Ideally all of an employer’s managers and supervisors would do everything in their power to encourage company-wide compliance with applicable employment laws. However, given the recent rise in employment litigation, it is apparent that compliance continues to be problematic, and employers would be well advised to provide additional incentives for compliance. Personal financial concern can be a powerful motivator. With that in mind, one incentive is simply educating supervisors, managers, and other decision-makers that they can be held personally liable for certain violations of employment laws within the company. Thus, in the minds of these managers, compliance is not just important for the company, but also for their own well-being. Some cases that could be used to illustrate this principle include the following:

FLSA violations:  Liability for wage and hour violations under the FLSA can extend “any person acting directly or indirectly in the interest of the employer in relation to an employee.” This has been interpreted to include individuals who have significant control over the employment relationship and particularly those who made decisions leading to the FLSA violation. For example, a federal district court in Florida allowed a hotel employees’ wage claims to proceed against a hotel manager while the action against the hotel itself was stayed in bankruptcy (Bullock v LVN Prop Mgmt, LLC (D. Fla. 2012)). Despite the manager’s protestations that employees were hired and managed by a third party who contracted with the hotel, the court found questions of fact on the extent to which the manager, who was also part owner of the hotel, controlled the employment relationship. Employees testified that she directed some of their daily activities; signed payroll checks; was at the hotel daily to observe work that was being done; and commented and criticized such work.

FMLA violations:  Under the FMLA and its implementing regulations, any person “acting in the interest of the employer” (e.g., a supervisor) may be individually liable for violations of the FMLA. Some courts have ruled that liability turns on whether the individual exercised sufficient control over the conditions of the employment. In 2012 for example, the Third Circuit ruled that an employee, who had Type II diabetes, could sue her supervisor individually under the FMLA.  The appellate court reasoned that he acted in the employer’s interest while carrying out his role as supervisor; he exercised control over her employment situation; and exercised substantial authority over the termination decision, even if he lacked final authority to fire her (Haybarger v Lawrence County (3rd Cir. 2012)).

OSHA safety violations:  In a St. Louis case against Andre Stone & Mason Work, Inc., the Eighth Circuit ordered the arrest of the original owner of a company and the owner of the successor company for repeatedly failing to comply with court sanctions regarding OSHA violations. The owners failed to pay fines and correct worker safety violations related to fall hazards, scaffolding deficiencies, power tool guarding, and other hazards associated with multiple construction projects (Case Nos. 06-2609 and 07-2304).

Payroll taxes:  I.R.C. Sec. 6672(a) makes “any person” having the responsibility to collect and pay over the employment taxes liable for a trust fund recovery penalty. In one case, an officer of a corporation, who was also a shareholder, was held liable in connection with the corporation’s unpaid withholding taxes. He was a responsible person with respect to the payroll taxes because he owned company stock, served as its director, signed loan documents on its behalf, approved business sites, reviewed sales data, directed payments to certain creditors to reduce debt the he had personally guaranteed, and had the authority to hire and fire senior employees and accountants involved in payroll operations (Erwinv. United States, (4th Cir. 2010)).

State discrimination laws:  Although individuals are generally not held personally liable under federal anti-discrimination laws such as the ADA, Title VII, and ADEA, they may be personally liable under a state’s laws. For example, the Supreme Court of Arkansas ruled that a nurse who was fired after complaining of sexual harassment by a doctor could proceed, under Arkansas Civil Rights Act, on an individual sexual harassment and retaliation claim against the doctor who supervised (Calaway v Practice Mgmt Servs, Inc  (Ark. 2010)). Similarly, an employee who worked in a county jail was allowed to proceed on her individual claims, under California’s Fair Employment and Housing Act, against two officers who allegedly aided and abetted her employer’s racial harassment against her by making offensive and threatening comments to her (Davis v Prison Health Servs (N.D. Cal. 2011)).

Training for compliance:  As these cases indicate, managers and supervisors have more than their jobs to lose by failing to comply with employment laws. Educating such high-level employees on the potential for them to be held personally liable could serve as a powerful incentive not only for their own compliance, but also the compliance of workers over whom they have supervision. By way of illustration, employers should include real cases, like the above, when training supervisors and managers on the importance of complying with employment laws.

Following the 2010 midterm elections, organized labor knew it was in for the fight of its life. The elections had swept in a crop of state governors who blamed unions, specifically public sector unions, for the sorry financial states they inherited. Those governors, who included Scott Walker of Wisconsin and John Kasich of Ohio, were ready to do battle.

Overall, 2010 wasn’t terrible for labor on the state level. They saw anti-collective bargaining laws pass in Ohio and Wisconsin, but they overturned the former in a referendum and have forced a recall election for Walker. In New Hampshire, a right-to-work bill was unable to defeat a gubernatorial veto and Indiana’s Mitch Daniels shot down similar legislation in his own state. By the time the New Year’s confetti was ready to drop, organized labor could have been forgiven for thinking that the worst was behind it.

Not so fast, fellas.

2012 has seen a rush of anti-union legislation and labor seems a bit taken aback. Indiana, on Wednesday, February 1, became the first state in a decade to enact right-to-work legislation, after Daniels signed a bill that passed the state Senate only hours earlier. The Senate voted 28-22 to pass the legislation. House Bill 1001 was passed by the Indiana House one week earlier and similar legislation was a point of contention for the last year. In 2011, Democratic representatives left the state in order to deny a quorum on the bill. At that time, Daniels said that he did not support bringing the bill forward, because the voters had not been prepared for the push. Beginning at the end of 2011, however, Daniels signaled that he was ready to sign right-to-work legislation. Oklahoma was the last state to enact such legislation, and Indiana is the first state in the rust belt to make the switch.

In response, Richard Trumka of the AFL-CIO could barely muster a snort of protest, calling it a “shame.” Trumka seemed dazed by the swiftness of the passage of a bill that seemed deader than Marley’s ghost last year.

Meanwhile, Arizona may soon follow Wisconsin and Ohio in barring collective bargaining by public employees. The state senate’s Committee on Government Reform voted to pass a bill that would prohibit all state and local governments and school districts from bargaining with public employee unions.

Under S.B. 1485, state and local governmental entities would be barred from recognizing or negotiating with a union representing its employees. It would not affect current contracts, but unions would be unable to negotiate a successor contract.

