Category Archives: Employment Law

Irresistible Ladies: Hit the Unemployment Line

Here’s hoping your holidays are happier than Melissa Nelson’s. Nelson was working as a dental assistant when her boss, James Knight, fired her because she posed a threat to his marriage. Knight, whose wife also worked in the dental office, apparently found Nelson so irresistible that he just couldn’t work with her any longer. In other words, she was fired, Knight admitted, for being too darn hot. Nelson, who is married with children, had worked in the office for nine years before being sent packing.

Last week, the Iowa Supreme Court put a lump of coal in Nelson’s stocking when it found that she had no claim against Knight for sex discrimination. The court found that Nelson wasn’t fired because she was a woman, but because Knight found her so attractive. Even though that attraction presumably wouldn’t have existed had Nelson been male, the court found that this decision wasn’t ultimately based on gender, but on personal feelings. The court found it persuasive, for example, that Knight had hired another woman to take Nelson’s place.

Generally speaking, courts in employment cases have found that attraction isn’t about gender per se, but about chemistry. After all, the boss who favors his paramour isn’t treating all women the same; by definition, he is favoring one woman at the expense of others (and men, too). A male boss with an attraction problem discriminates, legally, only when he treats women similarly. In the case of favoritism, a boss who made sex the price of favorable treatment — and made the “product” available to anyone willing to pay — would cross the line. In this case, the court stated that it might have ruled differently if Knight fired a number of women because he was attracted to all of them.

But on reading the court’s opinion, it’s hard to avoid feeling that they have missed much of the point. This case is so chock full of gender stereotyping, it feels like we’ve traveled back in time to the days when women were first entering the workforce. For example:

  • Knight’s argument is that Nelson’s very presence in his office was the problem — not his inability to control himself. Even in his own telling, Knight’s problem was that he feared he would be unable to stop himself from trying to have an affair with Nelson. This hearkens back to . . . well, to the Garden, really. Women are sexual, corrupting, the source of temptation. It’s not what women do or how they act; it’s just what they are. That’s how this case became about the hot employee and not about the boss with the active imagination. (Speaking of the Garden, Nelson had the pleasure of being fired by the tag team of Knight and his pastor, who sat silently while Knight read a prepared statement informing Nelson that their “relationship had become a detriment to Knight’s family.” )
  • Despite Knight’s efforts to paint himself as a family man trying to protect the sanctity of his marriage, the evidence tells a different story. In fact, this could easily have been a sexual harassment case. Knight admitted telling Nelson that if she saw a bulge in his pants, she could conclude that her clothing –scrubs, according to her! — was too tight. He also told her it was a good thing he only found her tops too tight, because if she also wore tight pants, he would “get it coming and going.” Knight said that Nelson told him she and her husband had infrequent sex; his response was that this would be like having a Lamborghini — her — in the garage and never driving it. He also texted her a question about her orgasms. Strangely, few of these facts have made it into news reports about the case, nor did they figure in the court’s analysis. Somehow, this case still seems to be about the old-fashioned family man, possibly misguided but trying to do the right thing. And not about the icky horn-dog boss.
  • Speaking of stereotypes, you have got to feel a bit sorry for Knight’s wife, who not only had to witness all of this at work but whose jealousy was blamed for the firing. In fact, the Iowa Supreme Court framed the central question of the case like this: “Can a male employer terminate a female employee because the employer’s wife, due to no fault of the employee, is concerned about the nature of the relationship between the employer and the employee?” Oh the jealous wife, ruining everyone’s workplace fun, frowning on comments about bulging pants and orgasms. What a killjoy.
  • For me, the strangest fact of the case comes with even more stereotypes. After firing Nelson, Knight — again, with his pastor — had a meeting with Nelson’s husband. Knight reassured him that his wife had not done anything wrong or inappropriate, but had to be fired because Knight was afraid he would one day try to have an affair with her. In other words, I just fired your wife because I really want to have sex with her, but I want you to know it’s not her fault. And I’m so glad we could talk out your wife’s firing, man to man.

