I would like to thank everyone on today's BLR teleconference on the pitfalls on using social networking sites to conduct background checks on employees. I hope everyone enjoyed the seminar.
As I promised, here are the five general caveats employers should follow when using social networking sites to conduct background checks on employees:
1. The employer and/or its agents conduct the background check themselves; 2. The site is readily accessible to the public; 3. The employer does not need to create a false alias to access the site; 4. The employer does not have to provide any false information to gain access to the site; and 5. The employer does not use the information learned from the site in a discriminatory manner or otherwise prohibited by law.
If any of the listeners to today's teleconference have any follow-up questions or comments, please feel free to email me.
Employers are obligated only to provide copies of any documents signed by the employee or applicant relating to their job. Labor Code section 432.
Employees are allowed to inspect other categories of documents. For example, Labor Code Section 1198.5 requires employers allow employees and former employees access to their personnel files and records that relate to the employee’s performance or to any grievance concerning the employee. Inspections must be allowed at reasonable times and intervals. To facilitate the inspection, employers must do one of the following: (1) keep a copy of each employee’s personnel records at the place where the employee reports to work, (2) make the personnel records available at the place where the employee reports to work within a reasonable amount of time following the employee’s request, or (3) permit the employee to inspect the records at the location where they are stored with no loss of compensation to the employee.
Employers are required to permit current and former employees to inspect or copy payroll records pertaining to that current or former employee. Labor Code Section 226(b). Starting on January 1, 2003, an employer who receives a written or oral request from a current or former employee to inspect or copy his or her payroll records shall comply with the request as soon as practicable, but no later than 21 calendar days from the date of the request. Failure to comply with the request entitles the employee to a $750 civil fine. Labor Code Section 226, subdivisions (c) and (f)
There are limits to the documents that an applicant or employee can inspect from his or her file. The employee does not have the right to inspect records relating to the investigation of a possible criminal offense, letters of reference, or ratings, reports, or records that (a) were obtained prior to the employee’s employment, (b) were prepared by identifiable examination committee members, or (c) were obtained in connection with a promotional exam.
Employers are becoming more and more aware of the information obtainable via the internet about their current employees as well as applicants. Many are looking up prospective and current employees' Facebook and MySpace pages to glean more information about the individual. As the the Fox News video below shows, current employees need to be careful what they tell their bosses to get the day off of work, versus the information posted on their Facebook page.
While the information posted on the Internet on social networking sites is usually public for everyone to see, employers need to be aware of potential claims against them. The law is behind in the times and there are many uncertainties in this area. Listed below are some potential pitfalls that employers need to be aware of when using the Internet to conduct background checks. Federal and State Discrimination Claims
Because people are becoming so comfortable in sharing private information on social networking sites, employers may learn too much information about an applicant that would not and could not have been discovered through an interview. Discovery of this personal information is not unlawful – it is likely that the employer would find out many of these traits at the first in-person interview with the applicant anyway. However, employers cannot base its employment decisions upon a protected category, such as race or gender. By learning about this type of information of an applicant via their on-line profile, the employer may have to explain that the information did not enter into the hiring decision.
Invasion of Privacy Claims
Though one might argue that members of social networking sites have no expectation of privacy (since they’re posting information to the world) some applicants or employees might argue that the employer overstepped its legal bounds by using profile data in employment decisions. Arguably, the terms of service agreement may create expectation of privacy for users of site.
State Law Privacy Claims Employees could potentially argue that using Facebook, MySpace or similar site to conduct background checks violate state statutory law. For example, California and New York have statutes that prohibit employers from interfering with employee’s off-duty private lives. Employees may attempt to argue a public policy violation has occurred in violating a state statute that protects off-duty conduct from employer’s control.
State common law could also create liability. Generally, there are four common law torts for invasion of privacy:
intrusion upon seclusion,
public disclosure of private facts causing injury to one's reputation,
publicly placing an individual in a false light, and
appropriation of another's name or likeness for one's own use or benefit.
As explained by one court, the tort of unreasonable intrusion upon the seclusion of another, "depends upon some type of highly offensive prying into the physical boundaries or affairs of another person. The basis of the tort is not publication or publicity. Rather, the core of this tort is the offensive prying into the private domain of another." (citing Restatement (Second) of Torts § 652B, comments a, b, at 378-79 (1977)). Generally, the invasion of privacy must consist of (1) highly offensive intrusion (deceitful means to obtain information); and (2) prying into private information (information placed on the web is most likely not private).
Fair Credit Reporting Act
An employer’s use of social networking sites may implicate the FCRA, which places additional disclosures and authorization requirements on employers. In enacting the FCRA, Congress stated its underlying purpose was to ensure that decisions affecting extension of credit, insurance, and employment, among other things, were based on fair, accurate, and relevant information about consumers. The FCRA is intended to provide employee with notice of the background check, authorization to conduct the check in certain circumstances, and disclosure to the employee if the information is used in the employment context.
FCRA Definitions:
A “consumer report” is defined at as information (oral, written, or other communication) provided by a “consumer reporting agency” about credit matters as well as about a person’s “character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for…employment purposes.”
Another kind of “consumer report,” called an “investigative consumer report” contains information on a consumer’s character, general reputation, personal characteristics, or mode of living that is obtained through personal interviews with friends, neighbors, and associates of the consumer.
A “consumer reporting agency,” is defined as “any person who regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.”
Employers who conduct the background checks internally do not qualify as a “consumer reporting agency” and therefore the FCRA does not apply. Employers still need to be careful, however, because state law may apply. For example, California Investigative Consumer Reporting Agencies Act is more restrictive than the FCRA.
Terms of Service Violations
Facebook, MySpace, and similar sites have terms of service posted on their pages that generally prohibit use of their content for “commercial purposes.” Violation of the terms of service would not automatically create a cause of action in and of itself. However, as discussed above, it may be a way for a plaintiff to argue that there is an expectation of privacy in using the site and everyone who signs up to use the site is agreeing to abide by those terms.
