I spoke at the Western Foodservice & Hospitality Expo last week regarding marijuana in the workplace and employer’s right to test for and prohibit the use of marijuana.  While employers generally still have the right to test employees for and prohibit marijuana in the workplace, employee’s still have privacy interests that employers need to aware of.  For example, Article I, Section I of the California Constitution guarantees citizens a right of privacy:

All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy.

This right to privacy carries over to the workplace, but is even more protected when the employee is conducting personal activities during non-working hours. On top of this general right to privacy, there are statutory protections provided to employees as well.  Below is a list of items concerning employee conduct that cannot be regulated by an employer under California law:

  1. Employers cannot prohibit employees from discussing or disclosing their wages, or for refusing to agree not to disclose their wages. Labor Code Sections 232(a) and (b).
  2. Employers cannot require that an employee refrain from disclosing information about the employer’s working conditions, or require an employee to sign an agreement that restricts the employee from discussing their working conditions. Labor Code Section 232.5.
  3. Employers may not refuse to hire, or demote, suspend, or discharge and employee for engaging in lawful conduct occurring during nonworking hours away from the employer’s premises. Labor Code Section 96(k).
  4. Employers cannot adopt any rule preventing an employee from engaging in political activity of the employee’s choice. Labor Code Sections 1101 and 1102.
  5. Employers cannot prevent employees from disclosing information to a government or law enforcement agency when the employee believes the information involves a violation of a state or federal statute or regulation, which would include laws enacted for the protection of corporate shareholders, investors, employees, and the general public. Labor Code Section 1102.5.

Happy Friday!

For good or bad, the use of AI is already prevalent and its potential uses are expanding quickly, including to the workplace.  LinkedIn is currently suing a competitor, hiQ Labs, for use of information “scraped” from the social network’s site and used for AI analysis.  hiQ uses the information gleaned from LinkedIn to predict whether employee are likely to leave their jobs.  While the issue in the lawsuit is whether outside companies have the right to use information made public on social media sites and does not involve any employment work-place privacy issues, the lawsuit has disclosed how AI is currently being used and in the workplace.  AI is quickly being adopted, and its effects will have huge ramifications for employers and employees.  This Friday’s Five discusses five impacts AI will have in the employment context:

1. Predictions of whether employees are likely to leave their jobs.

The analysis being done by hiQ Labs is a prime example of information that would be highly relevant to employers, employer’s competitors, recruiters and others.  As the Wall Street Journal article notes:

Among its services, hiQ monitors and analyzes LinkedIn profile pages to see who is polishing their résumés and liable to be poached, assigning so-called flight-risk scores to individual employees.

LinkedIn’s primary argument in suing hiQ to stops its “scraping” of LinkedIn’s information is that if LinkedIn users understood that their data was being gathered and used in this manner that they would be reluctant to share information and update their profiles.  This illustrates that there is value in the information being shared on LinkedIn when AI can analyze user’s data.  Regardless of which company has access to it, the fact that LinkedIn is suing over who has access to this data establishes how valuable the data is.  Employers are likely to begin using this data to evaluate their workforce in the near future, if it is not already occurring.

2. Set pay and performance standards.

One positive use of AI in the workplace could be as an aid to highlight good performers in a company and remind the managers to provide positive feedback or raises to high performing employees to increase employee retention.  Another potential use is analyzing data to set pay scales commensurate with the market for a particular locale or skill set.

3. Predictions of potential litigation.

Just as AI has been used to predict future mechanical failures of engines or other devices based on data history and monitoring the device, AI will likely be used to highlight employees who may pose a litigation risk.  Just as hiQ sets flight-risk scores, it is conceivable to set litigation-risk scores based on data.  Not commenting on whether this is appropriate (or legal) to do, the reality is that AI can and will be used for this analysis.

4. Help evaluate candidates interviewing for a job.

AI will likely be used in helping companies evaluate candidates for a job.  AI could evaluate education, experience, and other data obtained through the internet to predict an employee’s likely fit with the company as well as skill set.  There are laws already in place about employer’s use of certain public information, such as credit history and criminal backgrounds that must be excluded from such analysis, employers would have to approach this type of analysis cautiously to ensure compliance with existing laws.