EEOC Guidance on Using Criminal Records

About a month ago, the Equal Employment Opportunity Commission (EEOC) issued enforcement guidance on the use of arrest and conviction records in employment decisions. The EEOC has long warned employers that blanket policies of excluding anyone with an arrest or conviction could lead to discrimination claims, given the much higher arrest and conviction rates of African American and Latino men. This guidance clarifies the rules for employers, giving examples of the kinds of policies and decisions that might violate Title VII and providing a framework for employers who take criminal records into account in hiring, retention, or promotions.

The guidance points out that consideration of criminal records could lead to disparate treatment or disparate impact claims. In a disparate treatment case, the employee would have to show that the employer treated people in different protected classes (for example, those of different races) differently in considering criminal records. If an employer ran a criminal background check only on non-White applicants, excused minor offenses by White applicants while excluding Latino applicants for the same types of records, or assumed that an African American with a youthful drug offense posed a safety risk while a White applicant with a similar offense did not, that employer is treating applicants differently based on their race or national origin.

The trickier situation involves disparate impact claims, in which the employer’s apparently neutral policy has a disproportionately negative effect on people in a particular protected class. Because arrest and conviction rates vary so much by race and national origin, a blanket policy of excluding all applicants with a criminal record could easily result in a disparate impact against African American and Latino men. This is the reasoning behind the ongoing “ban the box” campaign, to get rid of the check box on employment applications asking whether applicants have ever been arrested or convicted of a crime. A company that routinely disqualifies any applicant with a criminal record from further consideration for any job could well be courting a discrimination claim.

Of course, this doesn’t mean employers don’t have good reason to screen out applicants with a record of particular offenses for particular jobs. No one wants a convicted sex offender working in a classroom or someone who just finished serving a felony sentence for identity theft handling confidential customer information. The EEOC provides a three factor test, which employers can use to ensure that any criminal record exclusion accurately distinguishes between those who pose an unacceptable risk and those who do not. The employer must assess:

  • the nature and gravity of the criminal offense or conduct
  • how much time hass passed since the offense or sentence, and
  • the nature of the job (including where it is performed, how much supervision and interaction with others the employee will have, and so on).

Even if this test indicates that the applicant may pose a risk, the employer should allow the applicant an opportunity to provide mitigating information demonstrating that he or she shouldn’t be excluded based on the offense. For example, the applicant might show that the criminal record is simply inaccurate. Or, the applicant might provide facts about what really happened, previous work history, rehabilitation efforts, and so on, in an effort to demonstrate that the record shouldn’t disqualify the applicant from the position.

Maryland Bans Employers From Requiring Social Media Passwords

Becoming the first state in what looks like a trend, Maryland has enacted a law, Senate Bill 433, that prohibits employers from requesting or requiring that employees or applicants hand over their passwords to social media accounts and other personal online accounts. The California legislature is currently considering a similar law, as are a handful of others. And the federal government isn’t far behind: Senators Schumer and Blumenthal have asked the Department of Justice and the Equal Employment Opportunity Commission to investigate whether asking employees or applicants for their passwords violates current federal law.

It’s fitting that Maryland was first in line: It was the case of Robert Collins, who was asked to provide his Facebook password during a recertification interview for his job at the Maryland Department of Corrections, that first publicized this issue. (Here’s my previous post about his case.)

No matter how people feel about whether employers should consider public posts in making job decisions, most everyone agrees that information an employee takes steps to shield should remain private. As Senator Schumer put it, requiring applicants to hand over their Facebook passwords is akin to asking applicants “for their house keys or to read their diaries.”

Not to be left behind, Facebook has also weighed in on the issue by making it a violation of the site’s code of conduct to “share or solicit a Facebook password.” In a statement by Erin Egan, the site’s Chief Privacy Officer, Facebook says that it has “worked really hard to give you the tools to control who sees your information”; she also warns employers that they could expose themselves to “unanticipated legal liability” by demanding user passwords.