The committee also voted to pass three other bills. S.B.1484 would bar employers from deducting union dues from employee paychecks without their authorization. S.B.1486 bars cities and counties from paying release time to workers who are actually doing union business. S.B.1487 bars government entities from withholding union dues from employee paychecks.

Not to be outsdone, the Michigan House of Representatives, on Wednesday, February 1, passed a package of labor reform bills sharply criticized as blatant anti-union measures. The legislation was introduced last week in the House Oversight, Reform and Ethics Committee and must now be passed by the state Senate before being sent to Governor Rick Snyder.

House Bill 5023 states that public employees shall neither go on strike nor initiate a lockout. Employees who violate the prohibition would be fined either one day’s wages for each day they engaged in the work action, or $500 for each day; unions would be fined $5,000 for each day that public employee members went on strike.

House Bill 5024 would allow employers to sue striking workers who get in the way of their businesses. Workers found in violation would be subjected to daily $1,000 fines and unions would face daily $10,000 fines.

Lastly, House Bill 5025 would make it illegal for employers to deduct union dues and contributions from employee paychecks without the express, written consent of the employee.

If Michigan follows Indiana and Ohio down the path of tough anti-union legislation, organized labor better watch out. The pitchforks are out and the budget cutting axes are sharp.

As if grappling with the rapid proliferation of social media in the employment context weren’t challenging enough, the National Labor Relations Act complicates matters further. Even nonunion employers can run afoul of the NLRA with a social media policy that, in the view of the National Labor Relations Board, could dissuade employees from exercising their rights to engage in protected, concerted activity via Facebook, Twitter, or similar sites.

In an effort to craft a consistent agency approach to resolving this burgeoning litigation, NLRB Acting General Counsel Lafe Solomon has instructed regional offices to forward social media cases directly to the Board’s Division of Advice. About 75 cases have made their way to the office to date and, they are “extremely fact-specific,” making it even tougher for employers to glean hard and fast rules for compliance. In an ongoing effort to offer “further guidance to practitioners and human resource professionals,” the General Counsel has issued two memoranda: one (OM 11-74) on August 18, 2011, discussing the NLRB’s resolution of 14 social media cases; a second (OM-12-31) on January 25, outlining more recent cases reviewed by his office.

An employer’s policies “should not be so sweeping that they prohibit the kinds of activity protected by federal labor law, such as the discussion of wages or working conditions among employees,” according to Solomon. Distilled to its essence: standard labor law principles apply here. That means that even if it does not expressly bar NLRA-protected activity, the NLRB would still find fault with a policy that:

• “chills” employees from exercising their protected Section 7 rights;
• significantly burdens an employee’s exercise of those rights;
• was enacted in direct response to union activity; or
• is applied in such a manner that it restricts the exercise of protected rights.

The good, the bad, and the iffy. The most recent memo covers seven cases that addressed whether an employer’s social media policy passes muster under Section 8(a)(1) of the Act. In five instances, the policies were found to be unlawful; one survived Board scrutiny; and one policy was deemed lawful after it was revised. These provisions — several of which are no doubt a regular fixture in employee handbooks these days — violate the Act:

• A collection agency’s rule prohibiting employees from making disparaging comments about the company through any media, including blogs or other electronic media;
• A home improvement chain’s directive that employees not identify themselves as company employees in social networking situations except when discussing terms and conditions of employment “in an appropriate matter”;
• A restaurant chain’s proscription against using “disrespectful conduct” and having “inappropriate conversations” on Facebook with fellow employees;
• A health care employer’s ban on “using social media to engage in unprofessional communication” that could negatively impact the employer’s reputation or interfere with its mission, or “unprofessional/inappropriate” communication regarding members of the employer’s community;
• A testing lab’s policy against disclosure of confidential, sensitive, or nonpublic company information with outside parties without prior company approval;
• A requirement that employees obtain prior approval to identify themselves as company employees on social media sites and expressly state that their comments are their personal opinions and not the employer’s;
• A provision barring employees from making statements to the media or on electronic bulletin boards or blogs without prior approval;
• A rule that employees must first discuss work-related concerns with their manager or supervisor before posting communications, or face discipline or discharge.

These rules earned the NLRB’s seal of approval:

• A drugstore chain’s policy that stated employees could be asked to confine their social networking to matters unrelated to the company if necessary to ensure compliance with securities regulations or other laws; barred disclosure of confidential and/or proprietary information, including customers’ personal health information; and prohibited social media posts about “embargoed” corporate information such as launch and release dates or reorganizations;
• A provision that employees engaged in social networking activities must indicate that their views were their own and not those of the employer; in this case, the rule appeared in a separate section entitled “Promotional Content,” applied only to communications designed to endorse, promote, or advertise the employer’s products or services, and included a reference to relevant FTC regulations.

One employer redeemed its policy in the Board’s eyes with a bit of reworking:

• A restriction on using social media to post “vulgar, obscene, threatening, intimidating, [or] harassing” comments about the company, coworkers, or supervisors, or comments that would violate the employer’s antidiscrimination or anti-harassment policies was permissible. The employer had salvaged its policy with this revised language after disposing of an overbroad prohibition on “discriminatory, defamatory, or harassing web entries about specific employees, work environment, or work-related issues on social media sites.”

Drafting tips. These hits and misses offer a few useful pointers for employers that want to implement a social media policy that squares with the NLRB’s directives: 

• Flesh out vague references to “defamatory,” “inflammatory,” “inappropriate,” or “disrespectful” communications with specific examples of plainly egregious or clearly unprotected conduct (i.e., posting sexually inappropriate content).
• Avoid using examples that may implicate NLRAü rights. Case in point: broadly stating that “sharing confidential information” is unprotected conduct could impermissibly restrict employees from discussing wages. Instead, prohibit the disclosure of” trade secrets” specifically or, in the case of a healthcare employer, “confidential patient information.”
• The old rules still apply. A policy that grants employees free rein to Tweet away on their own time but restricts such communications while at work or on (or via) company property would run afoul of the NLRA, which clearly allows employees to engage in protected activities on-site during nonwork time, in nonwork areas.
• Similarly, requiring that employees refrain from using the company name or service marks undermines employees’ protected right to use the name or logo on leaflets, pickets, and now blog posts while engaged in protected activity.
• Use prior restraint sparingly. Requiring company approval beforeü communicating via social media raises a red flag. Target such a mandate narrowly, to those circumstances when truly essential to protect reputation or intellectual property.
• Include limiting language to clarify that the socialü media policy does not restrict employees from exercising their protected Section 7 rights (bonus points if your policy articulates what those rights actually are). Keep in mind, however, that a generic disclaimer alone might not save you, particularly where ambiguities remain. In fact, one employer policy above was held unlawful despite a savings clause stating that the rule would not be applied to efforts to organize, bargain collectively, or engage in other concerted activity.