The Electronic Communications Privacy Act of 1986
The ECPA was intended to expand wiretapping protections to electronic communications.
Title I of the ECPA provides that “any person who intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication ... shall be punished ... or shall be subject to suit ...."
Title II, known as the Stored Communications Act (SCA), focuses on communications in storage (e-mails, blogs, electronic bulletin or similar message boards) and most likely social networking sites. The Store Communications Act provides that "whoever (1) intentionally accesses without authorization a facility through which an electronic communication service is provided; or (2) intentionally exceeds an authorization to access that facility; and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system shall be punished ...."
However, the SCA exempts from liability, ``conduct authorized ... by a user of that service with respect to a communication of or intended for that user.´´ A virtual community that has some type of privacy protection can create liability for an employer who provides false information or assumes an identity to gain access to the site.
Therefore, employers need to stay away from pretexting in order to gain access to an applicant's or employee's on-line profile. Also, websites and social networking sites open to the public are not covered by the SCA. Courts have indicated that a terms of service agreement, and nothing more, would not be enough to create a private webpage. There needs to be more protections taken by the publisher of the on-line content in order for the individual to prevail in asserting the site was “private” under the ECPA.
Conclusion Generally, under Federal law, employers may utilize social networking sites to conduct background checks on employees if:
The employer and/or its agents conduct the background check themselves;
The site is readily accessible to the public;
The employer does not need to create a false alias to access the site;
The employer does not have to provide any false information to gain access to the site; and
The employer does not use the information learned from the site in a discriminatory manner or otherwise prohibited by law.
I am preparing for a press interview about how employers should approach dress code policies and it seems that it always is a surprise to people to learn that that the California Government Code specifically addresses employees' right to wear pants to work. Section 12947.5 states:
(a) It shall be an unlawful employment practice for an employer to refuse to permit an employee to wear pants on account of the sex of the employee. (b) Nothing in this section shall prohibit an employer from requiring employees in a particular occupation to wear a uniform.
Also, employers should note, dress standards or requirements for personal appearance need to be flexible enough to take into account religious practices. While it is lawful for an employer to implement rules about employee physical appearance, grooming, or dress standards, the standards cannot discriminate based on a protected category, such as race or sex. Also, click here to read a previous post about policies on tattoos, tongue rings, and body piercings in the workplace.
I would like to thank everyone who participated in the BLR teleconference this morning. It was a pleasure speaking to everyone.
Due to the great interest in this topic, we will be conducting the seminar again on at least one one occasion, maybe two. We will also provide a seminar specifically addressing liability under California state law when using social networking sites and the Internet in conducting background checks. Please check back within the next week or two for the dates on these teleconferences, or send me an email and I can notify you when we finalize the dates.
To download today's PowerPoint slides, click here.
Also, I've had a lot of requests to repeat the five general guidelines employers should keep in mind to avoid liability when conducting background checks on applicants on the Internet. Under Federal law, employers may utilize social networking sites to conduct background checks on employees if:
The employer and/or its agents conduct the background check themselves (i.e., does not use a third party to conduct the search);
The site is readily accessible to the public;
The employer does not need to create a false alias to access the site;
The employer does not have to provide any false information to gain access to the site; and
The employer does not use the information learned from the site in a discriminatory manner or as otherwise prohibited by law.
Today, the Court will hear argument in Gomez-Perez v. Potter, on whether the Age Discrimination in Employment Act bars retaliation by public employers for the filing of age discrimination complaints. For more information about the facts of the case, click here.
On Wednesday, the Court is scheduled to hear oral argument in CBOCS West v. Humphries, on whether a race retaliation claim can be brought under 42 U.S.C. § 1981 (Section 1981). Section 1981 provides that any “person within the jurisdiction of the United States” has the same right to “make and enforce” contracts, regardless of their skin color. Section 1981 protects parties to a contract (both at the time of formation and post-formation). The argument arises that Section 1981 applies to aspects of the employment relationship because that relationship is considered contractual, but courts have not defined to what extent this protection exists in the employment context. Employees who have not filed a lawsuits within the time limits proscribed by Title VII (which allows for retaliation claims), often revert to Section 1981 in order to keep their claim alive.
As employment litigators, we are finding ourselves dealing more and more with Internet related issues, such as an employer’s right to monitor employees’ computer usage, and an employee’s privacy rights to information posted on the Internet. A recent case, Krinsky v. Doe 6, __ Cal.App.4th ___ (Feb. 6, 2008), (click here for the opinion) dealt with the issue whether someone who posts anonymously on the Internet can protect his or her identity under the First Amendment. While not directly related to employment law, the ruling's effects could be felt by companies and should be read by anyone dealing with human resource issues in California.
Lisa Krinsky, a corporate officer of a Florida company, SFBC International, Inc., filed a lawsuit against 10 unknown individuals for defamation and intentional interference of contractual relations. She claimed the 10 unknown individuals (sued as Does 1-10) posted scathing attacks about her and her company on Yahoo!’s message board. Krinsky attempted to discover the identity of 10 of the pseudonymous posters by serving a subpoena on the custodian of records of the message-board host, Yahoo!, Inc. (Yahoo!) in Sunnyvale, California.
Yahoo! notified Defendant “Doe 6” that it would comply with the subpoena in 15 days unless a motion to quash or other legal objection was filed. Doe 6 then moved in California superior court to quash the subpoena on the grounds that (1) plaintiff had failed to state a claim sufficient to overcome his First Amendment rights for either defamation or interference with a contractual or business relationship, and (2) plaintiff's request for injunctive relief was an invalid prior restraint. Doe 6 moved to quash the subpoena in California in an attempt to hide his identity, but the trial court denied the motion. Doe 6 appealed this decision, contending that he had a First Amendment right to speak anonymously on the Internet.
The appellate court discussed the fact that there is never really true anonymity on the Internet. Moreover, Yahoo! warns users that their identities can be traced, and that it will reveal their identities if legally required to do so. The parties in the case agreed that the enforceability of the subpoena should be determined by weighing Doe 6's First Amendment right to speak anonymously against plaintiff's interest in discovering Doe 6’s identity in order to pursue her claim.
