While the information posted on the Internet on social networking sites is usually public for everyone to see, employers need to be aware of potential claims for using this information in the employment context.  The law, as usual, cannot keep up with the fast-moving technology and change social media sites, so there are many uncertainties in this area.  This Friday’s Five discusses potential pitfalls California employers need to be aware of when conducting background checks.

1. Local City “Ban The Box” Ordinances

Many local cities in California have passed ordinances restricting an employer’s ability to conduct criminal history checks on applicants and employees.  For example, Los Angeles passed the Fair Chance Initiative for Hiring Ordinance that prohibits employers from seeking criminal background information prior to offering a job to applicants.  The law became effective on January 1, 2017, and the city began enforcing the law on July 1, 2017.  Under the ordinance, employers cannot conduct any “direct or indirect” activity to gather criminal history from or about any applicant using any form of communication, including on application forms, interviews or Criminal History Reports.  This includes searching the internet for information pertaining to the applicant’s criminal history.  Employers must be aware of their local ordinances to ensure that any background research on applicants or employees meets the requirements that apply to them.  More information on Los Angeles’ ordinance can be read here.

2. Federal and State Discrimination Claims

Because people are becoming so comfortable in sharing private information on social networking sites, employers may learn too much information about an applicant that would not and could not have been discovered through an interview. Discovery of this personal information is not unlawful – it is likely that the employer would find out many of these traits at the first in-person interview with the applicant anyway. However, employers cannot base its employment decisions upon a protected category, such as race or gender.   By learning about this type of information of an applicant via their on-line profile, the employer may have to explain that the information did not enter into the hiring decision.

3. Invasion of Privacy Claims

Though one might argue that members of social networking sites have no expectation of privacy (since the information is posted publicly) some applicants or employees might argue that the employer overstepped its legal bounds by using profile data in employment decisions. Arguably, the terms of service agreement may create expectation of privacy for users of site.

State Law Privacy Claims
Employees could potentially argue that using Facebook, Snapchat, Instagram, or similar site to conduct background checks violate state statutory law. For example, California and New York have statutes that prohibit employers from interfering with employee’s off-duty private lives. Employees may attempt to argue a public policy violation has occurred in violating a state statute that protects off-duty conduct from employer’s control.

State common law could also create liability. Generally, there are four common law torts for invasion of privacy:

  1. intrusion upon seclusion,
  2. public disclosure of private facts causing injury to one’s reputation,
  3. publicly placing an individual in a false light, and
  4. appropriation of another’s name or likeness for one’s own use or benefit.

As explained by one court, the tort of unreasonable intrusion upon the seclusion of another, “depends upon some type of highly offensive prying into the physical boundaries or affairs of another person. The basis of the tort is not publication or publicity. Rather, the core of this tort is the offensive prying into the private domain of another.” (citing Restatement (Second) of Torts § 652B, comments a, b, at 378-79 (1977)). Generally, the invasion of privacy must consist of (1) highly offensive intrusion (deceitful means to obtain information); and (2) prying into private information (information placed on the web is most likely not private).

4. Fair Credit Reporting Act (“FCRA”)

An employer’s use of social networking sites may implicate the FCRA, which places additional disclosures and authorization requirements on employers. In enacting the FCRA, Congress stated its underlying purpose was to ensure that decisions affecting extension of credit, insurance, and employment, among other things, were based on fair, accurate, and relevant information about consumers. The FCRA is intended to provide employee with notice of the background check, authorization to conduct the check in certain circumstances, and disclosure to the employee if the information is used in the employment context.

FCRA Definitions:

  • A “consumer report” is defined at as information (oral, written, or other communication) provided by a “consumer reporting agency” about credit matters as well as about a person’s “character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for…employment purposes.”
  • Another kind of “consumer report,” called an “investigative consumer report” contains information on a consumer’s character, general reputation, personal characteristics, or mode of living that is obtained through personal interviews with friends, neighbors, and associates of the consumer.
  • A “consumer reporting agency,” is defined as “any person who regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.”