5. Will there be a backlash for use of AI in the employment context, and will it be regulated?

Employers are already regulated on how they can use background information about candidates and employees under the Fair Credit Reporting Act (FCRA) and California’s Investigative Consumer Reporting Agencies Act (ICRAA).  Similarly, AI is using background information known about a person and comparing that data to a wide data set to glean likely future outcomes.  There could be a case made that just as the FCRA and ICRRA create obligations to provide notice to employees about the background information that an employer is relying upon to make an employment decision for the employee to correct any mistakes in that information, employees should be able to see the data being relied upon in the AI analysis.  However, given that AI can gather and process a huge amount of data, it might be impossible to review all of the data.  Moreover, the data relied upon by AI about the employee’s background may be very accurate, but the algorithms relied upon by the AI might weight information in a way that does not result in accurate predictions.  Don’t forget, AI predictions are just that – predictions.  Nevertheless, employers are always looking for a small advantage over competitors, and AI may be one additional tool to do this.  However, like many other areas of technology, the legal system is slow to adopt to technical advancements.  AI in the workplace exists and is being used, employers and the legal system needs to start considering it ethical and legal parameters.

Fingerprint scans, facial recognition, and retinal scans only a few years ago sounded like farfetched futuristic technology, but given the quickly advancing technology, these items are being used more and more in the workplace.  Today’s Friday’s Five discussed five items California employers should know about their legal obligations regarding the employee’s biometric information obtained during employment:

1. California Labor Code section 1051 – prohibition on employers from sharing biometric information with third parties.

This little known Labor Code section prohibits California employers of obtaining fingerprints or photographs from employees and then sharing this information to a third party.  Violation of the section is a misdemeanor.  Therefore, employers are not prohibited from collecting fingerprint information from employees, but are restricted from sharing this information with an outside third party.

2. Biometrics in timekeeping systems.

While there is no prohibition in using biometrics such as finger prints or hand prints in time keeping systems to verify an employees’ identity, employers must use caution in implementing these types of systems.  As discussed above, Labor Code section 1051 prohibits employers from sharing this information with a third party.  Therefore employers must take steps to ensure the vendor providing the technology does not have access to the biometric information.  Moreover, employers that obtain this information must be careful to protect the information from inadvertent disclosures to third parties.  Disclosures from from being hacked or unintentional inadvertent disclosure by the employer would likely be actionable under Labor Code section 1051 and California’s constitutional right to privacy.

3. Cost of photographs for employment must be paid for by employer.

Labor Code section 401 prohibits employers from requiring employees to submit a photograph from an applicant or an employee without paying for the cost of the photograph.  Obviously employers cannot discriminate against applicants based on race, gender, age, or other protected categories, but just as this information could be learned from a photograph, it would likewise be learned by the employer during a face-to-face interview.  Therefore, other than having to pay for the costs of the photograph, employers may ask for or take photographs during the hiring process as long as all prohibitions against discrimination are likewise followed.

4. Use of photographs of employees.

California Civil Code Section 3344, prohibits the use of a person’s “name, voice, signature, photograph, or likeness” in advertising or selling a product without the person’s prior consent.  Penalties under this section are the greater of $750 or actual damages suffered by the person as a result of each unauthorized use, any profits that are attributable to each unauthorized use, and attorneys’ fees and costs.  Punitive damages are also available to the prevailing party.  Therefore, employers who use the employee’s likeness in any advertising materials should consider obtaining written consent from employees to use their likeness in any marketing or advertising literature.

5. Employers must be careful to comply with other states’ biometric laws.

Facebook, Google and other technology companies are quickly learning about the intricacies of Illinois’ Biometric Information Privacy Act (BIPA).  The companies have been subject to litigation for alleged violation of the Illinois’ law on the grounds that Facebook and other tech companies’ using facial recognition in pictures stored to its software do not comply with the notice and consent requirements of the BIPA.  The law, passed in 2008, requires anyone gathering biometric information to provide certain notifications to the person whose data is being collected, and written permission to collect the information.  Facebook, for example, has asked for the case to be dismissed since its terms of service establishes that California law applies to any dispute.  Therefore, Facebook is arguing that because California does not have a similar law to Illinois’ BIPA, the case should be dismissed.  So far, that argument has not been successful and the case is proceeding against Facebook.  Employers operating in multiple states should pay careful attention to state statutes to ensure they are compliant with any applicable laws.  It is also likely that more and more states will enact similar laws to Illinois’ BIPA in the near future given the quickly advancing technology.