The appellate court’s decision ultimately turned on the issue whether the statements posted by the defendant were in fact defamatory. The analysis begins with examining whether plaintiff can establish with supporting evidence that a libelous statement has been made. If plaintiff can establish this, then the writer’s message has no First Amendment protections.
The California appeals court, in applying Florida defamation legal standards due to the fact that this is where the Plaintiff filed the underlying case, stated:
A publication is libelous per se in Florida "if, when considered alone without innuendo: (1) it charges that a person has committed an infamous crime; (2) it charges a person with having an infectious disease; (3) it tends to subject one to hatred, distrust, ridicule, contempt, or disgrace; or (4) it tends to injure one in his trade or profession. Plaintiff maintains that Doe 6 implied that she was dishonest by calling her a "crook" and asserted that she had a "fake medical degree," thereby accusing plaintiff of being dishonest or at least of engaging in conduct incompatible with her employment. He also subjected her to ridicule and disgrace and damaged her reputation by stating that she had "poor feminine hygiene." (citations and footnote omitted)
After examining the statements posted on the Yahoo! message board, the court found that the statements were not defamatory:
We likewise conclude that the language of Doe 6's posts, together with the surrounding circumstances -- including the recent public attention to SFBC's practices and the entire "SFCC" message-board discussion over a two-month period -- compels the conclusion that the statements of which plaintiff complains are not actionable. Rather, they fall into the category of crude, satirical hyperbole which, while reflecting the immaturity of the speaker, constitute protected opinion under the First Amendment.
As to plaintiff’s interference with contractual/business relationships claim, the appellate court held that this also failed:
As to Doe 6, it is clear from the pleading that the business tort alleged in the interference cause of action is based entirely on the "defamatory remarks" that were protected speech under the First Amendment. Casting the defamation claim in terms of interference with a business relationship does not save plaintiff's cause of action.
The appellate court concluded:
We thus conclude that Doe 6's online messages, while unquestionably offensive and demeaning to plaintiff, did not constitute assertions of actual fact and therefore were not actionable under Florida's defamation law. Because plaintiff stated no viable cause of action that overcame Doe 6's First Amendment right to speak anonymously, the subpoena to discover his identity should have been quashed. (fn. Omitted)
Jailed quarterback Michael Vick can keep nearly $20 million in bonus money he received from the Atlanta Falcons following a ruling today by a federal judge. While Vick’s case involved interpretation of the NFL collective bargaining agreement, how bonuses are treated is often a sticky area of the law for California employers. Vick's win today is a good reminder to California employers to review how they should be treating bonuses. Below is a general overview of California’s DLSE’s opinion regarding how California employers must treat bonuses (with some commentary added).
DLSE’s Definition of Bonus:
The DLSE opines that a bonus is money promised to an employee in addition to the salary, commission or hourly rate usually due as compensation. The word has been variously defined as “An addition to salary or wages normally paid for extraordinary work. An inducement to employees to procure efficient and faithful service.” Duffy Bros. v. Bing & Bing, 217 App.Div. 10, 215 N.Y.S. 755, 758 (1926). Bonuses may be in the form of a gratuity where there is no promise for their payment; or they may be required payment where a promise is made that a bonus will be paid in return for a specific result.
An employee forfeits bonus if the employee voluntarily terminates employment before bonus vests, and employer states that bonus is contingent on continued employment.
An employee who voluntarily leaves his employment before the bonus calculation date is not entitled to receive it if the employer has expressly qualified its promise of a bonus on a requirement of continued employment. Lucien v. All States Trucking (1981) 116 Cal.App.3d 972, 975. This has been the rule ever since Peterson v. California Shipbuilding Corp. (1947) 80 Cal.App.2d 827, 831, 183 P.2d 56. The California rule is in accord with the prevailing view that where a definite bonus or profit-sharing plan has been established and forms part of the employment contract, the employee is not entitled to share in the proceeds where he leaves the employment voluntarily prior to vesting. (See DLSE Opinion Letter 1993.01.19)
If employer has not conditioned bonus on employment at time of payment then the employee may be entitled to receive bonus.
Where the promise of a bonus is not expressly conditioned on continued employment an employee who voluntarily leaves employment may be entitled to the bonus if other applicable conditions have been satisfied. Thus, in Hill v. Kaiser Aetna (1982) 130 Cal.App.3d 188, an employee who resigned on January 3, 1978, was held to be vested in his right to a bonus for calendar year 1977 where: (1) the bonus plan did not expressly require continued employment, and (2) the bonus was an inducement for continued employment. Id., at 196.
Caution: implied contract for bonus could be created by employer’s actions.
The regular payment of the bonus in past years may ripen into an implied contract for compensation in the absence of a specific contract. (D.L.S.E. v. Transpacific Transportation Co.(1979) 88 Cal.App.3d 823; cf. Simon v. Riblet Tramway Co., 8 Wash.App. 289, 505 P.2d 1291, 66 A.L.R.3d 1069, cert. den. 414 U.S. 975, 94 S.Ct. 28 9, 38 L.E d.2d 218 ). However, in order to be actionable, there must be some objective criteria upon which the bonus is based.
There is an exception to this general rule if bonuses which are completely discretionary, based on no objective criteria and are not routine, would not give rise to an implied bonus contract.
Termination of the employment by the employer could create obligation to pay bonus to the employee.
Common law contract theories will not allow one party to the contract to prevent the other party from completing the contract. If the employee is discharged before completion of all of the terms of the bonus agreement, and there is not valid cause, based on conduct of the employee, for the discharge, the employee may be entitled to recover at least a pro-rata share of the promised bonus. (DLSE Opinion Letter 1987.06.03) Again, if a bonus is discretionary, this general rule would not apply.
Last week, the California Supreme Court held that it is not a violation of California law for an employer to terminate an employee who tests positive for marijuana, even though the employee was prescribed the marijuana for medical purposes under California’ Compassionate Use Act of 1996.