Employers who conduct the background checks internally do not qualify as a “consumer reporting agency” and therefore the FCRA does not apply. Employers still need to be careful, however, because state law may apply. For example, California Investigative Consumer Reporting Agencies Act is more restrictive than the FCRA.

5. Terms of Service Violations

Social media sites have terms of service posted on their pages that generally prohibit use of their content for “commercial purposes.” Violation of the terms of service would not automatically create a cause of action in and of itself. However, as discussed above, it may be a way for a plaintiff to argue that there is an expectation of privacy in using the site and everyone who signs up to use the site is agreeing to abide by those terms.

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:

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.

Jillian Sanzone worked for Three D, LLD, d/b/a Triple Play Sports Bar and Grille, as a waitress and bartender and Vincent Spinella worked as a cook.  The employees realized that they owed more money in State income taxes than expected and complained to the employer.  Sanzone, Spinella, and another former employee, Jamie LaFrance, began posting about the situation on Facebook.  LaFrance’s initial status update stated, “Maybe someone should do the owners of Triple Play a favor and buy it from them. They can’t even do the tax paperwork correctly!!! Now I OWE money…Wtf!!!!”  Sanzone added to the comment in stating “I owe too. Such an asshole.”  Spinella then “liked” LaFrances initial status update.  The employer terminated Sanzone and Spinella based on the posts, and that Spinella “liked” the post.  The NLRB held that the employee’s engaged in protected concerted activity and the employer violated their rights under the Act in terminating them.  On October 21, 2015, the United States Court of Appeals for the Second Circuit upheld the NLRB’s ruling in Three D, LLC v. National Labor Relations Board.  Here are five lessons employers should learn from this case:

1.     The NLRB can enforce compliance issues even for non-union employers

Section 7 of the 1935 National Labor Relations Act (the “Act”) guarantees that “[e]mployees shall have the right to self‐organization, to form, join, or assist labor organizations . . . and to engage in other concerted activities for the purpose of . . . mutual aid or protection . . . .” 29 U.S.C. § 157. Section 8(a)(1) of the Act protects employees’ Section 7 rights by prohibiting an employer from “interfer[ing] with, restrain[ing], or coerc[ing] employees in the exercise of the rights guaranteed in [Section 7] . . . .” 29 U.S.C. § 158(a)(1).  This applies to unionized and non-unionized employers alike.  For example, the employer in the instant case was not unionized.

2.     Employees may engage in “protected concerted activity”

The NLRB defines “protected concerted activity” as follows:

The law we enforce gives employees the right to act together to try to improve their pay and working conditions, with or without a union. If employees are fired, suspended, or otherwise penalized for taking part in protected group activity, the National Labor Relations Board will fight to restore what was unlawfully taken away.

Because the Facebook comments were found to be protected concerted activity, the employer’s decision to terminate the employees based on these comments and Facebook “like” of the comments was held to be in violation of the Act.

3.     Employee’s Facebook like of the comments can be a protected activity

Neither party in this case contended that the act of “Liking” a Facebook post could not be a protected activity.  Indeed, the NLRB, and the Second Circuit Court hearing the appeal recognized that in today’s workplace, social media comments and discussions are typically where protected concerted activity occurs.  The NLRB held that the comments in this case posted on Facebook were protected comments because it involved current employees and was “part of an ongoing sequence of discussions that began in the workplace about [the employer’s] calculation of employees’ tax withholding.”

4.     Not all activity is protected

While employees have the right to comment and discuss work related complaints on social media, this right is not unlimited.  An employee’s communications with the public may lose the protection of the act if they are sufficiently disloyal or defamatory.