None of these strategies is foolproof. Much depends on the context in which an employer’s policies are applied, as well as the fact-specific nature of an employee’s online conduct.

Employee discipline. Challenges to employer policies don’t typically arise in a vacuum; these cases generally appear before the NLRB only after an employee has been discharged for posting a status update or Tweet that displeases an employer. Of course, disciplining an employee for an irksome social media posting may also find an employer responding to an unfair labor practice complaint. That’s a topic for another day.

On Monday, a unanimous Supreme Court held that the attachment of a global positioning system (GPS) tracking device to an individual’s automobile and subsequent use of that device to monitor the vehicle’s movements on public streets constituted a search under the Fourth Amendment (United States v Jones, January 23, 2012, Scalia, A). By attaching the GPS device to the vehicle, law enforcement officers encroached on a protected area. Thus, the government’s physical intrusion on the “effect” at issue here constituted a Fourth Amendment search. Although the case was not one involving questions of employment law, it none the less has implications for employers.

Physical intrusion was a search. The High Court made clear that the government had physically occupied private property for the purpose of obtaining information. Thus, the Court concluded that it had no doubt that such a physical intrusion would have been considered a “search” within the meaning of the Fourth Amendment when it was adopted. The conclusion was based on a common law trespass theory. The High Court declined to analyze the challenged action in terms of whether the targeted individual had a reasonable expectation of privacy in the undercarriage of the vehicle, which was exposed to public view.

Reasonable expectation of privacy. While five Justices, Sotomayor, Alito, Ginsburg, Breyer and Kagan (in two concurring opinions), agreed with the majority that a Fourth Amendment search had occurred, they would have instead hung the analysis on the question of whether the long-term monitoring of the vehicle impinged on the targeted individual’s reasonable expectation of privacy. Finding that in this case it did, the concurring Justices rejected the prevailing view that GPS location tracking does not implicate a privacy interest because the location of the person or vehicle in public view is essentially not private, noting that a Fourth Amendment search also occurs “when the government violates a subjective expecta¬tion of privacy that society recognizes as reasonable.

The concurring opinions devote substantial discussion to tracking that would not require physical intrusion, such as cell phone location tracking, and the fact that such tracking can create a host of information about an individual’s public, familial, political, religious and sexual activities. Technological developments require a more current application of Fourth Amendment law, according to the concurring Justices. Observing that technology appears to have outpaced legislation that would protect individuals from government use of tracking that is merely electronic, rather than that which is physically intrusive, the Justices also noted that legislation may now begin to catch up. Finally, the Justices supported the notion that private information disclosed to a member of the public for a limited purpose should not be thereby rendered outside the protection of the Fourth Amendment.

What does it mean for employers? The reasoning of the five concurring Justices carries implications for private employers because lower courts may incorporate a similar analysis and be more willing to find that an employer’s location monitoring of an employee amounts to an invasion of that employee’s privacy interests.

In recent years, employer GPS tracking of employees has become more common – perhaps for legitimate business reasons such as to confirm a suspicion that an employee is not working when he or she claims to be working, or to determine whether an employee is actually suffering an injury for which she has taken leave or is collecting workers’ compensation.

But employers should think twice about location monitoring that requires physical attachment of a devise to an employee-owned vehicle – engaging in such conduct may expose the employer to a common law action for trespass. However, such monitoring may be permissible in some circumstances when the device is attached to a company-owned vehicle.

Earlier this month, a federal district court in North Carolina found that a county employee who was discharged for falsifying time sheets and improper use of a county vehicle failed to show a Fourth Amendment unreasonable search violation resulting from his employer’s use of a GPS tracking device on his county-owned truck (Brookshire v Buncombe County, January 18, 2012, Howell, D). The location data garnered from the tracking device did not match the employee’s time sheets. The employee had also signed an MOU acknowledging that he did not have an expectation of privacy in items stored in the truck and that the vehicle could be searched at any time without notice. The decision, however, turned primarily on the prevailing view of the federal courts that there could be no reasonable expectation of privacy by a person traveling in a vehicle on a public roadway.

Taking a lesson from the Brookshire case, private employers that permit employees to use employer-owned vehicles should consider requiring those employees to sign an agreement acknowledging that the employee has no expectation of privacy in the vehicle or items located inside it, and that the employer has the right to access the vehicle without notice.

However, also incorporating a lesson from the concurring Justices in the Jones case, employers should avoid location monitoring during nonworking hours because such monitoring may impinge on the employee’s reasonable expectation of privacy, even though the employee may be using a company-owned vehicle, cell phone or other electronic device.

Finally, the employer should conduct location monitoring only when it has a legitimate business need for doing so.

Unless they have been living under a rock, most employers know about the federal Family and Medical Leave Act (FMLA), and similar state laws, which require that covered employees be granted leave for certain family-related events (such as the birth of a child) and illnesses. However, there are a growing number of laws protecting the right of employees to take time off (either paid or unpaid) in other circumstances as well. Coverage usually depends on the number of employees that an employer has. Employers should be aware that they might be required to grant an employee leave under the following circumstances:

• Military Service – In addition to the federal FMLA, many states also have laws providing for employee leave to care for family members deployed or injured in military service. The leave could also apply to time spent addressing issues that arise due to the call to active duty, such as making childcare or financial arrangements. Many states have also enacted laws which, like USERRA, protect the employment rights of employees who themselves took time off for military service. Employers covered by both federal and state law must follow the provisions most beneficial to employees.
• Emergency Volunteer Services – Many states have laws providing leave for, or protecting the employment rights of, employees who are volunteer firefighters or emergency workers. Some states provide this type of leave only for public employees.
• Jury Duty – Federal law prohibits employers from firing, threatening to fire, intimidating or coercing an employee because of jury service in a federal court. Nearly every state has a similar law and some states extend protection to employees called as witnesses in court proceedings.
• Voting – Many states have laws allowing employees time off to vote.
• Organ and Blood Donation – Many states require covered employers to give employees time off to donate bone marrow, organs, or blood.
• Domestic Violence – A growing number of states are requiring that certain employers grant leave to victims of domestic violence for purposes such as obtaining medical care or counseling, and attending court proceedings or meetings with prosecutors.
• School Activities – Some states require that covered employers give employees leave to attend school-related activities and conferences concerning their children.
• Disability Accommodation – Granting leave may be considered a reasonable accommodation of an employee’s disability under the ADA or state discrimination laws. However, courts typically rule that an employer is not required to grant leave for an indefinite period of time, reasoning that this would either eliminate an essential job function or would cause an undue hardship.
• Religious Activities – The refusal to grant time off for an employee to observe his or her religion or attend a religious ceremony could be viewed as religious discrimination under federal and state law.

