure you’re going with the best and most competent option:
- How do you recommend securing active consent from EU residents? Do you automate this feature in your platform?
- How do your visual and audio cues work? Does your audio cue play for each new participant, or once at the start of the meeting? How do you keep these cues from disrupting the meeting experience?
- What are your call recording best practices in One-Party Consent / Multi-Party Consent states, and in the EU?
- How do you handle consents for cold-calls?
Final Thoughts: Is Call Recording Big Brother?
In the book 1984, author George Orwell paints a bleak picture of a dystopian future where people conform because “Big Brother” is always watching them.
Nowadays, the phrase “Big Brother” is often used to deride companies who spy on their employees, usually because of mistrust and fear.
So that begs the question: is call recording just another form of Big Brother?
Not if you don’t want it to be.
When you set up a culture where the rep’s core motivation is to improve themselves, they’ll see recordings as a tool to do so. In that situation, they’ll see it as a positive, and something they have ownership in.