Working with employers are various sizes, backgrounds, sophistication, and industries, I’ve seen a lot of confusion and simple misunderstandings about what constitutes employee discipline and how to properly document employee performance issues or discipline.  This Friday’s Five addresses five common misunderstandings I’ve seen recently about employee discipline and documentation:

1. If it was not a formal write-up put in the employee’s file, then the action does not constitute disciplinary action.

There is no legal definition of what constitutes a write-up, nor is there a definition of what is required to be in an employee’s personnel file.  Therefore, recollections about verbal warnings, e-mails, letters, even notes on napkins can be evidence to support an employer’s position that an employee was terminated because of performance issues.  The key item employers need to remember is if the employee challenges the reason for the termination that there is support for the termination decision, either through testimony and/or documentation.  The documentation can come in any form and does not have to be a formal write-up that is maintained in the employee’s personnel file.  However, this is not to say that employers can do away with formal employee reviews and write-ups, these are very good practices to maintain.

2. Verbal warnings do not have to be documented.

If there is no record of verbal warnings it is very difficult to prove at a later date that the employee had been counseled about the issue.  Managers should always document a verbal warning in some manner, such as in a manager’s log or even e-mailing themselves the specifics about the verbal warning.  By preparing an e-mail and sending it to themselves, it creates a great time-stamped record that is excellent evidence should there ever be any litigation concerning a termination.

3. Employees have to sign disciplinary documents.

Some employers do not think a write-up for an employee is valid unless the employee signs the write-up, but this is not true.  While it is a good policy to have some system that proves the employee was presented with the write-up, it is not required that the employee sign the document.  Many times the employee will refuse to sign such documents because they do not agree with them.  To alleviate this, some employers provide a line on the document that states the employee does not necessarily agree with the write-up, but is signing the document only to acknowledge receipt.  Another method to avoid the argument that the employee never received the written warning is to email the employee.  This creates a great record of when the warning was prepared and sent to the employee.

4. Employers have to follow a progressive disciplinary policy and cannot fire employees on their first offense.

While employers may choose to implement a progressive discipline policy that starts discipline with a verbal warning and progresses to a second or third written warning prior to termination.  However, if using a progressive disciplinary system, employers should be careful to preserve the employee’s at-will status and reserve the right to not follow the progressive disciplinary system at is sole discretion.  As long as the employee is at-will, they can be terminated at any time, even after their first small infraction of a company policy.  For more information about at-will employment, click here for my previous article.

5. Disciplinary documentation should be as broad as possible.

While write-up and counseling should address the overall issue that the employee needs to improve, employers need to avoid general statements without providing specific examples.  For example, instead of writing an employee up for having a poor attitude, the employer should provide a specific performance issue.  The employer should document the time, date and facts of the incident.  Write ups should also list the conduct that is expected of the employee in the future.

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.

This video is the third installment of three videos covering issues surrounding terminations in California.  For today’s Friday’s Five, in this final video in the series I discuss five common questions employers have about severance agreements:

  1. When are severance agreements appropriate in California?
  2. What are common terms in severance agreements? Such as a non-disparagement clauses and reference clauses.
  3. How much of a payment is required to the employee in a severance agreement?
  4. What is a section 1542 waiver of all known and unknown claims?
  5. Can employers include confidentiality provisions in severance agreements?

In order to obtain the termination checklist for California employers, please email me.

Another Friday, another Friday’s Five.  If you are new to the Employment Law Report, I write about a topic and include five items employers should understand on that topic every Friday.  This Friday’s Five discusses the documents employers should consider providing to employees at the end of employment.

The documents include:

  1. Notice of change of relationship
  2. For Your Benefit, California’s Program for the Unemployed – pamphlet published by the EDD
  3. HIPP notice
  4. COBRA notice
  5. For layoffs, potential WARN Act and California’s Baby-WARN Act

To download these documents and more information click here.

Click here to subscribe to the Employment Law Report Youtube Channel.

Employers should review the issue with legal counsel to ensure that they are providing the required documents for their particular situation.

This week’s Friday Five is a discussion focused on a discussion of considerations employers should make during the termination process, such as:

  • how to document reasons for terminations (and why it is important to be accurate and honest)
  • when final wages are due
  • where to provide final wages
  • payment of expense reimbursements, and
  • direct deposit of final wages

Friday’s 5 is here.  This post covers five issues that commonly arise when dealing with employment Shaking handscontracts and non-competition/non-solicitation agreements.  It is a very broad area to discuss, so, as always, this is a very general overview.  However, employers and executives alike should have a basic understanding about the legalities and enforceability of such clauses in California.

1.      At-Will employment, and Labor Code Sections 2924 and 2925.

California’s Labor Code section 2922 provides that employees are at-will: “An employment, having no specified term, may be terminated at the will of either party on notice to the other.”