In addition to laws requiring that employers grant leave for certain activities, some states have “day of rest” laws requiring that employers give employees a certain amount of time off during each work week. Some of these laws apply only to certain industries. Employers that want additional information on their state leave laws should contact the state’s labor agency.

Invariably whenever a court is faced with a plaintiff’s request for conditional certification of a collective action under the FLSA, it routinely recites the two-step analysis that courts use in evaluating such requests. The threshold issue in deciding whether to authorize a class in an FLSA collective action is whether the plaintiffs have demonstrated that potential class members are “similarly situated.” Typically, courts require the plaintiffs to show a modest factual nexus between their situation and that of the proposed class members. However, in spite of the modest factual nexus evidentiary standard, courts have not hesitated to deny conditional certification when evidence is lacking.

A review of some recent court decisions give insight into the rationale of courts that find that a named-plaintiff has failed to show that he or she is similarly situated to the members of the putative class.

Assistant store managers. In Guillen v Marshalls of MA, a federal district court in New York found that an assistant store manager (ASM) for Marshalls retail store was not similarly situated to a nationwide class of ASMs he claimed were improperly classified as exempt from the overtime provisions of the FLSA. According to the plaintiff, he and other ASMs were required to perform tasks that rendered them non-exempt and that Marshalls had a uniform expectation of ASM’s duties and responsibilities that applied to all stores nationwide. However, the plaintiff provided no evidence that could plausibly lead to the inference that ASMs nationwide were performing non-exempt tasks, the court concluded, where all of the ASMs who submitted affidavits were employed in the New York City area. Thus, the court agreed with the recent conclusion, in Vasquez v Vitamin Shoppe Industries, Inc, that a geographically concentrated cluster of store managers whom the plaintiff claimed were assigned duties inconsistent with the exempt classification was “too thin a reed to rest a nationwide certification.” Consequently, the employee failed to provide any proof that he was similarly situated to ASMs across the nation.

Cable installation technicians. Cable installation technicians employed by a Comcast Cable contractor were denied conditional certification of an FLSA collective action alleging overtime pay violations ruled a federal district court in New Jersey in Rogers v Ocean Cable Group, Inc. The plaintiffs alleged that they were not paid adequate overtime during certain weeks where they were not permitted to record all of the time in which they actually performed work. They also alleged that they were required to work through lunch and did not receive lunch breaks. Here, class certification was found not appropriate because the named plaintiffs failed to equate their personal situations with other putative class members. While some employees alleged that they could only record 30 minutes of pre- or post-shift work, others noted that they were permitted to record up to one hour. Thus, the court found that there was a lack of a factual nexus between the plaintiffs’ situation and a uniform company policy affecting all workers adversely.

Field auditors. Field auditors for Liberty Mutual Insurance were also denied conditional certification of a nationwide class in an FLSA collective action for unpaid overtime in Yerger v Liberty Mutual Group, Inc. The field auditors worked in three commercial insurance businesses that operated as semi-independent business units. While the field auditors performed similar work, each of the three business units was “a distinct and separately managed” organization. Moreover, they each had different methods of assigning audits, different reporting software, different audit review processes and different timekeeping requirements. Additionally, the units had varying levels of field auditor positions and distinct job descriptions. Consequently, despite the named plaintiff’s assertions that auditors routinely worked more than 40 hours per week and the employer provided remote access to its computer network to facilitate their after-hours work, a federal district court in North Carolina ruled that the plaintiff failed to rebut Liberty Mutual’s evidence that her specific duties were different from the work of other field auditors. Because her job duties were substantially different from the class members she sought to represent, the court denied conditional certification.

HR generalists. In this instance, because the uncontroverted evidence established that a plaintiff’s position was dissimilar from the vast majority of other employees and that only one or two employees performed the work of HR generalists for her employer, her motion for conditional certification of an FLSA collective action was denied by a federal district court in Arkansas in Harris v Southwest Power Pool, Inc. The plaintiff alleged that she was denied overtime compensation when she worked in excess of 40 hours in a week. She also asserted that the employer did not treat any of its employees as nonexempt, that her claims were typical of the proposed class, and that the common issue of the employer’s classification of all employees as nonexempt predominated over individual issues. However, the employer offered uncontroverted evidence that very few of its employees held positions similar to the named plaintiff’s and that the majority worked in positions that required technical knowledge. Despite the employee’s contention that the employer had a policy of misclassifying employees, that fact did not obviate the rule that certification is inappropriate where determining whether putative class members are nonexempt will depend on a fact-intensive inquiry into the duties performed by different types of employees.

While there has been a proliferation of FLSA collective actions in recent years, and the vast majority of those cases move past the initial conditional certification stage, it is far from automatic that plaintiffs bringing claims on behalf of themselves and similarly situated employees will be granted conditional certification by the courts.

The withdrawal of a long-anticipated Virginia Supreme Court opinion will lead to “continued silence” by the state’s high court with respect to blue-penciling, explained Linda M. Jackson, a partner in the Virginia law firm of Venable, LLP. The court was expected to issue an opinion in the case of BB&T Insurance Services v. Thomas Rutherford, Inc, to address head on the applicability of blue-penciling in Virginia. While practitioners are left wondering how to treat blue-penciling, another state supreme court decision clarified questions about the enforceability of a noncompete provision, ruling that a blanket prohibition against working for a competitor was overbroad and unenforceable, thereby highlighting the evolution of noncompete jurisprudence.