The conflict in Ross v. Ragingwire Telecommunications, Inc. was between California's Compassionate Use Act, (which gives a person who uses marijuana for medical purposes on a physician’s recommendation a defense to certain state criminal charges and permission to possess the drug) and Federal law (which prohibits the drug’s possession, even by medical users). The employer in this case terminated plaintiff’s employment based on a positive test for marijuana even through the plaintiff provided a doctor’s note explaining that he was prescribed marijuana to alleviate back pains.
The Supreme Court explained that the employer's decision to terminate plaintiff was not illegal:
Nothing in the text or history of the Compassionate Use Act suggests the voters intended the measure to address the respective rights and duties of employers and employees. Under California law, an employer may require preemployment drug tests and take illegal drug use into consideration in making employment decisions. (Loder v. City of Glendale (1997) 14 Cal.4th 846, 882-883.)
Plaintiff’s position might have merit if the Compassionate Use Act gave marijuana the same status as any legal prescription drug. But the act’s effect is not so broad. No state law could completely legalize marijuana for medical purposes because the drug remains illegal under federal law (21 U.S.C. §§ 812, 844(a)), even for medical users (see Gonzales v. Raich, supra, 545 U.S. 1, 26-29; United States v. Oakland Cannabis Buyers’ Cooperative, supra, 532 U.S. 483, 491-495). Instead of attempting the impossible, as we shall explain, California’s voters merely exempted medical users and their primary caregivers from criminal liability under two specifically designated state statutes. Nothing in the text or history of the Compassionate Use Act suggests the voters intended the measure to address the respective rights and obligations of employers and employees.
The Court also provided that a reasonable accommodation, as required under California’s FEHA, does not include an employer’s permission to use illegal drugs:
The FEHA does not require employers to accommodate the use of illegal drugs. The point is perhaps too obvious to have generated appellate litigation, but we recognized it implicitly in Loder v. City of Glendale, supra, 14 Cal.4th 846 (Loder). Among the questions before us in Loder was whether an employer could require prospective employees to undergo testing for illegal drugs and alcohol, and whether the employer could have access to the test results, without violating California’s Confidentiality of Medical Information Act (Civ. Code, § 56 et seq.). We determined that an employer could lawfully do both. In reaching this conclusion, we relied on a regulation adopted under the authority of the FEHA (Cal. Code Regs., tit. 2, § 7294.0, subd. (d); see Gov. Code, § 12935, subd. (a)) that permits an employer to condition an offer of employment on the results of a medical examination. (Loder, at p. 865; see also id. at pp. 861-862.) We held that such an examination may include drug testing and, in so holding, necessarily recognized that employers may deny employment to persons who test positive for illegal drugs. The employer, we explained, was “seeking information that [was] relevant to its hiring decision and that it legitimately may ascertain.” (Id. at p. 883, fn. 15.) We determined the employer’s interest was legitimate “[i]n light of the well-documented problems that are associated with the abuse of drugs and alcohol by employees — increased absenteeism, diminished productivity, greater health costs, increased safety problems and potential liability to third parties, and more frequent turnover . . . .” (Id. at p. 882, fn. omitted.) We also noted that the plaintiff in that case had “cite[d] no authority indicating that an employer may not reject a job applicant if it lawfully discovers that the applicant currently is using illegal drugs or engaging in excessive consumption of alcohol.” (Id. at p. 883, fn. 15.) The employer’s legitimate concern about the use of illegal drugs also led us in Loder to reject the claim that preemployment drug testing violated job applicants’ state constitutional right to privacy. (Id. at pp. 887-898; see Cal. Const., art. I, § 1.)
(footnote omitted).
The Plaintiff also alleged a cause of action for wrongful termination in violation of public policy. Generally, at-will employees can terminate or be terminated from their job at any time, but an employer cannot terminate an employee for reasons that violate a fundamental public policy of the state. The Court rejected plaintiff’s position that there was a fundamental public policy that permitted him to use medical marijuana and be under its influence while at work. “Nothing in the [Compassionate Use Act’s] text or history indicates the voters intended to articulate any policy concerning marijuana in the employment context, let alone a fundamental public policy requiring employers to accommodate marijuana use by employees."
The opinion can be viewed at the Court’s website (WRD) (PDF).
On February 26, 2008, I will be presenting a nation-wide teleconference entitled “Hidden Risks of Using Facebook, MySpace, and Other Websites to Scope Out New and Prospective Hires" through BLR. More information can be found at BLR’s website here.
During this 90-minute audio conference, I will cover the legal pros and cons of relying on online data when you screen potential and current employees – with a special emphasis on information found via Google, Facebook, MySpace, and other social networking sites. I will also cover the following topics:
The most common mistakes employers make when they check applicants and current employees on the Web
Which online sites pose the greatest legal threats for employers when used for HR purposes
When it’s legal to use information found online to evaluate applicants and workers – and what types of online details you must never use or keep (no matter how damaging or relevant it may seem)
How you can decide whether the information you’ve found online is accurate
The steps you should take if an applicant or employee claims that your online searches constitute an illegal invasion of privacy
When your Facebook, MySpace, or Google searches may cross the line into discrimination
The red flags that you may have violated the Fair Credit Reporting Act when surfing the Web to learn more about applicants or employees – and how to protect yourself
In preparing for the conference, I am interested in specific questions anyone would like addressed, problems companies have encountered in this area, or any other comments you have about this topic. Please email me at azaller[at]vtzlaw.com.
A bit off topic, but related to social networking sites, please feel free to connect with me or view my profile on Linkedin. Click here for my Linkedin profile.
Governor Schwarzenegger recently signed California Assembly Bill (AB) 392 into law. That bill creates a new leave of absence right for spouses of military personnel while those personnel are on a leave of absence from deployment.
Specifically, the military spouse law provides that:
Employers with 25 or more employees in the United States to allow eligible employees to take up to 10-days off from work, on an unpaid basis, when his/her spouse is on leave from deployment during a period of military conflict;
Eligible employees are defined as employees who work at least an average of 20 hours per week and whose spouse is a member of the United States Armed Forces, National Guard, or Army Reserve on active duty in an area of military conflict;
Employees must provide notice to the employer within 2 business days of receiving official notice that his/her spouse will be on a leave from deployment.