The NLRB held that the posts in this case did not lose this protection because the comments “did not even mention [the employer’s] products or services, much less disparage them” and that the employee’s claims of insufficient tax withholdings were “maliciously untrue.”  And Sanzone’s characterization of her employer as an “asshole” in connection with the asserted tax-withholding errors “cannot reasonably be read as a statement of fact; rather, Sanzone was merely (profanely) voicing a negative personal opinion of [her employer].”

5.     Employers need to take care in drafting their internet/blogging policies to ensure it does not run afoul of the NLRB or state law. 

The NLRB also found that the company’s social media policy violated the law.  The company’s policy stated the following:

The Company supports the free exchange of information and supports camaraderie among its employees. However, when internet blogging, chat room discussions, e-mail, text messages, or other forms of communication extend to employees revealing confidential and proprietary information about the Company, or engaging in inappropriate discussions about the company, management, and/or co-workers, the employee may be violating the law and is subject to disciplinary action, up to and including termination of employment. Please keep in mind that if you communicate regarding any aspect of the Company, you must include a disclaimer that the views you share are yours, and not necessarily the views of the Company. In the event state or federal law precludes this policy, then it is of no force or effect.

The NLRB found that this policy violated employee’s rights under Section 7 of the Act because, “…we believe that employees would reasonably interpret the Respondent’s rule as proscribing any discussions about their terms and conditions of employment deemed ‘inappropriate’….”  This finding was despite the policy’s savings clause.  The ruling leaves many questions of what type of policy would be upheld by the NLRB, and is a point of caution for employers.

Photo: Sam Michel

I will be conducting a webinar on January 15, 2013 on legal issues of social media in the workplace. The presentation will cover everything a California employer needs to know about social media in the modern workplace of 2013:

  • Discussion on the new law (Labor Code section 960) that prohibits employers from asking applicants and employees for their social media passwords taking effect on January 1, 2013.
  • How to avoid invading employees’ privacy rights when using social media for background checks.
  • Developments on how the NLRB held that some social media policies restrict an employee’s right to “engage in concerted activities.”
  • How to use the Internet to properly conduct a background check for applicant.
  • Discussion on whether your company needs a social media policy.
  • Evaluating whether an employer may be held liable for failing to use social media and the Internet to conduct a background check.
  • Alternatives to social media policies.

The cost is $150 (this is waived for clients). You may register below, or send me an email if you are a client.

This webinar has been preapproved by HRCI for 1 recertification credit hour. 

"The use of this seal is not an endorsement by the HR Certification Institute of the quality of the program. It means that this program has met the HR Certification Institute’s criteria to be pre-approved for recertification credit."

Imagine you are an employer and your employee in charge of your social media accounts leaves, keeps the accounts, and begins using the accounts while working for a competitor. Conversely, imagine you are an employee, leave employment to work for a competitor and your former employer sues you for $350,000 because you refuse to stop using your social media accounts. These issues are at play in PhoneDog v. Kravitz. The case illustrates the complicated issues surrounding exactly who owns social media accounts that are used for work. Noah Kravitz worked for PhoneDog as a product reviewer and video blogger. He had a Twitter account “@PhoneDog_Noah” he used as one way to publish product reviews as part of his job at PhoneDog. PhoneDog asserts in the lawsuit that it issues its employees Twitter accounts in the form of “@PhoneDog_[name]”. PhoneDog alleges that all of these Twitter accounts are proprietary, confidential information. Kravitz used the account while he was employed at PhoneDog, and garnered 17,000 Twitter followers.

When Kravitz left employment with PhoneDog to join a competitor, PhoneDog asked him to stop using the Twitter account. It is alleged in the lawsuit that Kravitz refused, changed the Twitter account handle to “@noahkravitz” and then continued to use the account and maintain the Twitter followers.

In response, PhoneDog filed a lawsuit against Kravitz for (1) misappropriation of trade secrets; (2) intentional interference with prospective economic advantage; (3) negligent interference with prospective economic advantage; and (4) conversion. Currently, the Court has ruled that PhoneDog’s lawsuit may proceed at this point, but Kravitz has raised some valid points that may be a defense, but still need to be developed further in litigation. 

