Crisis Management - Page 16 of 18

Yahoo’s Ban on Working from Home: Does it Raise Red Flags For Other Companies?

Yahoo’s widely reported decision to require its remote workforce to physically report to one of Yahoo’s office locations – or face termination of employment – has caused a social media stir. Here are some of the common questions, and our thoughts about whether Yahoo’s decision signals a trend applicable to other companies.

Q: Can Yahoo fire its remote workforce if they refuse to return to the office?

A: For the most part – yes. If employees are employed “at-will,” then they can be fired with or without cause, and without notice. In other words, Yahoo’s statement that they feel the business is best served by the regular, spontaneous interactions resulting from having employees in the office is a legitimate non-discriminatory reason to require employees to return to the offices. Therefore, any employee who refuses to physically report to a Yahoo office location can be lawfully fired for his/her refusal. Exceptions are generally limited to a circumstance where Yahoo had agreed, in writing, that the employee was guaranteed the ability to work from home. Another limited exception is if the employee is allowed to work from home for a specified period of time, as a reasonable accommodation for a verified disability.

Q: Does Yahoo’s decision signal that the other industries should re-evaluate the use of remote workers?

A: While it is always productive to re-evaluate the effectiveness of workforce models, a wholesale rejection of the remote worker model does not necessarily serve an industry’s business needs, or risk management objectives.

First, Yahoo’s action is perceived as providing an opportunity to pare down a “bloated” workforce in an effort to limit the need for extensive reductions in force. Yahoo is betting on there being less morale and legal risk associated with an employee’s resignation vs. an involuntary termination. While companies may face the business need to ramp down certain departments depending on where they are in the approval process, targeted restructurings are generally a more appropriate response.

Second, many companies, such as Life Sciences companies that are paring down costs as they await FDA approval, use remote workers as a cost-savings method, to reduce office overhead costs. In contrast, it has been reported that Yahoo has “excess” office space that presumably would not be cost-effective to offload or sublease. Also, the majority of Life Sciences companies are clustered in the areas of metro NY/NJ, Boston, the Bay Area and LA. Clearly, traffic is a significant issue in these areas and working remotely can offset the loss of productivity caused by lengthy daily commutes.

Remote work is also a necessity for many Life Sciences companies. For example, clinical trials are conducted at investigator sites in the U.S. and around the world. Employees in clinical operations must not only travel on a regular basis, but the ability to work remotely for much of the time when they are not traveling is valued. Also, using a remote workforce is a common response to growth and expansion, especially when there is a need to locate your sales force in states outside of company headquarters and manufacturing facilities.

Fourth, most industry jobs do require a Bachelor’s degree, and workforce studies indicate that approximately one-fifth of Life Sciences jobs require an advanced degree. Clearly, the ability to attract and retain a highly skilled and well-trained workforce has been recognized as a necessity to remain competitive – and that applies to small start-ups and large multi-national pharmaceutical companies. The ability to work remotely, at least part of the time, can be an effective recruiting and retention tool.

Q: What are the emerging HR issues with regards to the use of remote workers?

A: While mobile technology is a tremendous asset in terms of collaboration, the law does not always keep pace with the cross-over intersection of business and personal use of mobile technology. As a result, it is a “new frontier” and employers are faced with having to anticipate the potential legal liability. For example, to the extent that your company is monitoring employees’ e-mail/text and other use of mobile technology to ensure productively, it is critical to warn employees that they are being monitored, and they should have no expectation of privacy. We are also seeing an increasing rise in litigation and employer-adverse agency decisions resulting from employers’ use of information about employees’ non-work activities gleaned from review of their personal Facebook accounts as a basis to discipline or terminate employees. Also, many states have enacted or proposed legislation that makes it unlawful for an employer to directly or indirectly obtain access to an employee’s Facebook account. As a result, we recommend that concerns about employee abuse of telecommuting are best addressed by routine and regular performance management, rather than social media spying.

We also recommend proactive management of concerns relating to data confidentiality and network security. This includes review of existing restrictive covenant agreements to insure that enforceable non-disclosure, non-solicit and, if warranted, non-compete agreements are in place, tailored to protect those assets most critical to your business. Choice of law provisions also need to be considered when the employee is in a different state or country than the HQ location. In addition, we recommend providing the equipment used by the remote employee (phone/laptop, etc.), so that equipment – and all the programs and data contained on those devices – can be legally recovered at the end of the employment relationship. Protocols should also be in place to restrict access to proprietary and other confidential information, to demonstrate that your company has a legitimate need to protect certain information.