As more states consider and pass these bills, employees and applicants would be wise to take advantage of the protection by scrubbing their public online identity and shielding their private information behind a password. Apparently, however, that’s easier said than done. A recent study (reported on ZDNet) revealed that users find Facebook’s privacy policies incomprehensible — in fact, harder to understand than government notices, credit card agreements, and even bank rewards program documents. (The good news for Facebook: Users found Google’s privacy policies even more difficult to understand.) Perhaps that explains why 13 million Facebook users, according to a recent Consumer Reports projection, either aren’t aware of Facebook’s privacy settings or haven’t tried to use them.

EEOC: Sex Discrimination Includes Gender Identity and Transgender Status

In a landmark decision, the Equal Employment Opportunity Commission has ruled that Title VII’s prohibition on sex discrimination is broad enough to encompass discrimination based on gender identity and transgender status. The Commission held that Mia Macy, the complainant, was entitled to have her discrimination claims investigated by the federal agency that denied her a job, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (still referred to as the ATF, despite that final E).

According to the EEOC’s decision, Macy was living as a man and working as a police detective in Phoenix, Arizona, when she heard that the ATF has an open position at its crime laboratory in Walnut Creek, California. Macy was planning to move to the San Francisco Bay Area, and contacted the agency about the position in late 2010 or early 2011. Macy was told twice that the job was hers pending completion of a background check. Macy was also told that she would be working as an outside contractor through a company called Aspen of DC. In March of 2011, Macy contacted Aspen and asked them to inform the Walnut Creek lab that she was transitioning from male to female. Five days later, Aspen informed Macy that it had passed the information on. Five days after that, Macy was told that the job was no longer available due to budget cuts.

Finding the timing of the decision questionable, Macy contacted an EEO counselor at the ATF to ask about the situation. (This is how federal agencies handle discrimination issues: The employee or applicant must first complain to the very agency he or she believes committed discrimination. The agency then decides how to handle the charge; typically, the agency investigates and makes a decision, which the employee can appeal to the EEOC.) Macy was then told that the position had actually been filled by someone else who was farther along in the background investigation process. Finding this even more questionable, Macy filed a discrimination complaint with the ATF, stating that she was discriminated against based on sex, sex stereotyping, and gender identity.

The ATF said it would process her claim of sex discrimination, but would defer her claim of gender identity discrimination to a separate procedure, as that claim was not cognizable under Title VII. Macy appealed, claiming that by dividing her complaint up like this, the ATF was effectively denying her basic allegation that she was not hired because she revealed her transgender status. And, the EEOC agreed, finding that claims of discrimination based on gender identity and transgender status are claims of sex discrimination, and fall under Title VII’s prohibitions. The Commission pointed out what previous cases made clear: Discrimination based on sex includes discrimination based on gender — and gender encompasses not just a person’s biological sex at birth, but also “the cultural and social aspects associated with masculinity and femininity.”

The Supreme Court had already held that refusing to promote a woman because she did not act or dress in stereotypically feminine ways was a form of sex discrimination. In Macy’s case, the Commission held that discrimination based on gender identity or gender nonconformity was, inescapably, a form of gender discrimination: The employer is making a decision based on perceptions of how a person who is “male” or “female” should look, dress, and act. In an interesting comparison, the EEOC pointed out that Title VII’s prohibition on religious discrimination would protect an employee whose employer fired her because she converted from one religion to another. Even if the employer claimed to be biased only against “converts,” this would still constitute religious discrimination — and it would not create a “new” protected class. The Commission sent the case back to the ATF for proper processing as a cognizable complaint.

As the Commission’s decision notes, other courts have reached similar conclusions, so in some ways this case is merely the next step in that evolution of the law. At the same time, this is a huge development — and a huge victory for the LGBT community. The EEOC is the enforcer of the nation’s civil rights, and its decisions are tremendously influential. What makes this case even more interesting is that the sex stereotyping claim is potentially quite strong (I say potentially because the only known fact at this point is the timing of the decision which, while suspicious, isn’t dispositive). Macy’s skills and experience were all in traditionally male endeavors. She was a police detective, applied for a job as a ballistics technician, and according to news reports, is also a veteran. As the EEOC pointed out, the gender identity claim may not even be necessary for her to win. If the ATF simply wanted to hire a man for the job, and disqualified her once she transitioned to living as a woman, it’s a plain old sex discrimination case.