Kravitz maintains that there cannot be a claim against him for misappropriation of trade secrets because the Twitter account followers are not a secret, as anyone on Twitter can see who the followers are. Kravitz also argues that the password to the Twitter account is not a trade secret, as PhoneDog does not derive any economic benefit from the password itself – it simply allows the user to see public information. Kravitz was also the person who created the password, not PhoneDog, so there is no PhoneDog secret at issue here. Most interestingly, Kravitz argues that PhoneDog does not have a claim against him for misappropriating the account because the Twitter account is not owed by PhoneDog. Twitter’s Terms of Service specifies that all accounts are the exclusive property of Twitter, that Twitter has the right to “reclaim usernames without liability” to the users, and Twitter retains the right to terminate accounts.

The employer is not without its share of arguments as well. While Kravitz raises some interesting technical issues about who owns the Twitter account, PhoneDog would have a strong argument that the license issued by Twitter is really the property at issue. PhoneDog could argue that because the license granted by Twitter to Kravitz was done during Kravitz’ employment and he set up the account at the request of PhoneDog, this license actually belongs to PhoneDog. Some not so well known California Labor Code provisions strongly support PhoneDog’s argument.  For example, Labor Code section 2860, states:

Everything which an employee acquires by virtue of his employment, except the compensation which is due to him from his employer, belongs to the employer, whether acquired lawfully or unlawfully, or during or after the expiration of the term of his employment.

Furthermore, Labor Code section 2863 provides:

An employee who has any business to transact on his own account, similar to that entrusted to him by his employer, shall always give the preference to the business of the employer.

This fascinating case raises many interesting issues, and will not be the last time I blog about the issues it raises.  It is a good reminder that the creation and maintenance of social media accounts is a critical factor in the employment context today and needs to be addressed from both the employer’s and employee’s perspectives.

I would love to be able to tell my clients that the Internet and social media has created a very complex set of legal issues that requires them to hire me in order to help develop all new handbook policies, change the way they conduct background checks on applicants, and monitor their employees. However, unfortunately, this is not the case. Employers and employees need to calm down a bit. I cringe when I hear employment lawyers (and Facebook’s Chief Privacy Officer recent comments about employers asking to have employee’s Facebook passwords) advising people to refrain from using the Internet to do background checks on applicants because it may reveal that they are in a protected category, and then this could (possibly) be grounds for a discrimination case. Are these same lawyers advising their clients not to conduct interviews because during a face to face interview the employer will learn the same information? And just because the employer knows that an applicant or employee is in a protect class does not mean that discrimination occurred if it takes an adverse employment action against the applicant or employee. Sure, all employers are subject to frivolous legal actions. But, as I tell my clients, there are only two things my clients and I can control: (1) the advice I give them about how to act according to the law, and (2) whether my clients listen to my advice and act accordingly. The one thing we cannot control, no matter how hard we wish we could, is being able to stop people from filing a baseless lawsuit.

We’ve had the Internet since the 1970’s, and it became mainstream in the 1990’s. I would argue that most people (at least in the U.S.) have had experience on the Internet for at least a decade now. There has not been a lot of case law that has changed the way employment lawyers advise their clients on new human resources policies given the advent of the Internet and social media.

Have the courts simply not caught up with these "new" developments?

As typical lawyers always suggests at this point – courts are slow to deal with emerging technology issues, but I don’t think that is a play here. Courts are slow, but we’ve been actively using the Internet for a decade now. They are not that slow, and I think rather that the rules that were already in place and governed employer’s and employee’s activities were and still are sufficient in addressing the vast majority of the employment issues involving the Internet and social media. Sure, on the fringes there are a few technical items that may be the exception to this, but for the vast majority of employers the Internet and social media does not change much about how HR should conduct itself. The basic analysis regarding monitoring and employee’s off work conduct and right to privacy – the issues usually at play in these types of cases – is the same if the conduct at issue was done off the Internet. I would even argue that privacy cases usually are easier when it involves a posting on the Internet, as no one has any reasonable expectation of privacy in such a public disclosure.

