http://abclocal.go.com/kabc/story?section=news/local/los_angeles&id=9401177
In California, anyone who secretly records a telephone conversation or an in-person meeting may be violating Penal Code section 632, part of California's Privacy Act, which provides that intentional eavesdropping or recording of any confidential communication by means of any electronic amplifying or recording device without the consent of all parties to the communication is guilty of a crime.
The penalty for violation of section 632 is a fine not to exceed $2,500, imprisonment in the county jail or state prison for not to exceed one year, or both.
A person who is convicted for a second or subsequent violation of section 632 is subject to a $10,000 fine, imprisonment for not to exceed a year, or both.
Many businesses and individuals are unaware of this law and record telephone calls or conversations for a variety of reasons, including quality control, keeping track of employee conduct, or preserving evidence of a telephone call or meeting when they want a record of verbal agreements reached or suspect that a participant may be misrepresenting facts and want to be able to prove such misrepresentations.
However, if a communication is confidential, all parties must be advised of the recording or eavesdropping and must consent to being recorded. At one time, it was legal to record a conversation if only one party consented. That is no longer the law.