It is important to note that it does not appear there are any circumstances under which an employer would be permitted to deny an employee's leave request. Accordingly, employers should be extremely careful in dealing with requests for leave under this new law.
An employer’s obligations in conducting background checks and providing references for former employees is an extremely nuanced area of employment law and could expose an employer to significant liability. As explained below, conducting background checks/reference checks is critical for employers to defend themselves from negligent hiring/supervision claims. However, when conducting background checks employers must also be careful not to invade the employee’s privacy rights, and be aware that many background checks could fall under the Fair Credit Reporting Act (FCRA) (and the California equivalent of this Federal law), which require the employer to comply with additional requirements. We will be providing a series of posts related to these issues over the next few weeks. This first post focuses on employers’ potential liability under a negligent hiring or supervision cause of action.
Negligent Supervision - Standard
An employee who has been harassed or discriminated against, or otherwise injured by the acts of another employee, may attempt to sue the employer for negligence in supervision of the other employee. For example, an employee may state a cause of action against an employer in retaining an employee who allegedly sexually harassed the plaintiff. (Hart v. Nat'l Mortgage & Land Co., 189 Cal.App.3d 1420, 1426 (1987)). Similarly, third-parties who do not work for the employer, but who have been injured by an employer’s agent may also allege a negligence claim against an employer.
In order to establish a cause of action for negligent supervision, a plaintiff must prove: (1) the existence of a legal duty of employer to employee to use due care; (2) that the defendant-employer breached that duty; (3) any breach proximately caused plaintiff's damages; and (4) damages.
An employer's duty, is breached only when the employer knows, or should know, facts which would warn a reasonable person that the employee presents an undue risk of harm to third persons in light of the particular work to be performed. As one court stated, the “cornerstone of a negligent hiring theory is the risk that the employee will act in a certain way and the employee does act in that way.”
Examples
A court held that a student sexually molested by a teacher could pursue claim against the teacher's employer (which was the school district) for negligent hiring and supervision, if the persons responsible for hiring and/or supervising teachers knew or should have known of teacher's prior sexual misconduct towards students, and that the teacher posed reasonable foreseeable risk of harm to students under his supervision.
In another case, a teacher admitted on his employment application that he had been arrested for public indecency and had a bench warrant out for his arrest. The teacher kidnapped and assaulted several children at the school, and the children’s representatives prevailed against the school under a negligent hiring claim because the school failed to investigate the teacher’s disclosures about his background and hired him anyway.
General Rule For Employers
It is critical that employers take reasonable steps to conduct appropriate background checks on its employees to ensure that the employee does not present a knowable risk to other employees or third-parties. Furthermore, if an employer knows or reasonably should know that an employee poses a risk to other employees or third parties, an employer needs to take appropriate precautions, which could include terminating the employee, in order to protect other employees or third parties. Next time we will discuss the balance of obtaining appropriate information during the background check without violating an employee’s privacy rights.
How can a company prevent a former employee from spreading false rumors about the company on the Internet?
One answer, as according to Kevin O’Keefe, is counter intuitive. Kevin’s answer to the question in a bit, but first: What are the legal options a company can take to prevent an ex-employee from gossiping about the company on the Internet and possibly hurting the company’s reputation? In California, generally speaking there is not much a company can do. First, the former employee has the freedom of speech, and even if the company has a non-compete agreement (which are typically difficult to enforce under California law) the agreement probably does not address this situation. Only if the former employee discloses trade secrets, or other confidential information protected under the law, can the company bring legal action against the former employee to prevent publication. Generally stated, the company has an up-hill battle, and legal action should be the last resort.
Kevin suggests an alternative to legal action: start blogging. While Kevin is biased to blogs (he is the owner of Lexblog – the developer of this blog), his solution is excellent: “A blog, as a means of handling disgruntled employees on the net, may be a bit frightening for corporate heads and PR/communications professionals. But times are changing. Practicality requires doing things differently than they've been done in the past.” While I suggest approaching Kevin’s recommendation with caution (for example, a company would not want to start airing its dirty laundry – especially if potential legal actions are on the horizon). But if the employee has the freedom to sway public opinion via the Internet – the company should also counter this in the marketplace of ideas.
In California, all employers must meet workplace posting obligations. Workplace postings are usually available at no cost from the requiring agency. The Department of Industrial Relations requires employers to post information related to wages, hours and working conditions in an area frequented by employees where it may be easily read during the workday. Additional posting requirements apply to some workplaces depending on numerous items, such as the employer's industry.
How do you find out what posters are needed in your company? While not comprehensive, a great starting place is at the DLSE's website here that provides a list of the recommended posters. In addition to listing the posters required, employers can download many of the posters directly from the website. For example, the poster setting forth the minimum wage (which is required to be posted by all California employers) can be downloaded in English and Spanish from the site.
The California Labor & Defense Blog, is beginning a new series - the Weekly Tip - to remind employers, HR professionals and in-house counsel about the intricacies of California labor and employment law. This week we are posting about the DLSE's recommendation on how employers should treat "on-call" and "stand by" time.
The DLSE takes the view that, on-call or standby time at the work site is considered hours worked for which the employee must be compensated even if the employee does nothing but wait for something to happen. “[A]n employer, if he chooses, may hire a man to do nothing or to do nothing but wait for something to happen. Refraining from other activities often is a factor of instant readiness to serve, and idleness plays a part in all employment in a stand-by capacity”. (Armour & Co. v. Wantock (1944) 323 U.S. 126) Examples of compensable work time include, but are not limited to, meal periods and sleep periods during which times the employees are subject to the employer’s control. (See Bono Enterprises v. Labor Commissioner (1995) 32 Cal.App.4th 968 and Aguilar v. Association For Retarded Citizens (1991) 234 Cal.App.3d 21)
Whether on-call or standby time off the work site is considered compensable must be determined by looking at the restrictions placed on the employee. A variety of factors are considered in determining whether the employer-imposed restrictions turn the on-call time into compensable “hours worked.” These factors, set out in a federal case, Berry v. County of Sonoma (1994) 30 F.3d 1174, include whether there are excessive geographic restrictions on the employee’s movements; whether the frequency of calls is unduly restrictive; whether a fixed time limit for response is unduly restrictive; whether the on-call employee can easily trade his or her on-call responsibilities with another employee; and whether and to what extent the employee engages in personal activities during on-call periods.