What about social media policies?

That usually leads to the next question, “What about social media policies?” Again, most employers probably don’t need a specific social media policy.  And a basic policy (if you really think a social media policy is necessary) that the employer may terminate or discipline an employee for anything they do on the Internet if the employer could terminate or discipline the employee if the conduct at issue did not occur on the Internet would normally be sufficient.

Employers, lawyers, and employees need to take a step back and realize that even though we have these great new technological advances, the law developed before this technology does a pretty good job at resolving these issues in the employment context.

Mat Honan at Gizmodo wrote recently about a new company that helps employers search applicant’s “internet background” to assist in the hiring process. As Mat rightly points out, much of the concern over this “new technology” is overblown, and as he puts it, "[e]mployers would have to be stupid not to Google job candidates."  As I have pointed out before, much of the unduly concern is that lawyers don’t understand the technology, and therefore if they don’t understand it, their client’s use of the technology can only lead to bad things.

I think Guy Kawasaki had a great perspective on this issue when I recently interviewed him. He said he would be worried about a job applicant who did not have a Facebook page: what is wrong with this person? Is he anti-social? Is he not with the times or just simply does not understand simple technology? As Mat points out as well, with some common sense a job applicant can easily manage the results of an online search by being careful about which information he or she provides to the employer. For example, an internet search for the job applicant’s private email address might turn up more personal information than if the applicant has a separate email they only use for work purposes and lists on their c.v.

From the employer’s perspective I don’t think the analysis changes much for searching employees background on the Internet:

Generally, under Federal law, employers may utilize social networking sites to conduct background checks on employees if:

  1. The employer and/or its agents conduct the background check themselves;
  2. The site is readily accessible to the public;
  3. The employer does not need to create a false alias to access the site;
  4. The employer does not have to provide any false information to gain access to the site; and
  5. The employer does not use the information learned from the site in a discriminatory manner or otherwise prohibited by law.

I like the UFC’s approach to social media – reward its fighters with bonuses (totaling $240,000 per year) for having the most twitter followers and the most creative tweets. Is this a model a lot of employers could use in their workplace? Absolutely. Unless you find yourself with the few who are still wondering what Twitter is, it is obvious that social networking is here to stay and companies need to figure out a way to make it a productive part of their business. The model also gives the right message to employees – that they are responsible individuals who will use social media appropriately to help the company build its brand. This is a much better approach than telling employees about they cannot do with social media, which is what most companies’ policies do. By warning employees about all of the negative implications for them in using social media, it stifles potential branding opportunities that could exist for the company. And it is already stating the obvious.

If I were running a company, I would want my employees actively using their personal social media accounts to promote specials and new products. It is great that there are tools now available to track the success rate and to give incentives to employees who generate the most buzz. I can already hear other lawyers out there grumbling that this is a bad way to go, and that the company could find itself facing a lot of liability for what employees say on social networks. Every time an employee answers the phone they could create liability for a company, but companies still trust their employees to talk with vendors and customers. The game has changed, time to start communicating with customers where they are listening, and don’t let your policies hinder this.

I recently had the opportunity to interview Guy Kawasaki about his New York Times best selling book Enchantment.  I like to think of the interview as an extra chapter to Enchantment specifically for business owners and human resource managers about how to effectively manage employees.  We spoke about the following topics:

  • HR departments should be evangelists, not cops. 
  • HR needs to embrace social media.  A company should even be suspicious of an employee who does not have a Facebook page. 
  • How to recruit and retain great employees.  Hint: It is not about the money.

You can listen to the interview here, or through iTunes at the California Employment Law Podcast

My review of Enchantment can be read here