Photo: Toshiyuki IMAI

If you know Garyvee, you may be asking yourself how could an employment law blog rely upon advice from someone who has not only admitted, but takes pride in, the fact that he checked out of school in the third grade, does not read books, and uses language that makes most standup comedian’s performances seem tame?  However, to underestimate Gary is a huge mistake, and he brings a refreshing and realistic view of the workplace as it exists in 2016, that many companies could learn some important lessons from.

Gary is an entrepreneur who has a noted career in growing his family wine business from $3M to a $60M business in five years.  After that, he started Vayner Media, a digital marketing company, that now employees over 600 employees.  His is also an angel investor and venture capitalist.  I’ve recently listened to the audio version of his new book, The #AskGaryVee Book, twice in the last couple of weeks.  In listening to the book, I realized that his perspective on the workplace is the modern perspective that I’ve often advocated for on this blog.

For today’s Friday’s Five, here are five lessons from The #AskGaryVee Show (Gary’s Youtube channel) that employers must understand:

1)      Where are the best place to hire employees these days?

Search key terms on twitter search and do the homework.  Do the work.  Search terms about the items the employee would be doing, going to the person’s home page, and then email them asking if they are looking for a job.  It takes time, but you have to put in the work.

 

2)      How do you handle “Eeyore” employees?  The one that always sound like they’re whining and pessimistic.

Fire them.  Energy is very important, and dragging down the team is bad.  Not having the smarts is better than being a downer on the team.  It is pretty easy to see who is enthusiastic about their work.  Also, it is incredible how a small group of employees can affect the company.  Managers have to be careful not to confuse this with being an introvert.  Being introverted is something that needs to be recognized, and not looked down upon.  Moping is different than being quiet and introverted, and being introverted is not necessarily a bad quality to have.

 

3)      On your team, is it better to have employees that specialize in one thing or someone who can wear multiple hats?

Both work, but Gary is a fan of a jack of all trades.  He hates when people use the excuse that they are great at one thing to stop from getting better at another thing.

 

4)      Would you support Vayner employees writing their own books and curating their own content streams/personal brands?

Yes.  You cannot say you want to build around the employees, and then suppress them.  Leaders have to believe so much in themselves that they are not afraid to help employees grow.

 

5)      As a guy who loves hustle and people, what is the “unforgivable sin” one of your employees could make?

Gary is not worried about people’s work ethic.  While hustle may be the leader’s skill, and being able to work long hours, it does not have to be the skill of employees.  The only sin is to not figuring out a way to play nice with the boys and girls they work with.  Being disrespectful or being selfish is completely unacceptable, as is creating conflict.

Happy Friday!  This Friday’s Five focuses on the termination process.  Employers should develop a termination checklist to ensure all documents and contingencies are consistently covered during the process.  Here are five pointers employers can use to start in developing their own checklist:

1.      Final wages must be timely paid.

The employee’s wages must be paid at the time of termination.  In addition, employers are required to pay the employee all accrued but unused vacation in this final paycheck.  In addition, other items employers should review to ensure they are timely paid:

  • Expense reimbursement for business expenses
  • Commissions
  • Non-discretionary bonuses or profit sharing agreements

2.      Provide all required forms to employee at separation.

To the surprise of many employers, there are many forms that employers are required to provide to employees at the time of termination.  Here is a non-exclusive list of some of the routine forms required:

Employers should take time to review their obligations and forms that are required for their particular industry or situation.

3.      Communications about the terminated employee with others in the company and outside of the company. 

In order to prove a libel or slander claim, the employee must prove: (1) false communication; (2) unprivileged statement of fact (not opinion); (3) it was made about the plaintiff; (4) published to a third party; and (5) caused damage to the plaintiff.  More information about liable for slander claims can be read here.

Employers should take appropriate measures not to discuss the circumstances surrounding why an employee left the company with people within the company that do not have a need to know.  In addition, employers need to be very careful in how they communicate with anyone outside of the company about the employee’s work at the company.  To avoid any potential claims, many employers restrict what information they will provide for reference checks (even for employees who were good and left on good terms) to the employee’s dates of employment, and if authorized by the employee, the employee’s last rate of pay.