Employee Photos on the Company’s Social Media Page?

This week, we got an interesting question via our Facebook page: A company that has recently established a social media presence wants to know whether it’s legal to post pictures of employees at company functions. As usual, the answer is “it depends.”

A number of states have laws that prohibit the use of someone’s likeness without that person’s consent for commercial purposes. The whole point of a company’s social media pages is ultimately to boost the bottom line, whether that goal is achieved through selling more products, attracting outstanding employees, building a reputation for humor, intelligence, and trustworthiness, or other means. Companies that post candid employee photos or photos of employees doing their jobs, serving the community, and so on, do so to make a good impression on potential employees and customers. So I think it’s pretty clear that this is a commercial purpose.

Employers who want to use employee photos can simply ask for the employee’s consent. Like all other employment agreements, this one would best be put in writing, and should spell out what the employer intends to do. Is the company going to post an occasional photo of employees doing their jobs? What about employees enjoying themselves at after-hours company functions? Is the company going to use the employee’s image in actual advertising materials, such as brochures or a commercial? Will the employee have the opportunity to see the photo first? Clearly, an employee might be more comfortable with some photos than others: A smiling photo of an employee helping a customer might be more welcome than a candid photo of the employee’s bathing suit riding up at the company’s Fourth of July picnic at the lake.

Most companies that ask employees to consent to use of their image find that a few are unwilling to agree. I’ve been asked about this a couple of times by folks who assume that the employee who wants to opt out is camera shy, doesn’t like how he or she looks in pictures, or has some sensitivity about appearance. That may be the case, but often the real objection is more serious: The employee has been a victim of stalking or violence, or fears becoming one. This is not information the employee should have to share with the employer in order to get out of the company’s Facebook photo album.

And some employees have a philosophical objection that goes to the very nature of the employment relationship. That argument goes like this: The employer pays employees for their labor; it does not own their image. When you look at it this way, throwing a reluctant employee’s actual personal appearance into the pile of things that paycheck is supposed to cover does seem like an overreach.

The best solution to this dilemma is to ask for consent before using employee photos and to allow employees to withhold their consent, if they wish. Don’t require employees to explain their reasons. Simply find another photo, of employees who are more than happy to show up on the company’s social media page or in its other marketing materials, and move on.

FMLA and State Employers

Last week, the Supreme Court decided a case involving a state employee who sued for violation of the Family and Medical Leave Act (FMLA), Coleman v. Court of Appeals of Maryland. The arguments in the case were about federalism: how far one sovereign (the federal government, acting through Congress) can go in imposing liability on another (a state government). However, in reaching its decision — against the employee — the Court missed the entire point of the FMLA.

The facts are pretty basic: Daniel Coleman asked his employer, the Maryland Court of Appeals, for sick leave. His employer denied his request and told him he would be fired if he didn’t resign. Coleman sued for violation of the FMLA, charing that his employer failed to grant him time off for his own serious health condition as required by the law. His employer defended itself by saying that it was immune from suit because Congress didn’t have the right to subject it to money damages for violating the FMLA.

In our federal system of government, there are limits on the obligations Congress can impose on the states. At issue in this case was Congress’s right to enforce the guarantees of the Equal Protection Clause of the Constitution, which the federal government has used to remedy discrimination by the states (originally, race discrimination against the newly freed slaves). To subject a state to monetary damages under a federal law, that law must clearly indicate that intent; must be tailored to remedy or prevent Equal Protection violations; and must impose remedies that are proportional to that goal. In this case, what everyone disagreed about was whether or not the provisions allowing leave for an employee’s own serious health condition was intended to address sex discrimination, which violates the Equal Protection Clause.

The Supreme Court decided years ago that the FMLA’s provision allowing leave to care for family members was intended to remedy sex discrimination, and so could properly be enforced against the states for money damages. Because women are still the primary care providers in our society, the Court had no trouble finding that the caregiver provision was aimed at sex discrimination. In the Coleman case, however, the Court found that the self-care provision — the allowance of time off for the employee’s own serious health care condition — addressed discrimination based on illness, not discrimination based on gender. Therefore, the Court found that Congress didn’t have the right to require states to pay money damages for violating this section of the law.

