Employment Law and the Bottom Line

Polsinelli PC. In California, Polsinelli LLP
Employment Law and the Bottom
Line
June 25, 2015
Karen R. Glickstein
Polsinelli PC

real challenges. real answers.
SM
Today’s Presentation
 Social Media As Company “Property”
 Legal Issues Affecting Ability to Protect
 Whistleblowers—Current Trends
 “Hot Issues”-A speedy checklist

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Social Media: “Like” It Or Not?

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Social Media Drives Business

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What are the issues?
 Growing use of social media
 Employers Rely on Social Media to
Promote Business and for Employees to
Perform Job
 Who “owns” social media?
 NLRB issues
 BYOD issues

real challenges. real answers. sm
 People on Facebook
 More than 1.28 billion monthly active users (15% increase from prior
year)
 Five new profiles created every second (83 million fake profiles)
 50% of our active users log on to Facebook in any given day
 Average user has 338 friends; median is 200 friends
 People spend over 700 billion minutes per month on Facebook
 There are over 900 million objects that people interact with (pages,
groups, events and community pages)
 Average user is connected to 80 community pages, groups and
events
 Average user creates 90 pieces of content each month
 More than 30 billion pieces of content (web links, news stories, blog
posts, notes, photo albums, etc.) shared each month.
Facebook Facts from Pew (Feb. 2014) and Zephoria, Internet
Marketing (June 2014) and other sources

If Facebook Were a Country
1. China
2. India
3. FACEBOOK
4. United States
5. Indonesia
6. Brazil
7. Pakistan
8. Bangladesh

Linked In Facts (from the internet of course)
 Born on May 5, 2003
 332 million members
 2 new users join
every second
 25 million profiles
viewed every day
 1 in 3 professionals
on the planet use it
 Average connections:
913
 39 million students
and recent grads
 41% of millionaires
use
 13% of users don’t
use FB
 59% of users don’t
visit Twitter
– Source:
http://www.jeffbullas.com/2014/12/02/25-
linkedin-facts-and-statistics-you-need-to-
share/

More Linked In Trends (as reported by
www.forbes.com)
 41 percent of people
report over 500
connections; but
increasing numbers
report over 1000;
 Increased numbers
spending more than 2
hours a week;
 25% do not know about
settings that allow to hide
connections
 Groups are falling
somewhat, but people still
using
 Company page usage
jumped from 24% to 57%

Twitter By The Numbers
 554, 750,000 users
on Twitter
 Close to 500K people
sign up every day
 400 million tweets a
day
 9100 tweets per
second
 Most companies large
and small use Twitter
 33% of users follow a
brand
 Increase in use for
business
recommendations

What are the Issues?
 Branding/Marketing
 Trade Secrets and
Proprietary
Information
 Clarify expectations
at the beginning
 Treat as all other
company property or
“creations”
 Duty of employees
to update/change
information?

In re CTI, Inc., LLC, 528 BR 359 (S.D.
Bankr. Tex. 2015)
 Chapter 11 reorganization
 Owner claimed all social media accounts
belonged to him personally, not to Debtor
 Question: are the pages “property of the
estate?”
 Court holds that social media accounts
are property (like subscriber lists)
– Personal page v. company page?

Phone Dog v. Kravitz, 2011 WL 5415612
(N.D. Calif.)
 Employee maintained Twitter handle for
use with marketing business
 Account had about 17,000 followers
 Employee leaves, company requests
password and handle. Employee refuses
 Lawsuit filed alleging trade secrets,
interference with business relationship,
and conversion

Case Ultimately Settles before Trial
 But not before court
finds that claim plead
for misappropriation
of trade secrets
 Rejects employee’s
claim that followers
were public
information

 See also, AR2 LLC v.
Rudnick, (SD. Fla. 2014)
CEO engaged in
misconduct and
refused to turn over
access to web
domains and social
media platforms;
Also contends he
directed defamatory
reviews to Yelp.