4.      Consider if a severance agreement would be appropriate.

Offering an employee some severance pay may cost the company money in the short-term, but could save a lot of time and money in the long run. If the employer believes that there is a potential dispute with the employee, the employer may choose to pay some severance in exchange of a release of claims by the employee in order to avoid any potential litigation.  If done properly, an employee’s acceptance of a severance agreement would effectively waive any and all claims against the company.  If there is any potential for a dispute about any issues that arose during employment, entering into a severance agreement could be an effective way to avoid costly and time consuming litigation.  I’ve previously written about five common questions about severance agreements here.

5.      Have an attorney review the process.

If the termination has any type of complicated issue, of if the company is going to over a severance agreement, an employment lawyer familiar with the law should be consulted.  It is also helpful to discuss a termination with an employment lawyer to see if there are any other potential issues that the employer may not have considered, and develop a strategy to deal with the issues at the time of termination, and not during litigation.

Gary Vaynerchuk discusses how he uses social media to engage with his 500 or so employees and addresses the risks on The Ask Gary Vee Show, episode 176 (video below).   Gary made his career using social media, and continues to do so in running his digital media company, Vayner Media.  So it does not come as much of a surprise that he embraces using social media to engage with employees.  He is correct in his position that “intent trumps everything.”  He means that if employers have a good intent in engaging employees via social media, there will be less risk of litigation from its use.  Gary is also correct in his position that employees can make up anything or sue on anything, and if being afraid of litigation is the standard about whether to engage in certain conduct, employers would have a very difficult time running a business.  Gary notes also that employees are happy when he engages with them on social media, but he notes he does engage with respect, and does not want to make anyone uncomfortable.

I generally agree with Gary’s position, and employers should feel free to engage employees on social mediation as long as they understand the general rules of employee privacy issues that arise (and as noted below, this is nothing new with the development of social media).

California’s right to privacy

First off, in California, Article I, Section I of the California Constitution guarantees citizens a right of privacy:

All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy.

This right to privacy carries over to the workplace, but is even more protected when the employee is conducting personal activities during non-working hours. A person’s privacy expectation in their social media posts is very low since it is posted for the general public. But one could argue that off-work conduct (which includes social media activity) is part of the employee’s privacy right recognized in the California Constitution.

Furthermore, section 96(k) of the Labor Code provides that the California Labor Commissioner may assert on behalf of employees:

Claims for loss of wages as the result of demotion, suspension, or discharge from employment for lawful conduct occurring during nonworking hours away from the employer’s premises.

Indeed, employees have successfully alleged claims that an employer’s use of off-work conduct was used in making an employment decision that violated the employee’s privacy.  For example, in Rulon-Miller v. IBM Corp. (1984) an IBM employee was terminated for an alleged conflict of interest due to her dating a manager of an IBM competitor.  IBM warned the employee to stop dating the manager of the competition, and when she protested IBM terminated her employment.  The court found that IBM violated the employee’s right to privacy in terminating her employment due to off-work conduct, and the jury awarded her $300,000.

Unreasonable intrusion into an individual’s private affairs

There is also a potential for employees to argue that it is intrusion into their private affairs.  To be unlawful conduct in California, an intrusion into someone’s privacy must be an unreasonable intrusion into one’s seclusion or private affairs that is highly offensive to a reasonable person.  A plaintiff can state a cause of action when their privacy is invaded in an offensive manner without consent, and it does not matter if the information was disclosed after the invasion.  See Shulman v. Group W Prods. Inc. (1998).  However, because an employer is following an employee’s posts on social media, it would be very difficult for an employee to establish that such an invasion occurred because the employee is posting the information publically.

So can employers use social media to follow and communicate with employees?

There is nothing illegal about employers or supervisors from following employees on social media.  The information posted by the employees is publically shared, so it would be very difficult for employees to state that the employer somehow intruded upon their privacy by following or commenting about the information posted by the employee.  However, employees do have a privacy interest in their off-work conduct and as established by the IBM case above, and employers must be careful in making employment decisions based on this information.  So is social media off limits to supervisors or companies?  No necessarily so as Gary states.  Indeed, the IBM case above was decided in 1984, well before social media existed.  Employers, managers, and supervisors always had to manage this risk – even before social media.  Therefore, it is not per se illegal that companies follow and engage their employees on social media, as many companies are probably feeling to pressure to do so as this is becoming the standard way many people communicate.  As Gary discusses, the fact that a company is engaging its employees on social media can be a huge employee morale boost, and a way to establish that the company cares about employees and is communicating with them on a less formal basis.  Companies should approach the sensitivity of the information and privacy of employees just as they would have prior to the invention of social media.