Unfortunately, in parsing the case so finely, the Court ignored the history and purpose of the FMLA. The FMLA was born of disputes over pregnancy leave. Women’s rights advocates were divided as to how to address this fundamental difference between the sexes in the workplace. Fighting for pregnancy leave and time off to recover from childbirth seemed necessary to safeguard women’s right to workplace equality; yet it also created a fundamental difference in the way employers were to treat men and women, with the possible outcome that employers would discriminate against women to avoid having to provide this benefit. The FMLA — and specifically, the right to time off for one’s own serious health condition, the category of leave that includes pregnancy and childbirth — was the eventual solution. By making the right to leave gender-neutral, advocates hoped to frame pregnancy as just one of the many reasons why an employee might need time off, and thereby diminish the likelihood of sex discrimination among employers while also protecting the right to leave. By allowing parental and caregiving leave for men and women equally, the FMLA also sought to break the sex-based stereotype of women as primary caregivers. The whole law as a package, and particularly the provision allowing leave for one’s own serious health condition, was intended precisely to combat sex discrimination. Justice Ginsberg’s dissent explains this history and intent clearly, as does the amicus brief of the National Partnership for Women & Families, the group that was instrumental in drafting and advocating for the law decades ago.

Proposed FMLA Regulations Released

A couple of weeks ago, the Department of Labor released proposed regulatory changes to the Family and Medical Leave Act (FMLA). These changes would update the existing regulations to take into account two statutes passed in the last couple of years: One expands military family leave in several ways; the other clarifies eligibility requirements for flight crew members to ensure that more of them are able to take advantage of the law’s protections.

Here are some of the changes covered in the proposed regulations:

Qualifying exigency leave. Originally, employees with family members in the National Guard or Reserves were eligible for FMLA leave to handle certain practical matters when their family member was called to active military duty. In 2009, Congress expanded this protection to also cover employees with family members who are in the regular Armed Forces. It also made clear that this leave provision applied only to employees whose family members were deployed to a foreign country. The regulations reflect these changes. They also extend the amount of leave available to an employee who family member is on rest and recuperation leave (“R and R”) from five to 15 days, depending on the length of the family member’s R and R. Finally, the regulations clarify that an employee may take qualifying exigency leave to handle school and childcare matters arising out of the deployment of a spouse, child, or parent. In other words, the child who needs assistance need not be the employee’s child. If the employee’s parent is deployed, for example, the employee could take qualifying exigency leave to sort out childcare for a younger sibling.

Military caregiver leave. Employees are entitled to 26 weeks of leave to care for a family member who suffers a serious illness or injury while on active military duty. Congress expanded this entitlement in two important ways. First, someone who has a pre-existing injury or illness that is aggravated by active military duty is now covered. Second, veterans (those who were discharged or released from the military, under conditions other than dishonorable, in the past five years) are also covered. The proposed regulations define what constitutes a serious injury or illness for a veteran, propose to measure the five-year time limit backwards from the first date the employee takes leave, and propose changes to the certification requirements for this type of leave, to reflect that injured service members and veterans may be seeing private healthcare providers rather than using the military healthcare system. The Department of Labor is seeking comment on these changes, as well as on how it should define a pre-existing condition aggravated by military service, particularly given the military’s rigorous enlistment requirements that would presumably screen out many such conditions. In addition, the Department made a couple of very interesting statements in the proposed regulations on leave to care for a veteran:

  • The 26-week leave provision has been interpreted as a per service member, per injury requirement. In other words, an employee gets only a single period of leave unless a different family member is injured while on military duty or the same family member is injured again. The Department has shaken this up a bit by stating that it believes employees would be entitled to two leave periods for the same family member, once while the family member is still in the military and once after the family member becomes a veteran. It isn’t clear whether the Department intends that the injury must be different to entitle the employee to a second leave (for example, if the family member suffered a physical injury and then later developed PTSD).
  • The Department has taken the position that employers are not currently required to offer leave for employees to care for a veteran family member. Congress directed the Department to define, through regulations, what constitutes a serious injury or illness for a veteran. Because no final regulations yet address this issue, the Department has determined that the provision isn’t yet enforceable.