In Home Paramount Pest Control Cos, Inc v Shaffer, (November 4, 2011, Mims, W). the state supreme court analyzed a provision identical to one found enforceable in litigation that included an entity related to Home Paramount. Although the provision was found enforceable by the state high court in 1989, in this instance, the court reasoned that the provision that restricts competition is enforceable if it “is narrowly drawn to protect the employer’s legitimate business interests, is not unduly burdensome on the employee’s ability to earn a living, and is not against public policy.”  To evaluate that burden, the court considers “function, geographic scope and duration” of the agreement. Although the elements are to be considered together, when one factor is overbroad, the agreement must be found unenforceable. “Although we weigh the function element of a provision that restricts competition together with its geographic scope and duration elements, the clear overbreadth of the function here cannot be saved by narrow tailoring of geographic scope and duration,” the supreme court stated. The court did not, however, address blue-penciling.  “If the court was looking for a chance to apply blue pencil it could have done it here. It would have been a stretch, but they could have done it,” said Jackson.

In Home Paramount, the employee was prohibited from engaging “directly or indirectly or concern[ing] himself/herself in any manner whatsoever in the carrying on or conducting” of a competing business. In this instance, the geographic scope and duration were not at issue, however, the function element was considered overbroad.  The employer pointed out that the geographic scope was relatively narrow and the duration, two years, was commonly accepted for such provisions, so that those elements compensated for the breadth of the function element. However, the state high court disagreed that the provision, as a whole, was not broader than necessary to protect its legitimate business interests.

Citing precedent in which provisions with broad functional limitations were deemed unenforceable, the supreme court reasoned that “[b]ecause Home Paramount did not confine the function element of the Provision to those activities it actually engaged in, it ore the burden or proving a legitimate business interest in prohibiting [the employee] from engaging in all reasonably conceivable activities while employed by a competitor.

Furthermore, the supreme court was not compelled by the employer’s suggestion that stare decisis barred the court from finding against enforceability. Instead, while acknowledging that the provision at issue was identical that the one upheld previously, the supreme court reasoned that it had “incrementally clarified the law” since that case was decided. Consequently, to the extent that Paramount Termite conflicts with the current holding, the supreme court expressly overruled it.

In what Jackson labeled “a very spirited and very direct dissent” Justice McClannahan reasoned that stare decisis required an opposite conclusion. “With today’s decision, the majority fails to give due respect and deference to a basic tenet of stare decisis, which is that ‘in a well ordered society it is important for peopled to know what their  legal rights are, not only under constitutions and legislative enactments but also as defined by judicial precedent, and when they have conducted their affairs in reliance therein, they ought not to have their rights swept away by judicial decree,’” stated the dissent, citing a Virginia Supreme Court decision.

Regardless of the court’s express rejection Paramount Termite, Jackson noted that Home Paramount didn’t change the state of the law, but instead reinforced it. She explained that on the function component, the law came to be known as the ‘janitor defense.” In other words, “[the provision] really had to prevent [the employee] from doing something they had done for the [the employer],” she explained. Noting the court’s heed about evolution in the law, Jackson suggested that employers review noncompete provisions with a fresh eye. “The law keeps changing. We have to look at in through that lens,” Jackson explained.

On January 4, 2012, President Barack Obama wielded his recess appointment power to name three new Members to the NLRB. A firestorm of controversy erupted and while some of the criticism is well-founded, much of it misses what is most important to the story.

First, let’s look at what the critics may have gotten right. One of the immediate responses was that because the President waited until December 15 to nominate Sharon Block and Richard Griffin to the Board, the Senate had virtually no time to consider their qualifications and potential conflicts of interest. This criticism, in my opinion, works on a variety of levels. First, it points out that the nominees have not been fully vetted and it appears as though at least Griffin may have some skeletons in his closet. Reports surfaced today alleging that in his position as General Counsel for the International Union of Operating Engineers, Griffin may have blocked reform rules aimed at cleaning up corrupt locals. There is, undoubtedly, much more to the story, but this allegation would have certainly been explored during confirmation hearings.

Which brings me to another point about the criticism, this time from the left. Why did the President wait until December to nominate Block and Griffin. He surely knew that a confirmation vote on any of his nominees was unlikely, so why wait? If the point was to slide the nominees past public scrutiny, then the President and his team deserve all the condemnation that comes their way. If, however, the delay was due to a White House that often seems unconcerned with labor matters and only recently realized that they were about to face a Board that couldn’t perform its duties, then such a delay was bush league and, again, deserves all the complaints that critics can muster.

While critics of the recess appointments are right to point to the lack of vetting, they completely miss the boat on the nature of the appointments themselves. First, the Recess Appointments Clause does not specify the length of time that the Senate must be in recess before the President may make a recess appointment. Critics of the move argue that the Senate never actually entered a recess, because the House never gave its approval. As Representative Sharon Black said after introducing a resolution disapproving of the appointments:

“It’s astounding to me that the president is claiming these are recess appointments and within his authority, when Congress was not in fact in recess. I hope the House considers my resolution as soon as we return to Washington so we can send a message to President Obama.”

Wait, what? If Congress isn’t in recess, then why must the House delay consideration of the resolution until its members “return to Washington?” Because while Congress may not technically be in recess, the only reason it’s not is because the House, fearful of the potential for recess appointments, never gave its approval. The members just left town and have been forcing pro forma sessions in which no work gets done ever since.

Which, cynics would argue, doesn’t make this period all that different than when the Senate is in full session.

The point is that if it’s acceptable for the House to play procedural games to block the President’s powers, it may be acceptable for the President to say that since it’s not doing any work, Congress is indeed in recess.

Regardless of whether one agrees with the notion that a legislative body that leaves and returns without working is in technical recess, no-one could deny that Congressional Republicans have made it their goal to deny the President his choices for the NLRB. Senate Republicans have refused to allow hearings or votes on the President’s last four nominations to the Board, all in the hope that the Board would fall under its three-member quorum and be unable to perform its job of regulating labor-management relations. House Republicans have held hearings exploring whether the Board is in hoc to labor unions and some have introduced legislation to abolish the Board altogether.

They may be justified in their opposition to the Board. They may be correct in their belief that this Board has bent over backwards to favor unions and organized labor. They may be correct that the Board’s rulemaking has been rushed and improperly conducted.