Finally, we urge caution when allowing non-exempt employees to work remotely. Wage and hour laws require that the hours non-exempt employees work are accurately tracked, and that they receive overtime for extra hours recorded, including for hours that the Company was on notice that the employee was working, even if those extra hours were not recorded. Employers are being deemed as “on notice” when they are aware that the employee is e-mailing or texting supervisors about work during “off-hours” based on the access provided by mobile technology that might not be otherwise available to a non-exempt employee who is not working remotely.

(Editor’s note – This post was distributed as a Drinker Biddle Client Alert on February 27, 2013. To read other Drinker Biddle alerts and publications click: http://www.drinkerbiddle.com/resources)

Facebook Firings – An Old Approach to the New Issue of the Virtual Water Cooler

The National Labor Relations Board (“Board”) issued its second decision on a firing over Facebook posts on Wednesday, December 19, 2012. The Board, avowing its commitment to the idea that speech on a personal, non-work-related social media outlet should be treated the same way as discussions on work premises, ordered a non-profit organization to reinstate five employees who were fired over Facebook posts. In a 3-1 decision in Hispanics United of Buffalo, Inc., 359 NLRB No. 37, 12/14/12 [released 12/19/12], the Board affirmed the administrative law judge’s ruling that the employer violated the National Labor Relations Act (“NLRA”) when it terminated five employees for posting Facebook comments in response to a co-worker’s criticism of their job performance.

While noting that at issue was a novel mode of employee communication, the Board agreed with the ALJ that the appropriate analytical framework for resolving the discharge dispute had long been settled under Meyers Industries and its progeny.[1] Under the Meyers Industries analysis, an employee’s discipline or discharge is unlawful if it is motivated by an employee’s concerted, NLRA-protected activity and if the employer knows the activity was concerted. The underlying ALJ ruling in Ortiz v. Hispanics United of Buffalo, Inc., Case No. 3-CA-27872 (NLRB Sept. 2, 2011) issued a landmark decision when it marked the first time a Board judge had ruled on a social media-related employment decision.

Member Brian E. Hayes, the sole dissenter and Republican board member, disagreed with the majority view that the employees’ comments were made for mutual aid and protection. However, writing shortly before his term on the board ended Dec. 16, he agreed that the Meyers Industries framework was the right analysis to use for evaluating whether the activity on Facebook is protected and concerted. In light of this decision, it is clear that concerted activity is protected whether spoken in the workplace or via the virtual water cooler. Even with the difference in type and style of communication used in social media outlets, the Board is not adopting any new rules or framework within which to evaluate the speech.

Additionally, this decision serves as a warning to employers who have been using their policies to justify adverse employment actions when faced with potentially protected activity. The Board majority in this case rejected the employer’s defense that these five employees had violated its zero-tolerance policy on bullying and harassment when they disagreed with another co-worker that the company was not doing enough to help its clients. The Board held that the employees were taking a first step toward group action to defend themselves against another co-worker’s accusations made to management and hence, was protected, concerted activity. Employers who seek to discipline an employee for comments he or she makes on social media sources must therefore not merely rely on their policy, but they must also ensure that their policy is valid in that, among other things, it does not discourage protected, concerted activity.

[1] Meyers Industries, 268 NLRB 493 (1983), remanded sub nom. Prill v. NLRB, 755 F.2d 941 (D.C. Cir. 1985), cert denied 474 U.S. 948 (1985), supplemented 281 NLRB 882 (1986), affd. sub nom. Prill v. NLRB, 835 F.2d 1481 (D.C. Cir. 1987), cert. denied 487 U.S. 1205 (1988).

FTC Approves Settlement of Noncompetition Case Against Renown Health Voiding Ten Physicians’ Noncompetition Agreements

On November 30, 2012, the Federal Trade Commission voted 5-0 to approve the settlement of a complaint it filed against Renown Health on August 3, 2012. A settlement was promptly reached between the FTC and Renown Health avoiding the unwinding of two acquisitions made by Renown Health of two independent local cardiology groups.

The complaint alleged that Renown Health’s acquisition of competitor cardiology groups in Reno, Nevada, Sierra Nevada Cardiology Associates, Inc. (“NCA”) and Reno Heart Physicians, Inc. (“RHP”), and the employment of the 32 physicians employed by these entities, “is likely to lead to anticompetitive effects including increased prices and reduced non-price competition.” The acquisitions resulted in Renown Health employing approximately 97% of the cardiologists serving private patients in the Reno area. The FTC complaint focused on the fact that all of the employed physicians were subject to employment agreements containing noncompetition and non-solicitation provisions prohibiting them from practicing medicine or soliciting former patients for two years in the Reno area after termination of their employment. As a result of the noncompetition and non-solicitation agreements, competition for cardiology services would have to come from without, which the complaint alleged to be unlikely because of certain barriers to market entry. The State of Nevada, through its attorney general, worked with the FTC in investigating and resolving the matter. The Nevada AG filed a similar complaint and entered into an agreement with Renown Health similar to the FTC consent decree.

