Laborsphere

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.

Former Employee Fails To Convince Court Of Underpayment In First And Last Weeks Of Employment

Methodically navigating the arcane maze of regulations surrounding the Fair Labor Standards Act (“FLSA”), the Court in Kirchoff v. Wipro, Inc., W.D. Wash., No. 2:11-cv-00568, 10/2/12, held that a technology consulting company (“Wipro”) did not violate the FLSA or Washington law by using the “Pay Period” – rather than the “Work Week” – method to calculate a fired senior manager’s salary for the first and last weeks of his employment.

Wipro provides consulting services to technology companies such as Microsoft Corp., Cisco Systems, Inc. and AT&T, Inc. Wipro employed Kirchoff as a Senior Manager at an annual salary of $140,000 from July 26, 2010 to January 27, 2011, when Wipro terminated his employment. Kirchoff then sued Wipro, claiming that he and other employees had been underpaid because Wipro used the “Pay Period” method to determine their pay for the first and last weeks of their employment.

An employer must generally pay an exempt employee his or her full salary for any workweek in which the employee works at all, regardless of the number of hours. However, Department of Labor (“DOL”) regulations provide that “[a]n employer is not required to pay the full salary in the initial or terminal week of employment. Rather an employer may pay a proportionate part of an employee’s full salary for the time actually worked in the first and last week of employment. In such weeks, the payment of an hourly or daily equivalent of the employee’s full salary for the time actually worked will meet the requirement.” 29 C.F.R. §541.602(b)(6). Additionally, “[w]hen calculating the amount of a deduction from pay allowed under paragraph (b) of this section, the employer may use the hourly or daily equivalent of the employee’s full weekly salary or any other amount proportional to the time actually missed by the employee.” 29 C.F.R. §541.602(c).

Under the “Pay Period” method of calculating an exempt employee’s pay for a partial first or last week of employment, the employer divides the employee’s annual salary into twenty-four semi-monthly pay periods to obtain a semi-monthly rate, which the employer then divides by the number of working days in the semi-monthly pay period to yield a daily rate for the pay period. The employer then multiplies the daily rate by the number of days actually worked by the employee to determine the final compensation for the first and last weeks of employment.

Under the “Work Week” method, the employer divides the employee’s annual salary by fifty-two to calculate the weekly rate and then divides that rate by five, the number of working days in a week, to determine the daily rate. The employer then determines the employee’s final pay by multiplying the daily rate by the number of days that the employee actually worked.

Kirchoff argued that 29 C.F.R. §778.113(b) requires employers to use the “Work Week” method. While acknowledging that the approach specified in this regulation “matches” the “Work Week” method, the Court rejected Kirchoff’s argument. According to the Court, Part 778, of which this regulation is a subpart, deals with Overtime Compensation, and Kirchoff’s dispute did not involve overtime, nor does the applicable regulation, 29 C.F.R. §541.602, incorporate or reference the overtime regulation. The Court further noted that Section 541.602(c) permits the employer to use “any amount proportional to the time actually missed by the employee.” The Court explained that Kirchoff’s interpretation that only the “Work Week” method is permitted would render the remaining language of the regulation meaningless, which runs counter to basic rules of statutory construction that presume that every word has some effect.

Focusing on Section 541.602(c), the Court found that Wipro’s method based on the percentage of days worked in the pay period was mathematically correct as a “proportionate part” of Kirchoff’s full salary. The Court granted summary judgment to Wipro on Kirchoff’s FLSA and state law claims.

Employers must be careful when addressing application of FLSA regulations and be aware that the FLSA provides employers with multiple options for calculating employees’ pay for the first and last weeks of work.

Seventh Circuit: ADA Gives Disabled Employees Priority For Vacant Positions

A recent Seventh Circuit decision may require employers to select minimally qualified employees over far more qualified employees when filling vacant positions. In EEOC v. United Airlines, Inc., 2012 WL 3871503 (7th Cir. 2012), the Court held last month that, absent undue hardship, the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. (“ADA”), requires an employer to transfer a disabled employee to a vacant position ahead of more qualified non-disabled employees.