But it’s time to end the bickering. The President has made his appointments. The Board will, barring any quick judicial resolution, operate for the remainder of the President’s term, issuing decisions and making rules. Congress now has an obligation to ensure that the Board does its job properly because that job is nothing less than ensuring harmonious labor relations. And given the state of the economy, that job has never been more important.

Despite the OFCCP’s statements to the contrary, the proposed national utilization goal for individuals with disabilities contained in the OFCCP’s proposal to amend its regulations implementing Section 503 of the Rehabilitation Act of 1973 is a quota, OFCCP expert John C. Fox stated during a webinar on the proposal presented by the National Employment Law Institute (NELI). He explained, however, that hiring quotas for the disabled are lawful because individuals without disabilities are not a protected class. Disability law expert David K. Fram joined Fox for the January 10, 2012, webinar on the OFCCP’s Notice of Proposed Rulemaking (NPRM) that was published in the Federal Register on December 9, 2011 (76 FR 77056-77105).

Specifically, the OFCCP is suggesting that federal contractors would be required to set a hiring goal of having seven percent of their employees be workers with disabilities in each job group of the contractors’ workforce, but it is soliciting comments on the potential use of a utilization range between four and ten percent. To annually evaluate their utilization of individuals with disabilities, the NPRM proposes that contractors use the job groups established for utilization analyses under their Executive Order (E.O.) 11246 affirmative action programs (AAPs). The proposed goal is derived primarily from disability data collected as part of the Census Bureau’s American Community Survey.

In an agency statement announcing the NPRM, OFCCP Director Patricia A. Shiu said, “What gets measured gets done.” This statement reveals that the “goal” is actually a quota because measuring the disabled makes hiring the disabled in like proportion implied, according to Fox.

The proposal would also require each covered contractor, on an annual basis, to review the outreach and recruitment efforts it has undertaken over the previous twelve months and evaluate their effectiveness in identifying and recruiting qualified individuals with disabilities. Fox noted that, in the preamble to the NPRM, the OFCCP states “The primary indicator of effectiveness is whether qualified individuals with disabilities have been hired” (Fox’s emphasis). This statement means that 51 percent or more of the effectiveness calculation for each contractor would be whether a contractor has met the hiring goal, according to Fox. Thus, the statement renders the goal a quota and moves the requirement from recruitment to hiring.

Homogenization with ADAAA. The NPRM would also incorporate updates to the OFCCP’s Section 503 regulations made necessary by the ADA Amendments Act of 2008 (ADAAA). The ADAAA amends both the ADA and the Rehabilitation Act with respect to the definition of “disability” and related issues. Consequently, the proposal includes revisions that are needed to make the Section 503 regulations consistent with the ADAAA and with the revisions to the ADAAA implementing regulations made by the EEOC in March 2011.

Fram presented a detailed discussion on how the definition of disability has greatly expanded under the ADAAA.  Both Fram and Fox said that the OFCCP did a good job of proposing amendments to the current Section 503 regulations designed to homogenize it with the changes made to the statute by the ADAAA.

Three invitations to self-identify. Fox pointed out that, under the proposals, contractors would be required to extend three types of invitations to self-identify, one “pre-offer” and two “post-offer.” The pre-offer invitation would gather self-identification data alerting the contractor to the number of individuals with disabilities applying for jobs with the contractor and its purpose would be to help the OFCCP start building an “availability” database and to help the contractor set hiring goals, he explained. Under the proposal, a contractor would be required to extend the first post-offer invitation after it extends an offer of employment but before the applicant begins his/her job duties. Contractors would also be required to annually survey employees to provide them with the opportunity to voluntarily and anonymously self-identify, thus creating a second post-offer invitation requirement.

Fram and Fox both agreed with the OFCCP assessment that requiring contractors to invite applicants to self-identify as disabled would not violate the general prohibition, contained in the ADA and Section 503, against pre-offer disability-related inquiries because the ADA and Section 503 regulations permit the contractor to conduct a pre-offer inquiry into disability status if it is made pursuant to a federal, state or local law requiring affirmative action for individuals with disabilities.

The NPRM provides that the OFCCP will prescribe the language that contractors will be required to use when inviting self-identification and publish it on the OFCCP website. Fox noted that NPRM does not contain a suggestion for what this language would be.  He said that uniform invitation language may be difficult because what works for one company may not work for another. He reported that contractors have found that invitations to self-identify as to race and sex (as currently required by the regulations implementing E.O. 11246) need to vary geographically in order to maximize response rates, and wondered if the same might be true regarding individuals with disabilities.

Documentation. Fox said, and Fram agreed, that seven percent is a “modest” goal relative to the percentage of available applicants and employees who are in fact disabled because under the ADAAA and the EEOC regulations implementing the ADAAA, the definition of “disability” is now very broad. However, there is a “big disconnect” between this modest goal and the requirement for documenting it, Fox observed, and Fram again agreed. Fox explained that documenting the percentage of applicants, hires and incumbent employees with disabilities is going to be very difficult because people often hide disabilities because they consider them to be private or fear disclosing them. Fox said that real world experience among federal contractors for the last 30 years of inviting those who have been offered a job to self-identify is that usually only one to three percent report they are disabled. 

Sub-goal. The OFCCP is also considering the possible inclusion of a two percent sub-goal for individuals with certain particularly severe or targeted disabilities (such as: total deafness; blindness; missing extremities; partial and complete paralysis; epilepsy; severe intellectual disability; psychiatric disability; dwarfism). But Fox said that documenting this sub-goal would be problematic because the OFCCP states that the pre-hiring offer invitation to self identify contractors would be required to use is only for general self identification as to the existence of a disability and does not seek information as to the nature or type of disability the person has.

Linkage agreements. The proposal would require a contractor to enter into three kinds of  “linkage agreements.” A “linkage agreement” means an agreement describing the connection between the contractor and appropriate recruitment and/or training sources. The first required linkage agreement would be with the local State Vocational Rehabilitation Agency office nearest the contractor’s establishment, or a local organization listed in the Social Security Administration’s Ticket to Work Employment Network Directory. The second would be a linkage agreement with at least one of six other listed organizations involved in recruitment and developing training opportunities for individuals with disabilities. Third, the contractor would be required to establish a linkage agreement with one disabled veterans service organization listed in the National Resource Directory (a partnership and online collaboration among the Departments of Labor, Defense, and Veterans Affairs).