The parties reached a settlement this fall through an agreed consent decree that would avoid having to unravel the mergers. The FTC has now approved the consent decree under which Renown Health released up to ten cardiologists previously employed by NCA or RHP from their noncompetition and non-solicitation restrictions.

This result signals a cautionary note for those hospitals and health care systems with an overly large market share in a geographical market who seek to further expand their employed physicians in a given practice area. In this case, the 88% market share for the cardiologists was a daunting statistic for Renown Health to overcome. Going forward, this is just one more potential road block that health care providers must consider before acquiring additional physician practices and increasing its employed physician roles.

Who Owns a Social Media Account? Court Rules that Employer Did Not Violate the Computer Fraud and Abuse Act (CFAA) by Taking Over a LinkedIn Account

A recent summary judgment ruling issued out of the Eastern District of Pennsylvania, Eagle v. Morgan, et al., CIV-No. 11-4303, 2012 U.S. Dist. LEXIS 143614 (E.D. Pa. Oct. 4, 2012), highlights the need for employers to have clear policies regarding social media accounts established and used on the employer’s behalf. While plaintiff Dr. Eagle was president of defendant Edcomm, a banking education company, she created a LinkedIn account and used that account to promote Edcomm’s banking education services, foster her reputation as a businesswoman, reconnect with family, friends, and colleagues, and build social and professional relationships. Edcomm contended that it had an unwritten informal policy of “owning” the LinkedIn accounts of its former employees after they left the company. Dr. Eagle was terminated and subsequently denied access to her LinkedIn account by Edcomm, which had accessed her account, changed her password and altered her LinkedIn profile to display the company’s new president’s name and photograph while retaining some elements of Dr. Eagle’s profile.　 Dr. Eagle ultimately regained control of her LinkedIn account but nonetheless sued Edcomm and its employees, alleging, among other things, violations of the Computer Fraud and Abuse Act and the Lanham Act, and invasion of privacy by misappropriation of her identity.

On October 4, 2012, the district court granted Edcomm’s motion for summary judgment to dismiss Dr. Eagle’s federal claims. Holding that a reasonable jury could not find that Dr. Eagle had suffered a “legally cognizable loss or damage in the brief period in which her LinkedIn Account was accessed and controlled by Edcomm,” the district dismissed her CFAA claim. The district court concluded that Dr. Eagle’s claim of lost business opportunities and damage to her reputation were “speculative” at best and “not compensable under the CFAA,” and that even if types of damages were recoverable, she failed to present any evidence to quantify these damages. The district court also dismissed Dr. Eagle’s claims under the Lanham Act, finding that she had failed to produce any evidence of a likelihood of confusion to the public by switching her name and photo with that of her successor. However, the district court retained jurisdiction over Dr. Eagle’s remaining state law claims as well as Edcomm’s counterclaims (a conversion claim over a laptop and a misappropriation claim that asserts that Edcomm was the rightful owner of the LinkedIn account).

Given the rapidly evolving standards regarding employee/employer use of social media websites for marketing and business development (both for the employer’s business and the employee’s reputation), employers should take a proactive role in developing clear guidelines regarding the creation, control and ownership of business-related social media accounts.　 Policies stating, for example, that the company owns the social media site can help employers avoid disputes with departing employees. In addition, during exit interviews with departing employees, employers should consider inquiring generally about the employee’s social networking activities as they relate to his or her employment. Ask employees whether any client or customer information exists on their social networking accounts. If it does, request that this information be removed immediately. If an employer learns of an employee’s social networking activity that it believes violates a non-solicitation or other restrictive covenant, consider sending a cease and desist notice, including a specific request for the removal of any and all offending information. Finally, be prepared to adapt to changing norms, laws, rules and regulations affecting or regulating the use of social media sites.

A Litigator’s Perspective on Trade Secret Protection Programs: How to Protect Your Valuable Information Against Rogue Employees

Mark E. Terman, a partner in the Los Angeles office and a member of the Competitive Advantage practice team, authoried the article “A Litigator’s Perspective on Trade Secret Protection Programs: How to Protect Your Valuable Information Against Rogue Employees,” which was recently published on InsideCounsel.com. Mark’s article discusses the Uniform Trade Secrets Act and its variations, as well as questions companies should consider when developing their own trade secret program. Mark also emphasizes that companies should have a program to deter and limit trade secret misappropriation. “A seeming axiom of trade secret and unfair competition litigation is that the more brazen and dishonest the behavior of the former employee (and perhaps their new employer), the more accommodating a court may be to a company whose proof is less than perfect. By contrast, the thinner a company plaintiff’s proof is, the more a court may accept a former employee’s argument that there is nothing secret, nor valuable in the assets even if their theft can be proven” he says.

To read the entire article click here.