The DLSE also considers travel time compensable work hours where the employer requires its employees to meet at a designated place and use the employer’s designated transportation to and from the work site. (Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575)
I recently discovered the blog "Building a Better Restaurant" by Jeffrey Summers. If you are in the restaurant business, it is definitely a blog you should subscribe to.
Jeffrey's recent post about 16 ways to grow your staff's loyalty is a good reminder to all employers about how to keep your employees motivated and working for you. He writes:
Employees matter. No, really, think about it: Your competitors have access to the exact same resources as you—which means infinite choices exist for your customers, and for your employees as well.
Jeffrey lists the following as the ways to keep your employees happy:
1. Don’t misrepresent your culture. 2. Learn the rules of engagement. 3. Cross-pollinate your culture. 4. Be a good corporate citizen. 5. Give praise where praise is due. 6. Get creative with benefits. 7. Be aware of the changing needs of your employees. 8. Great employees thrive under great leaders. 9. Conduct “stay” interviews regularly. 10. Create a “best” work environment. 11. Help employees achieve work/life balance. 12. Insist that your employees take vacations. 13. Create an environment of trust. 14. Get rid of weeds. 15. Use internship and mentoring programs to grow and nurture new talent. 16. Take a seasonal approach.
With all of the recent press about legislation to prohibit "bullies" in the workplace, Jeffrey's post is a good reminder about what employers need to do keep employees happy and that market forces will penalize a "bad" employer in terms of high employee turnover and low customer service. Also, as a practical matter, employees will eventually leave your company, but if they feel that they have been treated fairly, they are less likely to pursue legal action against a former employer out of spite.
The California Supreme Court decision today in Prachasaisoradej v. Ralphs Grocery, finally clarified once-and-for-all that employer profit-based incentive plans are permissible in California. For the uninitiated, this might seem like a “no brainer.” After all, what could possibly be wrong with sharing profits with one’s employees, isn’t that the type of responsible corporate citizenship that should be encouraged in a 21st Century “ownership society.”
In fact, prior to today’s decision, Plaintiff’s lawyers had successfully prosecuted a number of class actions that that claimed these plans were illegal. The operative legal theory of these lawsuits (some of which resulted in multi-million dollar settlements) was that the employer’s plans illegally required workers to foot part of the bill for the company’s business expenses because any increase in expense items could result in lower wages.
The Ralph’s Groceries decisions seems to have put a stake in the heart of this specious line of reasoning. In the process of upholding the legality of an incentive plan for grocery store managers, the Court explained:
The Plan was not illegal, we conclude, simply because, pursuant to normal concepts of profitability, ordinary business expenses, such as storewide workers’ compensation costs, and storewide cash and merchandise losses, were figured in, along with such other store expenses as the electric bill and the cost of goods sold, to determine the store’s profit, upon which the supplementary incentive compensation payments were calculated. By doing so, Ralphs did not illegally shift those costs to employees. After fully absorbing the expenses at issue, Ralphs simply determined what remained as profits to share with its eligible employees in addition to their normal wages.
Employers should keep in mind, however, that the Ralph’s Groceries decision was not dealing with earned wages. In terms of legal consequences, there is a world of difference between making a determination of what an employee must do in order to earn a bonus in the future (such as meeting the store profitability target at issue in Ralph’s Groceries) and making an after-the-fact reduction in a bonus that has already been earned. The latter scenario will almost always be illegal.
Once we are able to dissect the decision more, we will post more of our thoughts about the case. The case can be read in its entirety here.
Is it illegal to be a bully in the workplace? Many employees are astounded to find out that it is not. But, recently states have begun to consider legislation that would make it illegal to be a bullying boss. California attempted to pass "anti-bullying" legislation in 2003 (the bill died in committee), and currently states such as New Jersey, New York state, Vermont and Washington state are debating bills that would make such behavior illegal.
As this LA Times article indicates, there is a growing opinion that workplace bullying needs to be addressed by legislation. The LA Times reports:
Jumping on the bandwagon, the AFL-CIO launched the My Bad Boss contest, now in it second year, to "expose what is a growing problem," Nussbaum said, and to give workers an opportunity to get their bad-boss experiences "off their chests." Last year's winning entry was "Dr. X," a dentist who took $100 out of each employee's paycheck for every canceled appointment.
(On a side note - Dr. X's practice of deducting the employee's paycheck for each canceled appointment probably violates the California Labor Code.) The legislation I've seen so far is not very clear on the specifics about what constitutes illegal bullying. Employers already have an economic incentive to prevent bullying in the workplace (as written about on this blog previously here), and it is likely that the courts would become even more overwhelmed with these types of cases.
When new hires fail, it costs the organization. Some sources say at minimum it is salary and a half. It costs time, recruitment efforts, salary, training, client relationships, morale, sales, productivity, and the list goes on and on.
In a recent Leadership IQ study, it found that the number one reason for new hires not working out wasn't a lack of competence... it wasn't a lack of knowledge... it wasn't even a lack of technical skill. Rather, it was coachability. Twenty six percent of new hires failed because they couldn't accept feedback. Other top reasons included an inability to manage emotions, lacking the necessary motivation or initiative, and not possessing the right temperament for the position.
So, if we know that a wrong hire is costly and we know why new hires tend to fail, why don't we do something about it? Because the areas where new hires are failing the test isn't an area that most hiring managers are used to testing. How do you interview for coachability? How do you assess someone's ability to take initiative? How can you tell if someone possesses the right temperament for the position?