This case involved guidelines that United Airlines issued in 2003 for accommodating “employees who, because of disability, can no longer do the essential functions of their current jobs even with reasonable accommodation.” Under the guidelines, these disabled employees were eligible for placement in a vacant position and even received priority over otherwise equally qualified co-workers, but did not receive an open position over a genuinely superior candidate. The Equal Employment Opportunity Commission (“EEOC”) filed a lawsuit against United Airlines, which filed a Motion to Dismiss. The district court granted the motion, holding that a “competitive transfer policy does not violate the ADA.”

The EEOC appealed and the Seventh Circuit reversed. The Seventh Circuit acknowledged that, according to its own precedent, employers were not required “to reassign a disabled employee to a job for which there is a better applicant, provided it’s the employer’s consistent and honest policy to hire the best applicant for the particular job in question.” The Court concluded, however, that this precedent conflicted with the Supreme Court’s more recent decision in U.S. Airways, Inc. v. Barnett, 535 U.S. 391 (2002).

In Barnett, the Supreme Court considered whether a disabled cargo handler who could no longer perform his job was entitled to a mailroom position ahead of a more senior employee who was otherwise entitled to the job pursuant to a seniority system. The Barnett Court noted that “preferences will sometimes prove necessary to achieve the [ADA’s] basic equal opportunity goal” and articulated a “two-step, case-specific” analysis. First, the plaintiff/employee must show that an accommodation “seems reasonable on its face, i.e., ordinarily or in the run of cases.” After the plaintiff/employee satisfies the first step, the burden shifts to the defendant/employer to “show special (typically case-specific) circumstances that demonstrate undue hardship in the particular circumstances.” The Barnett Court concluded that, although a transfer to the mailroom may have constituted a reasonable accommodation, violating the seniority system was unreasonable. According to the Seventh Circuit, however, the Barnett Court “was not creating a per se exception for seniority systems.”

Relying on Barnett, the Seventh Circuit remanded the United Airlines case and directed the district court to apply the Supreme Court’s analysis. The Seventh Circuit observed that the Tenth and the District of Columbia Circuits have previously reached similar results. The Court gave little weight to a contrary Eighth Circuit decision that relied on the Seventh Circuit’s now-overruled precedent.

Practical Advice for Employers

Employers should have policies and procedures in place to address transfer requests by employees whose disabilities prevent them from performing their jobs. Within the Seventh Circuit (Wisconsin, Illinois and Indiana), employers should plan to give these employees priority for open positions and must understand that the Seventh Circuit will rarely accept an “undue hardship” excuse for denying the transfer.

Even outside of the Seventh Circuit, employers should be mindful of the United Airlines decision. Not only have the Tenth and District of Columbia Circuits reached similar rulings, but the Seventh Circuit’s interpretation of the Supreme Court’s Barnett decision will likely influence the decisions of courts that have not yet addressed this issue. Moreover, the EEOC clearly takes the position that anything less than mandatory reassignment violates the ADA.

U.S. Supreme Court to Define Who is a Supervisor Under Title VII

In a development that could have far reaching implications for employers, the U.S. Supreme Court has agreed to hear a case, Vance v. Ball State University, in which the central issue is the definition of “supervisor” for purposes of determining an employer’s liability for harassment under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (“Title VII”). Under Title VII, if the alleged harasser is a supervisor, liability is generally imputed to the employer (unless the employer can show they it had an effective anti-harassment policy that the plaintiff unreasonably failed to utilize). On the other hand, if a hostile work environment is created by co-workers, not supervisors, the employer is liable only if the plaintiff proves that the employer failed to take reasonable measures to stop the harassment, a considerably more difficult standard for plaintiffs.