The OFCCP has placed a lot of focus on these agreements as a means for contractors to find qualified individuals with disabilities, Fox said, but he added that history has shown employers rarely find good candidates from these sources. In addition, contractors generally do not have difficulty finding job seekers; more often, they have to wade through large numbers of applicants for a given opening.

Reasonable accommodation. The proposed revisions would require that contractors develop and implement written procedures for processing requests for reasonable accommodation. In addition, certain disability accommodation “best practices” would become mandatory, Fox said. Among these new requirements, contractors would be required to provide a statement of reasons explaining the circumstances for rejecting disabled individuals for vacancies and training programs and a description of considered accommodations. This requirement would necessitate consultation with legal counsel and will be substantially time-consuming, Fox noted, adding that  sourcing would be difficult because most accommodations are accomplished locally, with no documentation, and no “bally-who.”

Contractors would also be required to catalogue the nature and type of accommodations for disabled individuals who were selected for hire, promotion, or training programs. This requirement raises confidentiality concerns, Fox said.

Required policy statement. Under the proposal, contractors would be required to re-draft the Equal Employment Policy statement in their Section 503 AAPs, which under current regulations ‘‘should indicate the chief executive officer’s attitude on [affirmative action for individuals with disabilities],’’ so that the statement indicates “the chief executive officer’s support for the affirmative action program.’’ This aspect of the proposal presents a “profound First Amendment problem,” Fox observed, in that the government would be dictating what federal contractor CEOs should say they think.

Suggestions for writing comments on the proposal. Comments on the proposal are due by February 7, 2012. Fox told the webinars listeners that the federal contractor community is, in essence, “at trial” during this comment period. The purpose of NPRMs is not just to inform the public and gather comments, he said. Rather, the Administrative Procedure Act has created this process to allow a mass, visible and public trial of agency proposals. Courts have been striking down substantial regulations elsewhere, Fox noted, and they may to do so here as well if contractors submit comments that will provide courts, upon subsequent legal challenge, with evidence to support striking down the regulations at issue.  Evidence, Fox explained, means detailed information of the costs and time burdens that would be placed on contractors by these regulations. It does not mean “pabulum whining,” he emphasized.

The OFCCP’s calculation, submitted to the Office of Management and Budget, of total first year costs of these proposed regulations is $473 per contractor establishment, but many in the contractor community have accused the OFCCP of either outright lying about the costs, or being incredibly naive, he said. However, it is up to the contractor community, via written comments on the proposal, to provide specific evidence regarding how the OFCCP’s estimates about the projected burden of the proposal are flawed.

Fox recommended that contractor comments:

(1) be clear – the comments should either (a) support, (b) oppose, unless specified modifications are made, or (c) oppose unqualifiedly, the proposal;

(2) be succinct;

(3) be focused; and

(4) provide evidence supporting the commenter’s position.

Fox is the President and a founder of Fox, Wang & Morgan P.C. He leads large and complex litigation matters in state and federal courts, in cases involving wage-hour and discrimination class actions, trade secret claims, employment contract disputes, wrongful termination, corporate investigations, and the use of statistics in employment matters. Fox previously served as Executive Assistant to the Director of the OFCCP, where he was responsible for all enforcement and policy matters.

David K. Fram is NELI’s Director of ADA and EEO Services. Fram has trained tens of thousands of HR professionals and attorneys, and testified before Congress about the ADA Amendments Act.  Prior to joining NELI, Fram served as Policy Attorney at the EEOC, where he helped formulate the federal guidelines implementing the ADA.

While social networking has fast become a powerful marketing tool for companies, it’s proven equally valuable to employees as a vehicle for professional development. But with the typically ill-defined terms of ownership in a company’s social media presence, and the significant value that an employee’s own professional stature brings to that presence, social networking can potentially turn quite anti-social indeed. Several court rulings in recent months have tackled the legal issues that arise when these often competing interests collide.

The case of the stand-in Tweeter. A Chicago interior design firm found itself defending against federal claims because it posted updates to the private Facebook and Twitter accounts of its marketing chief after she was hit by a car and seriously injured (Maremont v Susan Fredman Design Group, NDIll, December 7, 2011). As director of marketing, public relations, and E-commerce for the design firm, social media was a key function of the plaintiff’s role, and her social media efforts to promote the firm’s sales qualified her for bonuses. The employee created a design blog hosted on the firm’s website and opened a Facebook account for the firm. The employee had her own personal Twitter and Facebook accounts as well, which were not for the benefit of the firm, although she used her personal posts and updates to promote the firm by linking them to the firm blog and website. Her efforts also generated a considerable following among the city’s design community, and her personal Twitter account boasted 1,250 followers.

Both parties appeared to be enjoying the fruits of the employee’s social media labors until one day, during a work-related errand, she was struck by an automobile and suffered serious brain trauma. While she was hospitalized for her injuries, another employee at the firm posted Facebook updates and tweets on her accounts, promoting the firm. The first of the tweets was linked to the firm’s blog, which ran an entry written by the firm’s owner informing readers of the employee’s accident and announcing that, in her absence, a guest blogger would assume the employee’s duties. Subsequent tweets also promoted the firm and, in some cases, linked readers to the firm’s blog or website. Although the employee requested that the firm refrain from posting updates to her Facebook page and Twitter account while she was out, it continued to do so, prompting her to change her passwords.

Six months later, the employee came back to work part-time, announcing her presence on the firm’s blog, “Your editor is back!” Her triumphant return was short-lived, though; still suffering the lingering effects of ongoing post-concussion syndrome, her doctor urged her to stop working completely. When she attempted to come back again a year later, her position had been filled. Contending that she suffered severe emotional distress from the firm’s posting of tweets and Facebook updates from her personal accounts to promote its business, she filed suit, alleging a false association claim (or false endorsement claim) under the Lanham Act, along with a Stored Communications Act (SCA) cause of action and state law statutory and common law privacy claims.