Eagle v. Morgan, 2013 WL 943350 (E.D.
Pa.)
 Plaintiff co-founded
banking education
company and
estyablished LinnkedIn
account when she was
CEO
 Ownership changes; new
company’s social media
policy requires
employees to create and
maintain LInkedIn
Accounts
 Plaintiff’s employment
terminated and she is
no longer able to
access account
 Company replaces
Eagle’s name with
that of her Successor
 Many theories
advanced, including
“conversion”

Many Interesting Legal Questions
 Court finds that
LinkedIn account is
not tangible chattel,
therefore cannot be
converted
 Tortious Interference
alleged; all elements
but damages proven
 May have
ramifications with
regard to non-
solicitation and non-
competition

Cellular Accessories for Less, Inc. v. Trinitas, LLC,
2014 WL 4627090 (C.D. Calif.)
 Companies are
competitors selling
mobile phone
accessories to
businesses
 Oaks works for
Cellular until
discharged; starts
own business
(Trinitas)
 Issue: are the linked in
contacts retained by
Oakes “trade secrets”
 Analysis is traditional
trade secret law (like non-
compete/non-solicit)
 How difficult to collect?
 What about fact that
LInkedIn “suggests”?
 Are contacts “Public”?

Jefferson Audio Visual Systems, Inc. v.
Gunnar Light, 2013 WL 1947625 (W.D. Ky)
 At base level, it’s a
defamation/business
dispute case
 Ultimately sue for
fraudulent
misrepresentation
because former
employee doesn’t
change LinkedIn page
 Ultimately, no reliance

Related Questions
Non-Competes and Non-Solicits? (BTS USA
v. Executive Perspectives, LLC, (Conn. Sup.
Ct. 2014) and Pre-Paid Legal Services, Inc.
v. Cahill (E.D. Okla. 2013)
Use of Passwords? Maremont v. Susan
Fredman Design Group, Ltd (N.D. Ill. 2014).

BYOD—Bring Your Own Device

As Technology Becomes More
Accessible . . .
 Recent Study by Cornerstone OnDemand:
37 percent of employees who use apps
for work would spend own money on
worke related apps in the next 12 months
if they felt the app would help with job
 Even among those who don’t use aps for
work; 20 percent said they would spend
own money for apps that would help them
increase productivity

But the Same Study Notes
 When employees
asked if employers
had policies on using
apps for work that are
not provided by
company, 43% said
no and 21% did not
know
 When asked about
company policies on
use of personal
devices, 45% said no
policies; 15 % said
did not know

What are the Issues?
 Less expensive for
company if
employees use own
device
 But how do you
protect confidential
information?
 When can employer
access personal
device of employee?

Factors to Consider
 How many devices will you support?
 Security policy
 How will IT support problems?
 Make clear who owns what data and apps (in
other words, how do you keep personal
personal?)]
 What will you allow? Tie to Social Media or
Electronic Use Policies?
 What happens when employee leaves?

Like Many HR Issues, Goes to Culture
 Require Separate
Phones?
 Require easier
access?
 Don’t forget issues
with exempt v. non-
exempt employees

Polsinelli PC. In California, Polsinelli LLP
The NLRB Position

What is Section 7?
 Section 7 provides that
“employees shall have the
right to self-organization, to
form, join, or assist labor
organizations, to bargain
collectively . . . And to
engage in other concerted
activities for the purpose of
collective bargaining or
other mutual aid or
protection.”

Is the Internet the New Water
Cooler?

Decisions are Fact Specific; Not Consistent
 Hispanics United of
Buffalo, Inc. (Sept. 2,
2011)
 Employees could not be
fired for posting on wall of
co-worker who
complained about her co-
workers’ performance
 Posts by co-workers
protected because deal
with job performance
 Same result where
employees posted
concerns about
employers tax-
withholding procedures
 Because all relate to
shared concerns of
employee re: terms and
conditions of employment

But, hot dogs?
 Auto dealership employees
complain online and post
pictures where owners
serve hot dogs, cookies
and snacks from a
warehouse club
 Sarcastic comments re:
owner going all-out
 Vocalizing sentiments of
co-workers, so concerted
activity

Another Example of Overly Broad
 Prohibition on micro-
blogging to discuss
company business on
personal accounts
 Prohibition on discussing
anything wouldn’t want
manager to see
 Prohibition on anything
“inappropriate” re company
or managers

Triple D, LLC, 361 NLRB No. 31 (August
2014)
 NLRB Decision where Board unanimously
finds that Company unlawfully discharged
two employees for participating in
Facebook discussion regarding perceived
errors in employers tax withholding
calculations

 Triple Play Sports Bar
and Grille fires two
workers after learning of
a discussion on
Facebook regarding tax
withholdings between
several employees
 “They can’t do
calculations” “Now I owe
money . . . Wtf”
 One employee “likes” the
status
 Employer argues that
they are “defamatory and
disparaging remarks” so
lose NLRA protection
 NLRB says comments
(including “like”) are
concerted activity and
policy was effort to chill
speech
What the Board Said