Flight crew coverage. Congress created different rules to measure employee eligibility for flight crew members, who were being excluded due to the way the 1,250 hours requirement was being interpreted. The regulations include these changes, as well as changes in how much leave an employee has taken is calculated.

These regulations are proposed, which means that the Department is accepting public comments for 60 days. The Department will then review the comments it receives, decide whether to incorporate them into (or otherwise modify) its regulations, then release the regulations in final form. Until that happens, these regulations aren’t legally enforceable.

Supreme Court Gives Religious Employers a Big Defense in Discrimination Cases

Last week, the Supreme Court decided an employment discrimination case against a Lutheran school, Hosanna-Tabor v. EEOC. The case involved a teacher who claimed she was fired in retaliation for asserting her rights under the Americans with Disabilities Act. (The teacher, Cheryl Perich, had taken a leave of absence after being diagnosed with narcolepsy, and was asked to resign when she tried to return to work.) The school argued that it had to be free to choose the employees who acted in a ministerial role, and that its decision to fire Perich was therefore beyond the reach of the civil court system. The Supreme Court agreed, for the first time explicitly recognizing a “ministerial exception” to the ADA and other federal civil rights laws.

The parties agreed on the facts of the case. Perich was what the school refers to as a “called” teacher, which means she had completed a course of instruction on the Church’s beliefs and was asked to teach under the formal title “Minister of Religion, Commissioned.” This position gave Perich certain advantages over the school’s lay teachers, including more job security and some tax breaks. Perich’s duties were largely the same as those of the lay teachers.

Perich was diagnosed with narcolepsy and was out on disability leave at the start of the 2004-2005 school year. In January of 2005, she told the school she was ready to return soon; the school had already hired a lay teacher to replace her for the rest of the year. The congregation of the Church voted to give her a “peaceful release” from her call, by which it would pay a portion of her health insurance premiums if she resigned. Her response was not to peaceful: She refused to resign, told the school her doctor had released her to return to work on February 22, and showed up at the school on that day. She refused to leave until she was provided with a written acknowledgment that she had showed up. The school informed her that she would be fired, to which she responded that she had spoken to a lawyer and intended to assert her rights. She was fired and filed a lawsuit for retaliation under the ADA.

The Supreme Court found that Perich’s lawsuit was barred by the ministerial exception. Although lower courts had recognized this exception to federal laws prohibiting discrimination, this is the first time the Supreme Court has done so. Pursuant to this exception, grounded in the Establishment Clause and Free Exercise Clause of the First Amendment, religious bodies must be free to decide who will “preach their beliefs, teach their faith, and carry out their mission.” A discrimination lawsuit infringes that right by dictating whom the religious institution must hire or retain.

A couple of things interested me about this case. First of all, the Court refused to set clear guidelines on who qualifies as a “minister,” saying it was reluctant to adopt a “rigid formula” in its first case on the issue. The Court said that the facts in this case, including the effort required to be a called teacher, Perich’s use of the term for herself (and willingness to take advantage of the tax benefits), and her religious responsibilities, all added up to ministerial status. The concurring opinions took up this issue, with Justice Thomas proposing that courts should defer to the religious body’s good faith statement that someone is a minister. Justice Alito also wrote separately to emphasize that all religions should be entitled to this exception, not just those that have “ministers,” ordain certain members, or otherwise utilize the nomenclature and rites of the Protestant Church. This leaves a lot of leeway for future courts to decide how much analysis and probing is allowed of a religious institution’s assertion that a person qualifies as a minister under the exception.