However, if the employer and employee enter into a contract for employment, California’s Labor Code specifically sets out that the employer or the employee may terminate any employment contract for any willful breach of the duties owed to each other.  Labor Code Section 2924 provides:

An employment for a specified term may be terminated at any time by the employer in case of any willful breach of duty by the employee in the course of his employment, or in case of his habitual neglect of his duty or continued incapacity to perform it.

Labor Code Section 2925 likewise provides:

An employment for a specified term may be terminated by the employee at any time in case of any wilful or permanent breach of the obligations of his employer to him as an employee.

2.      Agreements restraining individuals from engaging in a lawful profession is void under Business and Professions Code Section 16600. 

Employment contracts, non-competition agreements, and/or non-solicitation agreements can be challenged under Business and Professions Code section 16600.  That Section provides a very broad rule voiding any contract that limits an employee’s ability to engage in their profession:

Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

3.      Exception to Section 16600 – Narrow Restraint

One exception to Business and Professions Code Section 16600’s prohibition on restraining an employee’s ability to work is if the restraint is narrowly drafted.  Restraints on the pursuit of “only a small or limited part of the business, trade or profession” have been upheld by California courts.  As the court in General Commercial Packaging, Inc. v. TPS Package Engineering, Inc. explained, “[A] contract does not have to impair a party’s access to every potential customer to contravene section 16600…. [A] contract can effectively destroy a signatory’s ability to conduct a trade or business by placing a substantial segment of the market off limits.”  General Commercial Packaging, Inc. v. TPS Package Engineering, Inc., 126 F.3d 1131, 1132–33 (9th Cir.1997)

There is also a strong public policy against enforcing agreements that restrict employee’s ability to work in the profession they chose.  California Courts have noted, “the interests of the employee in his own mobility and betterment are deemed paramount to the competitive business interest of the employers ….”

4.      Exception to Section 16600 – Protection of trade secrets and to prevent unfair competition

As one court has noted, “Section 16600 has specifically been held to invalidate employment contracts which prohibit an employee from working for a competitor when the employment has terminated, unless necessary to protect the employer’s trade secrets.” Metro Traffic Control, Inc. v. Shadow Traffic Network, 22 Cal.App.4th 853, 859 (1994). In addition, any such restrictions must be “carefully limited.” Id. at 861.

For example, in Gordon Termite Control v. Terrones, 84 Cal.App.3d 176, 179 (1978) the court refused to enforce an agreement prohibiting an employee from calling on any accounts he had called on while with former employer, finding “[k]nowledge of potential customers … is not a trade secret ….”

Moreover, the information must be an actual trade secret to obtain this protection.  In Gordon v. Landau, 49 Cal.2d 690, 694 (1958), the court found that an agreement restricting a door-to-door salesman from using his former employer’s confidential customer list was valid under section 16600.  However, in Letona v. Aetna U.S. Healthcare Inc., 82 F.Supp.2d 1089 (1999), the court rejected the employer’s argument that was seeking to protect information that qualified as a “trade secret” because “Aetna’s own admission that such information is ‘publicly available at Aetna’s website on the Internet” destroyed any argument that the information was secret.

5.  Out-of-State employers must be cautious about using form agreements.

Employers should heed the warning issued by the court in Letona v. Aetna U.S. Healthcare Inc. to out-of-state employers using form agreements in California:

Aetna took the contract it uses in other states and, without regard to California law, and contrary to the clear prohibition contained in section 16600, compelled its California employees to sign it or be fired. Aetna’s claim that it should not be held responsible for wrongful termination unless it “knew” the provision was unenforceable misses the mark.  Aetna knew it was operating in California and would be subject to its laws. Section 16600, or a version thereof, has been on the books since 1872. See Bosley Medical Group v. Abramson, 161 Cal.App.3d 284, 288, 207 Cal.Rptr. 477 (1984). It is not asking too much for Aetna to refrain from requiring its employees to sign presumptively illegal provisions and then firing them when they decline to do so.

Photo: Casa Thomas Jefferson

Today’s Friday’s Five focuses on five aspects of responding to employee’s complaints made on social media.  Yelp has been in the news recently (Another ex-Yelp worker is calling the company out after being fired, CNNMoney; Yelp’s Tweet About Fired Employee Could Spell Legal Trouble, Inc.com [I was quoted in this article]), for how it responded to two former employees’ complaints on social media about the company.  The incident is a great learning opportunity for employers.  Employers need to understand that this is the new reality, employees feel that they need to voice their concerns very publicly on social media, and these complaints can spread quickly.  Employers also need to plan ahead and have a system and policies in place before they are confronted with this type of situation so their response can protect the company without creating legal liability.  Here are five lessons for employers about responding to employee’s complaints on social media:

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.