The answer: Behavior Interviewing. Behavioral interviewing has been around for quite some time, and it's getting more and more use in the workplace. The basic premise is that the best predictor of future performance (how effectively a candidate MIGHT meet the requirements for the position) is past performance (how effectively a candidate HAS met the requirements for the position). This is not to say that a viable candidate can only have performed the exact job at another organization. Rather, the goal is to focus on what's known as KSAs (Knowledge, Skills, and Abilities). These are transferable and assessable in an interview when asked effectively.
The strategy is to get away from asking hypothetical questions such as, "If you were in a conflict situation with another co-worker, how would you handle it?" Rather, ask questions that are more direct, more depth-seeking, more "real" such as, "Can you give me a specific example of a time when you didn't get along with a co-worker of yours? What was the conflict about? How did it start? What did you do? How did he respond? How did you manage through it? What was the result?" Get your interviewee to become a storyteller, and you'll learn so much more. And, if she says that she's never had any conflict with another co-worker, then that should raise some red flags as well.
Joe - thanks for the great information. Joe is a communications specialist that has provided executive and managerial training for companies of all sizes.
FedEx is still litigating its classification of its drivers as independent contractors. FedEx lost a case recently in California in Los Angeles and the court ruled the company owes 200 drivers $5.3 million in expenses. In addition, the California Employment Development Department (EDD), which is responsible for collecting payroll taxes, assessed FedEx Ground owed more than $7.88 million in back payroll taxes because it also held the drivers were misclassified as independent contractors. The audit covered the period July 2001 to June 2004 and concluded that some of the drivers were properly classified as independent contractors, but found the “single-route” drivers were employees.
As these cases illustrate, California employers need to approach the independent contractor classification very carefully. If a worker is properly classified as an independent contractor it can save the company money and give the workers great flexibility. However, misclassifying employees as independent contractors exposes the company large damages for unreimbursed expenses, unpaid overtime, back payroll taxes, and many other items.
For guidance on whether employers have properly classified its workers as independent contractors, the California Division of Labor Standards Enforcement (“DLSE”) provides an explanation of the “economic realities” test. The DLSE maintains that the most indicative fact determinative of whether a worker is an employee or an independent contractor depends on whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed. The DLSE also sets forth the other factors that are considered when determining an employee’s status:
Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
Whether or not the work is a part of the regular business of the principal or alleged employer;
Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
Whether the service rendered requires a special skill;
The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
The length of time for which the services are to be performed;
The degree of permanence of the working relationship;
The method of payment, whether by time or by the job; and
Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.
Further details about the DLSE’s position on who classifies as an independent contractor can be found here. The DLSE’s information provides a great starting point for employers to audit their classifications of employees, but each case may present different facts, and the economic realities test may change depending on the jurisdiction (i.e., civil court or an EDD assessment) and whether state or federal law is at issue.
Recruiting applicants and interviewing new applicants is critical to running a successful business and staying ahead of the competition. I think this is one area that many companies do not spend enough time thinking about, training their managers about, and tracking how effective managers are in hiring good people. As noted on Guy Kawasaki's blog, one of his readers provides a very detailed explanation of the interview process at Hewlett Packard. This is a must read for any human resources manager establishing a protocol for interviewing new applicants. It is obvious that HP knows how critical interviews are for determining fit within the company, and have given the process a lot of thought.
The scam is that the new poster can be downloaded from the Department of Labor's website for free - click here to download the new wage poster. Employers can simply post this new poster next to the existing 2007 workplace posters.
California employers need to continue to pay employees at least the California minimum wage of $7.50 per hour for the remainder of 2007 and $8.00 per hour beginning January 1, 2008. It is a bit baffling that California employers are required to pay more than the Federal minimum wage, but they are still required to post the information.
Yes – you are still reading the California Labor & Employment Defense blog and we do have something to say about the items listed in the title of this post.
The article correctly notes that generally employers are allowed to make job determinations upon and employee’s tattoos and body piercings. Employers can also develop policies prohibiting employees to expose the tattoos and body piercings. A great example of an employer implementing such prohibitions is Disney’s very conservative prohibitions mentioned in the LA Times article.
One area of caution, if an employee protests against an employer’s grooming standard based upon his or her religion, the employer should carefully review whether it needs to reasonably accommodate the employee under the law.
Diane Pfadenhauer at Strategic HR Lawyer has an excellent post about the recent Sixth Circuit case Thomas v. Miller. The court in Thomas held that even though an employer may have less than 20 employees, it may be subject to COBRA requirements if the employer has used “conduct or language amounting to a representation” that an employee is entitled to COBRA benefits. Diane reminds employers to carefully draft their policies to ensure that the policy does not apply to employee who may otherwise be exempt from the law at issue.
I see this occur often in regards to California specific laws. For example, California Labor Code section 230 provides certain protections to victims of domestic violence or sexual assault. Employers cannot discriminate against employees who must take time off to seek a temporary restraining order or other injunctive relief to ensure the health or safety of the employee and/or his or her child. If an employer has 25 or more employees, however, the employer is prohibited from discharging, discriminating, or retaliating against an employee who is a victim of domestic violence or sexual assault and who takes time off to seek medical attention and a list of other services. Often times small employers assume this second requirement pertains to them and incorporate it into their policies without noticing that they are not covered by this law.
Employment lawsuits are continually on the rise. Here are seven things that may help you avoid employee lawsuits:
Treat Employees with Respect
Communicate with Your Employees
Implement an Effective Unlawful Discrimination and Harassment Policy
Document, Document, Document
Conduct Honest Employee Evaluations on a Regular Basis
Do Not Retaliate
Take Action and Investigate Promptly
These simple steps will go a long ways to reducing employee lawsuits. To ensure that your company has done everything it can to avoid employee lawsuits, you should have your employment policies, training and practices reviewed by your employment lawyer.