Second, the school’s stated reason for firing Perich was that her threat to sue violated Lutheran doctrine that disputes should be resolved internally rather than through resort to the courts. But according to the facts, this threat came only after the school had told her she would be fired, so it’s hard to see how the internal dispute resolution process was still available to her. And, the Court’s unanimous opinion didn’t take up this part of the case at all. Essentially, the school is saying that this doctrinal belief essentially required it to retaliate against Perich, just as Catholic doctrine precluding ordination of women would require that Church to discriminate on the basis of sex. It’s not clear what evidence was presented to the lower courts based on the Court’s opinion, but it seems to me that religious employers relying on a defense this extreme should have to show that the belief is in fact held, and in good faith. For a court to analyze whether that belief is “valid” or correct in some ultimate sense would of course violate the First Amendment. But there should at least be some requirement that the belief is genuine and not a pretext for discrimination. A similar standard applies to employees who want a religious accommodation: Courts don’t examine the ultimate rectitude or logic of their beliefs, but do require that they be genuinely held and be religious in nature. To the extent religious organizations are claiming an exemption from laws so fundamental to our society, it seems they should be subjected to the same requirement. This wouldn’t give courts the right to say what a Church’s doctrine should be, but only what the Church’s doctrine actually is.


Can an Arbitration Agreement Waive the Right to Bring a Class Action?

For at least two decades, employers nationwide have been requiring employees to sign arbitration agreements. In a typical arbitration agreement, the employee gives up the right to sue over employment-related claims, instead agreeing to have such disputes heard in an arbitration proceeding. (Twenty years ago, the U.S. Supreme Court decided Gilmer v. Interstate/Johnson Lane, in which it made clear that employees could be required to arbitrate claims protected by statute, such as discrimination claims. Many employers and their lawyers interpreted this case as a green light to impose arbitration agreements on employees.)

Advocates for employees have brought piles of cases challenging arbitration agreements, arguing that the rules by which these agreements are judged should be different when one party has all or most of the bargaining power, as is the case in the employment relationship — particularly when the employee is required to sign the agreement as a condition of employment. (Generally, employees would prefer to proceed publicly, before a jury of their peers, with all of the protections offered by the judicial system, rather than privately, before a professional arbitrator whose decision is largely unappealable and who has a much freer hand in deciding which evidence to admit, how long the proceeding will last, and so on.) For the most part, however, these cases have failed, and arbitration agreements have been upheld. Progressive members of Congress have introduced various versions of legislation (here’s a recent example) that would prohibit the enforcement of pre-dispute arbitration agreements in consumer, civil rights, and employment cases, but have had no success to date.

But the legal landscape is different in California, where state law is more protective of employees, consumers, and others who often find themselves at the mercy of more powerful adversaries. The California Supreme Court and Courts of Appeal have continually refused to enforce arbitration agreements that overreach in favor of the employer. In the case of Armendariz v. Foundation Health Psychcare Services, the California Supreme Court held that arbitration agreements may be enforced as to statutory claims (such as discrimination) only if they comply with five rules intended to ensure that the employee’s claims receive a fair hearing. These rules, called the Armendariz factors, are:

  1. The agreement can’t limit the damages and other remedies available to employees. If, for example, an employee would be entitled to ask for punitive damages in court, such damages must also be available in arbitration.
  2. The employee must be allowed to conduct sufficient discovery — the opportunity to seek documents and information regarding the dispute. The Court noted that employers typically hold most of the relevant information in an employment dispute, and limiting the employee’s ability to collect that evidence could unfairly affect the outcome of the case.
  3. The arbitrator must issue a written decision that includes the essential findings and conclusions on which the award is based. The intent of this rule is to give employees sufficient information to appeal the decision, even though appeals of arbitration awards are quite limited.
  4. The employer must pay all costs and fees that are unique to arbitration. In other words, an employer can’t make it more expensive for an employee to arbitrate than it would have cost to bring a claim in court.
  5. The agreement must provide for neutral arbitrators.

Also unique to California is the state’s protection of an employee’s right to bring a class or collective action: a dispute brought on behalf of a group of similarly situated employees who have the same claim against the employer (for example, that the employer improperly failed to provide rest breaks or pay overtime). Many arbitration agreements preclude not only class actions in court, but also class or collective arbitration proceedings. Instead, employees agree to bring their disputes only on their own behalf as individuals.