Under the Lanham Act, a plaintiff does not have to be in direct competition with the defendant in order to state a claim; all that is required is for the party to have a “reasonable interest to be protected” against activities that violate the Act. To have standing, a plaintiff simply must show “an intent to commercialize an interest in her identity,” the court wrote. The employee made that showing here. While promoting the firm on Facebook and Twitter had been part of her duties for the firm, it was undisputed that the employee also “created a personal following on Twitter and Facebook for her own economic benefit,” the court noted. It was clear that if she left her employment at the firm, she would promote a different employer with her Facebook and Twitter followers. As such, the employee had a protected commercial interest in her name and identity within the Chicago design community, and she satisfied the standing requirement.

The employee also asserted a potentially viable SCA claim. Without permission or authorization, the court observed, the firm used her personal Twitter password to access her personal account and authored 17 tweets, and similarly accessed her Facebook account, entered Facebook postings, and accepted at least five friend requests. This undisputed conduct raised genuine issues of material fact as to whether the firm exceeded its authority in obtaining access to the employee’s social media accounts.

Left to be seen with respect to both claims was whether the employee could prove actual damages. To establish a Lanham Act violation, she must show actual injury resulting from “actual consumer reliance on the misleading statements,” such as a loss of sales, profits, or goodwill, or that the firm was unjustly enriched. Noting that both parties had informed the court that expert discovery was necessary on this issue, the court deemed it premature for it to determine at this stage whether there was actual injury or unjust enrichment. Because the parties had yet to complete discovery as to damages, summary judgment was denied.

The court disposed of the plaintiff’s claims under the Illinois Right to Publicity Act, however. With only the contents of the tweets available for review, the court concluded that the firm and its employees had not passed themselves off as the plaintiff. The employee herself recognized publicly that the firm did not appropriate her identity by acknowledging in her blog post upon her brief return that the employer had temporarily replaced her during her absence. The employee’s common law privacy claim (asserting intrusion upon seclusion) was ill-fated as well, because she could not show that she made any attempt to keep private the matters discussed in her Facebook and Twitter posts. To the contrary, she endeavored to publicize this content widely throughout the local design community. As such, the employee failed to identify any private information upon which the firm defendants intruded.

What’s a Twitter worth? What about the Twitterer? Who owns a company Twitter account, and its followers—the employer or the Tweeter? What’s a Twitter account worth, and what—or who—creates its value? Of what effect is Twitter’s own prohibition on buying or selling accounts? Concluding these increasingly salient questions could not be resolved on a motion to dismiss, a federal magistrate judge refused to dispose of an employer’s misappropriation and conversion claims against a former employee whom it sued for continuing to use the company Twitter account after his departure (PhoneDog v Kravitz, NDCal, November 8, 2011).

As a product reviewer/video blogger, the defendant’s job had been to provide written and video commentary via a variety of media, including the company website and Twitter account. When he left the company, he simply changed the Twitter account’s handle to his own name, continued to use it, and took his 17,000 followers with him, refusing the company’s demand that he relinquish the use of the password and Twitter account. The employer argued that the Twitter account contained trade secrets in the form of the subscribers’ names and the account password. As the employer saw it, all “@PhoneDog_Name” Twitter accounts used by company employees, as well as the passwords to such accounts, constituted proprietary, confidential information.

The employer alleged that it suffered $340,000 in damages when the former employee absconded with the Twitter account. To reach this calculation, it asserted that according to industry standards, each of the 17,000 followers was valued at $2.50 and that its damages amounted to $42,500 ($2.50 x 17,000) for each month that the defendant continued to use the account. The employee countered that according to Twitter’s terms of use, all Twitter accounts are the exclusive property of Twitter and its licensors. He also suggested that followers have the right to subscribe and unsubscribe and that, as human beings, they cannot be categorized as property. Moreover, he argued that any value attributed to the account came from his efforts in posting tweets and each follower’s interest in following him, not from the account itself.

Whether the employer had any property interest in the Twitter account or the password and follower list, and what the proper valuation methodology would be, could not be resolved on the limited record before it, the court ruled. Refusing to dismiss the misappropriation and conversion claims, the court was satisfied that the employer had sufficiently described the subject matter of the “trade secret” in likening the list of Twitter followers to a customer list in which a company had an intangible property interest. That was enough, at this stage, to proceed.

Irreparable harm and the cyber-slacker. The next employee-turned-defendant in our story is a former video and social media producer for CYC, the primary online entity within a group of closely affiliated online marketing companies that develop and market herbal and beauty products (Ardis Health, LLC, et al v Nankivell, SDNY, October 19, 2011). Her duties included maintaining websites, blogs, and social media pages. As part of her responsibilities for the company’s online presence, she also maintained account passwords and other login information for websites, email accounts, and social media accounts, as well as the third-party servers where the company stored content.

When CYC saw fit to fire the employee, it requested that she return the access information to the various online accounts and servers. She refused to do so, leaving the company unable to gain access to their online accounts and websites to update them as needed for marketing purposes. CYC filed suit and was granted its motion for preliminary injunctive relief. It was uncontested that CYC owned the rights to the access information, and the employee’s unauthorized retention of the information thus formed the basis of a claim of conversion. The likelihood of the company’s success on the merits, therefore, was “unquestioned,” the court held.

Moreover, CYC satisfied the court that it would suffer irreparable harm if the access information were not returned while the case was pending. CYC relied heavily on its online presence to advertise its businesses, the court noted, which requires the ability to continuously update their profiles and pages and react to online trends. “The inability to do so unquestionably has a negative effect on plaintiffs’ reputation and ability to remain competitive, and the magnitude of that effect is difficult, if not impossible, to quantify in monetary terms,” wrote the court. “Such injury constitutes irreparable harm.”

The court rejected the former employee’s argument that CYC would not suffer irreparable harm absent return of the access information because the websites and blogs to which the information pertained had gone unused for the two years preceding her discharge. However, the defendant was a CYC employee throughout that two-year period, and it was her responsibility to post content to those websites, an incredulous court noted. “Defendant cannot use her own failure to perform her duties as a defense.” Moreover, any past failure to utilize the websites did not preclude a finding of irreparable harm here. Without the access information, CYC would be unable to pursue new opportunities that may arise. For example, CYC had recently embarked upon “daily deal” promotions, the court observed, “the success of which depends heavily on tie-ins with social media.” Thus, the court ordered the defendant to turn over the information.

“Tweets” and “updates” and “daily deals”— what a tangled web we weave. As the employment law implications of social networking continue to unspool, these proprietary squabbles promise to ensnare employers and employees alike.