Rush's top seven tips are great reminders about what employers need to continually remind themselves to do. I also thought that it is interesting that Rush's top tip - treat your employees with respect - cannot be found in any of the 50 U.S. state laws, federal law, or any case law. Even though there is no "legal" requirement to treat employees with respect, I wholeheartedly agree that this is the single best step employers can take to prevent litigation (in addition to having a satisfied and productive workforce).
I also wanted to add three more tips to round out a "top ten" list for California employers:
8. Develop and strictly enforce a meal and rest break policy 9. Ensure your exempt employees (i.e., salaried employees) are properly classified as exempt under California law; and 10. Review and update your employee handbook and/or policies once a year to incorporate any changes in the law.
Q: Can an employer implement an “English-only” policy in the workplace?
A: Generally speaking, no. California Government Code section 12951 provides that an employer can only implement or enforce a policy that limits or prohibits the use of any language in the workplace unless:
1.The language restriction is justified as a business necessity; and 2.The employer notifies the employees of the circumstances and the time when the language restriction is required to be observed, and the consequences of violating the restriction.
Business necessity is defined by Government Code section 12951 as “an overriding legitimate business purpose such that the language restriction is necessary to the safe and efficient operation of the business, that the language restriction effectively fulfills the business purpose it is supposed to serve, and there is no alternative practice to the language restriction that would accomplish the business purpose equally well with a lesser discriminatory impact.” Companies should not consider implementing “English-only” policies unless they can point to a legitimate safety reason for the restriction.
No. 1 - You only litigate when you have an important interest to protect. Litigation is costly. Incredibly costly. But it is not the expense that is the real issue, it's the diversion of resources. Time employees spend reviewing e-mails and documents, educating lawyers and preparing for depositions is time away from the business. That's the real cost of litigation.
No. 2 - A non-judicial resolution is almost always preferable. When you file a complaint, you are turning over resolution of an issue to a third party - be it a judge, arbitrator or jury. To a great degree you lose control of the outcome.
No. 3 - You litigate when you have a high degree of confidence that you will prevail. Bluffing is for weekend games of Texas Hold'em . When you file suit, you need to have fully evaluated all aspects of the case to ensure that the outcome will be favorable.
No. 4 - You litigate to win. This means that your employees, board and management team fully understand and support the commitment (both financial and time) required to prevail. It also means having seasoned litigation counsel who understand your business and objectives.
While his perspective is towards enforcing a company's intellectual property rights, his analysis can easily be applied to defending employment litigation. Most notably different is that employers do not chose when to be sued for wrongful termination or wage and hour claims. However, the company should be completely prepared to defend itself in litigation - in California it is only a matter of when. In order to develop a strong defense, the company should work with experienced employment attorneys to establish policies that (1) comply with the law and (2) assist the company when a lawsuit is filed. I mention the second point because while companies have policies that comply with the law, when litigation starts the fact that you have complied with the law is good, but the company needs PROOF that it complied with the law. An experienced employment litigator can help companies set up policies to document the areas that will most likely be areas of contention during litigation. For example, California companies should have a clear "at-will" policy signed by the employee, should have a system (preferably computer based) for recording when employees take their meal breaks, and have a clear policy on rest breaks that is in some way acknowledged by employees.
Also, this process of working with an attorney in establishing solid policies is a great period to see if the company likes working with the attorney and (hopefully) develops a good relationship that is critical in any attorney-client relationship. This also allows the attorney to become familiar with the company and its business and objectives as Mike mentions in No. 4 above.
Finally, companies need to understand Mike's point No. 4 - You litigate to win. Once a case is filed against a company, the message communicated throughout the company should be that it is extremely important to spend the time necessary to assist the outside counsel in defending the case. Owners, executives and employees must give their undivided attention to the litigation. To do otherwise is a costly mistake.
As another reminder, Van Vleck Turner & Zaller LLP will be conducting a free seminar for employers and human resource professionals regarding employee handbooks and employment policies.
The seminar will take place on July 10, 2007 at 3:00 p.m. to 4:30 p.m. at Tony P's Dockside Grill in Marina del Rey. After the seminar, please join us for networking and cocktails overlooking Marnia del Rey.
Attorneys from our firm will lead a discussion on employee handbooks and policies including:
Policies every California employer must have
Policies every California employer should have
What not to include in an employee handbook or policies distributed to employees
Other issues related to handbooks and policies
At the end of the presentation, we will also have a question and answer period for the attendees to ask any general employment related questions. Download a flier with more information here.
To register, please email us or call us at (213) 996-8445 and ask for Vanessa to register.
A defense lawyer in a emotional distress claim brought against a school district wanted access to all of the plaintiff's postings at MySpace and FaceBook. However, a judge ruled that the plaintiff's right to privacy trumped the defenses right to information which or may not be relevant to defense of the suit.
Kevin rightly notes that lawyers today need to have a working knowledge of the internet and sites like MySpace and FaceBook. Our experience is that the Internet is full of information about individuals that is extremely useful during litigation. This information is usually posted by the individual himself or herself and is shared with the rest of the world. We have had cases were a plaintiff has posted information about his or her prior job on the internet that inevitably contradicts what he or she said during sworn testimony in a deposition.
We also recommend that before an employer hires an employee, the employer should do a quick internet search to see if the employee has information posted in MySpace, FaceBook, Monster.com, and simply run the employee's name through Google. Often times this will enable you to see the “real” person you are about to hire.
This raises a great point for California employers: what are California employers’ obligations to disclose payroll information?
California Labor Code section 232 provides that employers cannot require employees to refrain from “disclosing the amount of his or her wages.” Employers are not required to disclose this information, but the labor code does prohibit an employer from discharging, disciplining, or discriminating against an employee who discloses his or her wages. This is one of the few occasions I believe the current law in California reaches a good balance in giving the employees some control over this "private" information (they do not have to share their wage information with co-workers if they don't want to), but still allows employees who believe they are not being paid fairly, whatever the reason, to do some research of their own.
Using Facebook, MySpace, and Other Websites to Scope Out New and Prospective Hires" through BLR. More information can be found at BLR’s 
information found via Google, Facebook, MySpace, and other social networking sites. I will also cover the following topics: