In a world where employee mobility is a business reality, companies should be taking proactive measures to guard trade secrets, retain competitive advantage and be ready for court if it comes to that. Click below to launch a video and hear from Labor & Employment partners Mark Terman and David Woolf on what they, and our other Labor & Employment group lawyers, are doing every day to protect companies.
Mark Terman, Labor & Employment partner in the Los Angeles office, was recently interviewed for a story on Bring Your Own Device (BYOD) policies for employers. As more and more employees use their own personal devices for work purposes BYOD policies are quickly becoming important for employers to have in place. The story was picked up by news outlets around the country, including in Miami, FL, Seattle, WA, Jacksonville, FL, Toledo, OH, Milwaukee, WI, Spokane, WA and Orlando, FL. To view the story that was carried by CBS 4 in Miami click here. To view posts from LaborSphere on BYOD considerations for employers click here.
On April 8, 2014, at an event commemorating National Equal Pay Day (an annual public awareness event that aims to draw attention to the gender wage gap), President Obama signed two executive orders designed to limit workplace discrimination. The first prohibits federal contractors from retaliating against workers who discuss their salaries with one another, while the second instructs the Department of Labor to establish new regulations requiring federal contractors to submit summary data on compensation paid to their employees, including breaking down the data by gender and race.
The protections offered by the anti-retaliation Order overlap with many already existing under state and federal law. For example, the NLRA protects employees’ right to engage in “concerted activities” and thus already prohibits employer discipline against employees who discuss their wages. Further, some state laws, such as California Labor Code §232, already preclude an employer from disciplining an employee who discloses the amount of his or her wages. Nonetheless, the Order may add to these protections, such as by expanding them to management employees (who are not protected by the NLRA), and providing an alternative option for bringing retaliation claims (i.e., through the Office of Federal Contract Compliance Programs rather than the NLRB).
The effects of the Order requiring the collection of compensation data will be unclear until the regulations themselves are formulated. Based on the Order’s mandate to “avoid new record-keeping requirements and rely on existing reporting frameworks to collect the summary data” and to develop regulations that “minimize, to the extent possible, the burden on Federal contractors and subcontractors,” it is possible that the federal government will require that the data be submitted along with a federal contractors’ annual EEO-1 Report.
The President’s signing of these Orders appears to tie into the White House’s previously announced plans to accelerate change in areas it believes are within the authority of the Executive Branch, without the need for legislation. Indeed, the Orders’ provisions mirror parts of the Paycheck Fairness Act (“PFA”), a proposed piece of legislation that would add procedural protections to the EPA and the FLSA to address male–female income disparity. (The PFA came up for a vote in the U.S. Senate on April 9, 2014, where it was blocked by a Republican filibuster). Similarly, in February 2014, President Obama issued an Order raising the minimum wage for federal contractors, at a time when Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) were urging a bill to raise the federal minimum wage to $10.10 per hour and index it to inflation. Then, in March 2014, President Obama directed the Labor Department to revamp regulations governing which types of employees business may classify as overtime-exempt “executives” or “professionals.” With regard to the Order requiring the collection of compensation data, the OFCCP has been working internally on releasing a proposed compensation data collection tool for the past three years. See http://www.dol.gov/ofccp/Presentation/Compensation_Data_Collection_Tool.htm (publicizing the OFCCP’s August 10, 2011 Advance Notice of Proposed Rulemaking regarding a new compensation data collection tool).
The high profile nature of the Orders provides yet another impetus for employers to evaluate their existing policies, and plan for the future.
Partners in the firm’s Los Angeles office recently presented to the Southern California Chapter of the Association of Corporate Counsel a program titled “What Happens at Work Stays at Work – The California Employer’s Approach To A National Program for Restrictive Covenants and Trade Secret Protection.”
The presentation, which was broadcast to in-house counsel viewing in three separate locations spread out around southern California, first looked at the California landscape, giving a refresher and update on non-competition agreements, customer and employee non-solicitation, identifying and pleading trade secrets and misappropriation.
The presentation then looked at considerations for a multi-jurisdictional approach to trade secret protection, including best practices for effective corporate policies and confidentiality and property protection agreements.
The presentation concluded by addressing social media in a trade secret protection program, including Twitter, LinkedIn, and BYOD, and making the most of choice of law and forum selection clauses in restrictive covenants.
A copy of the presentation can be downloaded here.
Editor’s Note: The following post by Los Angeles Partner Mark Terman appeared in the latest issue of the California HR Newsletter. To view the entire newsletter click here. To sign-up to receive the California HR Newsletter see the instructions below.
By: Mark E. Terman
The Issue: How can employers reduce risks of the sharp increase of class action litigation by unpaid interns and adverse publicity for companies and key executives over failure to pay wages?
The Solution: Employers should evaluate and correct their unpaid internship practices or, alternatively, treat interns as minimum-wage employees who, if properly classified as part-time or a short-term temporary employee, may not be eligible for certain employee benefits.
Analysis: Unpaid internships have long been used by students and newcomers to build a resume, launch a career or simply land a paying job. Employers can capitalize on this to teach their business and find talent; but, they should not use interns just to cut labor costs.
If the intern is closely supervised and taught a curriculum that can be applied to multiple different employers, is not primarily doing work that regular paid employees do, has no guaranty of becoming employed, and an advance writing specifies that there will be no pay, odds are that intern can lawfully be unpaid in California. If a school or college will give course credit, the odds further increase. The overarching theme is that unpaid internships must be educational and predominantly for the benefit of the intern, not the employer.
Non-compliant employers risk expensive class action and regulator’s claims to reclassify interns as employees and to recover unpaid minimum wages, overtime pay, interest, multiple penalties, and attorney’s fees. “Warning bells” include: use of unpaid interns to minimize labor costs or provide extended job interviews; no supervised education and training beyond what the intern might observe; and a predominance of clerical or “go-fer” duties.
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Unpaid internships have long been viewed by students, recent graduates and industry newcomers as a chance to gain experience that might help them select or launch a career, and to some, a chance to eventually land a paying job. Employers can capitalize on this to teach their trade or profession and find new talent; but, they should not use interns just to cut labor costs.
The United States Department of Labor and many states use six criteria to determine whether internships in for-profit company operations can lawfully be unpaid: 1) the internship must be similar to training given in an educational institution; 2) regular paid workers are not displaced; 3) the intern works under close observation; 4) the employer derives no immediate advantage from intern activities; 5) there is no guaranty of employment upon internship completion; and 6) it is clear up front that there is no expectation of payment. The overarching theme is that unpaid internships must be educational and predominantly for the benefit of the intern, not the employer.
Some employers have no idea the criteria exist and unwittingly expose themselves to expensive single-plaintiff, class action and regulator’s claims to reclassify interns as employees and to recover unpaid minimum wages, overtime pay, interest, multiple penalties and attorneys fees. [For more on this see our post on Unpaid Interns Deemed Employees Under the FLSA]. Add to that, there are potential employer and decision maker risks for failure to withhold income and employment taxes.
“Warning bell” examples of internship programs that may be subject to reclassification include, use of unpaid internships to simply minimize labor costs or merely as an extended job interview to see if interns can make the cut later for a paid job; no real, supervised education and training, beyond what the intern might happen to observe; and a predominance of work assigned to interns that paid employees would normally do to generate or support the business. Likewise, interns whose work is primarily running errands, answering phones, filing, organizing documents, data entry, scanning or coping images, or cleaning – even though they arguably have good exposure to work going on around them – tend to look like they are merely doing what paid support staff employees ought to be doing.
By contrast, if the intern is closely supervised and taught learning objectives that can be applied to multiple different employers, with occasional support staff type work incidental to the learning, with no guaranty of employment, and a writing that specifies a limited duration of an internship without pay, odds are better that intern can lawfully be unpaid. As a practical matter, if a school or college will give the intern course credit, the odds of legal compliance increase.
A safe path to avoid classification risks is to pay interns at least minimum wage and for any overtime worked, afford meal and rest breaks, and manage their work assignments to reduce overtime needed. Depending on employer policies and applicable laws, an intern who is part-time or a short-term temporary employee may not be eligible for certain employee benefits.