In the case of Gentry v. Superior Court, the California Supreme Court laid out some more factors for courts to consider in deciding whether to enforce this type of agreement, including the size of the potential damages, the potential for retaliation against employees, the likelihood that employees who aren’t part of the proceedings may be ignorant of their rights, and other real-world facts that might pose an obstacle to employees seeking to vindicate their statutory rights through individual arbitration proceedings. Despite the language of an arbitration agreement, a court can order class arbitration of claims that cannot be waived under California law (such as the right to overtime) if it decides that a group proceeding would be significantly more effective at vindicating and enforcing employee rights.

California courts have continued to apply the Gentry case despite the U.S. Supreme Court’s finding, in AT&T v. Concepcion, that California courts may no longer prohibit the enforcement of class action waivers in arbitration agreements entered into by consumers. And last week, the National Labor Relations Board gave the state some support: The NLRB ruled that arbitration agreements prohibiting group actions violate the National Labor Relations Act (NLRA), even at companies where employees are not represented by a union. The NLRA protects the rights of all employees to engage in concerted activity to try to improve the terms and conditions of their employment, whether through a union or otherwise. The NLRB found that prohibiting group proceedings in arbitration violates this right.


Employer Sues Former Employee Over Ownership of Twitter Account

These days, many companies employ social media specialists, whose jobs include posting about the company — or on its behalf — on sites like FaceBook and Twitter. If the account is in the company’s name, and employees post only on company time and only on company topics, it seems clear that the account belongs to the company. Among other things, this means the company retains the account when the employee leaves, along with all those followers and friends.

But what if the employee posts in his or her own name, blending professional and personal in the manner that seems to define our age? What if the employee’s personality and personal posts are the very things that attract an audience? What if the employee brings a popular personal account to the company — or is hired precisely because the company wants access to the employee’s existing followers? Who owns the account then? And what’s a Twitter account worth, anyway?

Some of these questions may be answered by a lawsuit filed by PhoneDog, a mobile phone website, against Noah Kravitz, its former employee. While employed, Kravitz began tweeting as PhoneDog_Noah, posting comments about personal interests as well as professional issues. According to news reports, Kravitz says he opened the account himself and linked it to his personal email. During the course of his employment, Kravitz reached 17,000 followers.

When he left PhoneDog, Kravitz says the company told him he could keep the account in exchange for posting occasionally about the company; Kravitz agreed. He changed his handle to @NoahKravitz and tweeted on. In July, however, PhoneDog filed a lawsuit, claiming that Kravitz’s Twitter followers were essentially a customer list, and therefore a PhoneDog trade secret that Kravitz had misappropriated. (Kravitz claims that the trade secret lawsuit is in retaliation for his claim that the company owed him back pay and a percentage of the site’s advertising revenue.) The company is seeking damages to the tune of $2.50 per follower per month, which adds up to $340,000.

The outcome of the case will turn, in part, on the factual dispute over whether or not PhoneDog told Kravitz he could keep the account. To win a trade secret case, an employer has to show that it took steps to maintain the confidentiality of the information claimed to be secret. Allowing someone else to take and use that information would undermine this argument. And of course, IP experts are very interested in how the court will value each Twitter follower, if damages come into play. I’m not sure where that $2.50 figure came from, but it’s notoriously difficult for courts to put a value on good will and reputation, which the company claims were damaged here.

Another thing that interests me about the case is the personal angle. Under traditional employment law principles, the employer owns what the employee creates as part of his or her job . But what if part of the employee’s “creation” is the employee’s personality? Experts tell us that social media works best precisely when it’s personal: when there’s an actual voice and character the audience can identify with, rather than a relentless barrage of faceless corporate pronouncements. (In fact, Kravitz attributes his popularity to the fact that his feed combines professional comments with personal posts.) At some point, does all of that personality become something that the company can’t really own? If someone like Kravitz counts his own family and (actual) friends as followers, features his photo prominently on his Twitter feed, and posts personal information, from his love of certain sports teams and restaurants to pictures of his vacations, can all that really “belong” to his employer? I don’t know the answer, but it’s just one more way that Web 2.0 is challenging existing legal doctrines.