Although determining whether an employee is a “supervisor” is important in many cases, neither Title VII nor Supreme Court case law specifically defines the term. However, various circuit courts have crafted their own definitions of “supervisor” and two primary definitions have emerged. The First, Seventh and Eighth Circuits define a “supervisor” as an employee who possesses the power to make “consequential employment decisions” such as decisions about hiring and firing, promotions and demotions, and disciplinary actions. In contrast, the Second, Fourth, and Ninth Circuits (as well as the Equal Employment Opportunity Commission) have adopted a broader definition, holding that an individual qualifies as an employee’s supervisor if the individual: (1) has authority to undertake or recommend tangible employment decisions affecting the employee; or (2) has authority to direct the employee’s daily work activities. Under this broader definition, far more employees are “supervisors” and, as a result, may potentially subject their employers to vicarious liability.

In Vance, the plaintiff worked in Ball State University’s catering department. She alleged that another employee, Davis, subjected her to racially discriminatory remarks. According to the plaintiff, Davis directed her work and was, therefore, a “supervisor.” The district court granted summary judgment to Ball State, holding that Davis was not a supervisor because she did not have the power to hire, fire, or discipline Vance. The Seventh Circuit affirmed.

Whether the Supreme Court, in deciding Vance and resolving the split among the circuit courts, adopts a narrow or expansive definition of “supervisor” will have a significant effect on employer exposure in harassment suits. If the Supreme Court adopts a broader definition, the pool of employees who can potentially subject their employers to vicarious liability will be significantly greater, likely resulting in more suits against employers. Moreover, it will be more difficult for employers to prevail at the summary judgment stage of litigation, because a more fact-based inquiry will be needed to determine whether someone is a supervisor. While it is relatively straightforward to show whether an employee is responsible for hiring, firing, promotions and the like, the broader standard requires a more detailed examination of the employee’s role.

Oral argument is scheduled for November and a decision is expected early next year.

Would Your Wage and Hour Practices Withstand Scrutiny?

These are real headlines from the last four days:

Holiday Inn at LA Airport Hit with Wage Class Action
Bath & Body Works Will Pay $1.3M to End Managers’ Wage Suit
Texas Sales Managers Hit Gold’s Gym with Overtime Suit
FedEx to Pay $10M to Settle OT, Meal Break Suit
Kraft Paying $1.75M to Settle Sales Workers’ OT Suits
ZipRealty Pays $5M to Settle California Agents’ Wage Claims

Similar headlines from the last two weeks would fill this screen. And these headlines do not reflect a new trend – rather, they are just examples of the many similar headlines featured almost daily in Labor and Employment publications. In fact, a record number of wage and hour lawsuits have been filed in the last 18 months. And there’s no sign that they will be dwindling any time soon.

Why are these suits here to stay? For one, with the availability of attorneys’ fees and liquidated damages, they’re a boon for plaintiffs and their lawyers. For another, given economy-driven layoffs, potential plaintiffs may end up in lawyers’ offices more often, looking for ways to strike back. And don’t think you’re protected just because the former employee signed a severance agreement. Employees cannot release wage and hour claims, even if your agreement says otherwise. Perhaps most compellingly, the Fair Labor Standards Act is not the easiest law to comply with. Ever try to compute the regular rate when non-discretionary bonuses are paid every week and the amount varies? Do you really know what “independent discretion and judgment” is? Do you know if you need to count the time employees spend at home checking their email as “time worked”?

What are the most popular practices targeted by plaintiffs?

Failure to pay overtime – either because the employer doesn’t like paying overtime or because employees are misclassified as exempt.
Failure to pay overtime at the proper rate.
Paying workers less than the minimum wage, especially tipped workers.
Failure to provide uninterrupted meal breaks of the appropriate length.
Retaliation against workers who complain.

What should you do? Short of making everyone non-exempt and prohibiting overtime, ask yourself how confident you are that your classifications are correct. If you’re not confident, call your lawyer and schedule an audit. Review a sampling of time and pay records to ensure that overtime was properly calculated and paid. Not sure? Call your lawyer. Don’t have time records? Groan.

Finally, don’t think you’re safe because your company is not big enough to be on anyone’s radar screen. Ever heard of 888 Consulting Group? Savvy Car Wash? Geosite Inc.? Quicksilver Express Courier Inc.? ZipRealty? Me either. But all of these companies have been hit with wage and hour suits. You may not be able to avoid being sued, but an FLSA audit before that happens could help you minimize the damages.