The Newest Report from the GC- March
2015
 Lawful and Unlawful Handbook Policies
– “Do not discuss ‘customer or employee
information’ outside of work” v. “No
unauthorized disclosure of ‘business secrets’
or other confidential information”
– “Be respectful of others and the Company” v.
“No rudeness or unprofessional behavior
toward a customer or anyone in contact with
the company”

Same Issues with Press Communication
 Can’t prohibit all
contact or refer to
certain office or legal;
 Can note that the
company will speak
through one person
so long as emphasis
on crisis or something
else that would not
implicate Section 7

Yet More Examples
 Copyrights,
trademarks or logos;
 Prohibitions on
photography,
recording or personal
devices;
 “walking off the job” v.
“leaving without
permission

Whistleblowers and Retaliation

Watch it Grow
 Originally a common
law claim
 Fueled by post-
Enron world
 Now, almost all-
encompassing

Headlines are Happening
 Miami based nurisng home to pay $17 Million to settle a FCA suit
brought by former CFO who alleged kickback scheme (June 2015)
 Whistleblower to receive over $600K after providing information that
led to SEC Enforcement Action (May 2015—Paradigm Capital
Management)
 VA Settles Three Whistleblower Claims (data manipulation,
questionable medical practice and sexual harassment) (April 2015)
 OSHA safety complaint results in $85K award (April 2015)
 $38 Million settlement in Health Care Fraud suit under FCA (this
was not the whistleblower’s claim)(October 2014)
– Multi-million dollar awards not uncommon under FCA Whistleblower provision

A Virtual ABC of Statutes
 Affordable Care Act
 Commercial Motor Vehicle Safety Act
 Dodd Frank Act
 Environmental Statutes (Clean Air, CERCLA, Surface Mining, etc.)
 False Claims Act
 FDA Food Safety Modernization Act
 IRS Whistleblower Law
 Military Whistleblower Protections
 OSHA
 Sarbanes Oxley Act
 SEC

What are the Elements?
 Most Whistleblower claims are fairly
simple on their face:
– Engage in “protected activity”;
– “adverse action”
– causation

“Engage in Protected Activity”
 Providing information
or participation in
investigation
 “reasonable belief”
 Part of job duties?

Adverse Action
 Something “bad” has to happen
 Test may differ depending on statute
 Would conduct discourage others from
making complaint?

Common law issues
 What is violation of “public policy”
 Is subject preempted by statute? State or
federal?
 Workers’ compensation retaliation
– No longer “sole” cause in Missouri

You May Not Be Safe
 Privately held not
always a protection
 Do you work with or
have contact with
publicly traded
companies?
 (i.e., do employees of
private companies do
work for public
companies)

The Whistleblower in Your Midst
 Recognize the
possibility of litigation
 Follow procedures
 Document
performance
 Treat “fairly”

Best Practices
 Document performance of employees contemporaneously
 Provide supervisors/managers with training on both performance
issues and reporting issues
 Have policies in place; train all employees
 Consider hotlines or outside reporting mechanism
 Consistent source for reports to be made/investigated
 Involve in-house or outside counsel appropriately
 Review employment/severance agreements to insure language
cannot be interpreted to prevent reporting
 Assess whether additional reporting mechanisms warranted

Listen to the Podcast
 http://www.polsinelli.com/intelligence/podcast-g

Other “Hot” Topics
 Pregnancy discrimination: Is it a
disability?
 Religious Discrimination: Abercrombie
Suit
 EEOC Position on Wellness Programs

About the Presenter
Karen R. Glickstein is a
Shareholder at Polsinelli P.C.
She has an extensive trial
practice focusing on
management side employment
law matters (both counseling
and trial work), social media law,
and business litigation.
For more information, you can also
visit our website at www.polsinelli.com.
Karen R. Glickstein
Polsinelli P.C.
900 W. 47th
Place
Suite 900
Kansas City, Missouri
64112
816.753.1000
816.395.0638 (direct)
816.817.0162 (direct fax)
kglickstein@polsinelli.com

SM
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material provided herein is general and is not intended to be legal
advice. Nothing herein should be relied upon or used without
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relationship.
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© 2015 Polsinelli PC. In California, Polsinelli LLP.
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Employment Law and the Bottom Line

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