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.

In Sullivan, et. al. v. Oracle Corporation, the California Supreme Court ruled on whether California’s overtime laws apply to out-of-state residents who perform work in California. The Court held that California’s interests in protecting all workers who perform work within the state are sufficient enough to require that California based employers must pay all out-of-state workers who perform work in California according to California’s overtime requirements.

The Plaintiffs were employed by Oracle as instructors who train Oracle’s customers in the use of the company’s products. Two Plaintiffs reside in Colorado, and another plaintiff resides in Arizona. The Plaintiffs primarily worked in their home states but also performed work in California and other states. During the relevant time period for this case (2001-2004), Plaintiff Sullivan worked 74 days in California, Plaintiff Evich worked 110 days, and Plaintiff Burkow worked 20 days.

The case came to the California Supreme Court as a request by the Ninth Circuit to decide unresolved questions of California law. The issues presented to the Court were:

  1. Does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?
  2. Does Business and Professions Code section 17200 apply to the overtime work described in question one?
  3. Does Section 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?

Does California Overtime Apply to Out-Of-State Plaintiffs Working In California?

The Supreme Court held that the Plaintiffs were owed California overtime. It explained:

California’s overtime laws apply by their terms to all employment in the state, without reference to the employee’s place of residence. The overtime statute declares simply that “[a]ny work in excess of eight hours in one workday and . . . 40 hours in any one workweek . . . shall be compensated at the rate of no less than one and one-half times the regular rate of pay . . . .” (Lab. Code, § 510, subd. (a), italics added.) The civil enforcement provision provides that “any employee receiving less than . . . the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance . . . .” (Id., § 1194, subd. (a), italics added.) Moreover, a preambular section of the wage law (Lab. Code, div. 2, pt. 4, ch. 1, §1171 et seq.) confirms that our employment laws apply to “all individuals” employed in this state (id., § 1171.5, subd. (a), italics added).

The Court explained that states have broad authority under their police powers to regulate employment matters within their boundaries (such as child labor laws, minimum and other wage laws, and workers compensation laws). “To exclude nonresidents from the overtime laws’ protection would tend to defeat their purpose by encouraging employers to import unprotected workers from other states.”

The Court was clear that the holding in this case is limited to the facts presented to it. The court stated, “[t]hus, we are not prepared, without more thorough briefing of the issues, to hold that IWC wage orders apply to all employment in California, and never to employment outside of California.” (emphasis in original).

Does B&P Code Section 17200 (“Unfair Competition Law” or “UCL”) Apply to The Unpaid Overtime?

The Supreme Court held it does, stating:

We have already decided that the failure to pay legally required overtime compensation falls within the UCL’s definition of an “unlawful . . . business act or practice”

Does the UCL Apply When To Claims Under the FLSA for Overtime Worked By Nonresidents In Other States?

The Court concluded that the UCL does not apply to claims under the FLSA for alleged violations that occurred in other states. It explained that in holding so would extend the UCL to apply outside of California’s boarders, in violation of the “presumption against extraterritorial application.”
 

You may also subscribe to the California Employment Law Podcast through iTunes by clicking here. 

I like the UFC’s approach to social media, but 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.

A reader of the California Employment Law Report asks if it is possible to have employees enter into an agreement that would allow the employer to count a portion of the employees’ tips towards the minimum wage requirement. “Tip credit” is recognized by many states and it allows employers to count a portion of the employees’ tips towards a portion of the minimum wage requirement. Whether this is allowed and to what extent employers can offset their duty to pay minimum wage varies from state to state. Unfortunately, California does not allow tip credit. But the question raises another issue of whether it is possible to have employees agree to a tip credit even though the Labor Code does not provide for any credit.

As I’ve written about before, there are a few rights under the California Labor Code that employees cannot waive for public policy reasons. Labor Code Section 1194 provides a private right of action to enforce violations of minimum wage and overtime laws, and the statute voids any agreement between an employer and employee to work for less than minimum wage or not to receive overtime. It provides:

Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit.

Therefore, any agreement entered into with employees permitting a tip credit would not be permitted under California law, as the employee would be waiving his or her right to minimum wage, which is not allowed under Labor Code Section 1194.

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. 

Apple, Virgin America, 1965 Ford Mustang, and Mike Rowe. These are examples of Guy Kawasaki’s idea of Enchantment. In his new book he sets out to help readers understand what enchantment is in order to strive to be enchanting. Some have called it an update of How To Win Friends And Influence People for 2011.

Here are the ideas that caused me to dog ear the pages they were on and stood out for me:

  • To be likable, you need to find shared passions with others. To do this you need to do your homework, but it is easier today than ever to do so thanks to Google. Long gone are the days of reviewing back issues of newspapers to find out about people.
  • On launching a successful venture: “Perhaps [most presentations achieve] antienchantment, because people leave less intrigued than when they knew only rumors. Enchanting launches are more than press releases, data dumps, one-sided assertions, and boring sales pitches. They captivate people’s interest and imagination by telling a compelling story.”
  • Tell personal stories when conveying ideas. They do not need to be “epic” stories.
  • Marketing is turned upside down post-Internet – people depend on opinions of their friends and casual acquaintances more than “experts.”
  • Provide social proof. If everyone else sees other people doing it, then it must be ok.
  • Find something you agree with an opponent with before entering into negotiations. Small talk can often establish items in common, which will help lead to a successful resolution.
  • Embrace technology – especially social media.
  • Tell recruits for a company that you want them, and repeat often – even when they are employees.
  • Learn how to resist enchantment so that you are not enchanted by someone who does not have your best interest in mind.

It is also important to note about what is missing from the book: a chapter on price. As Guy puts it, “It is not about the money.” The book is a good reminder for business owners, human resource managers, and employees alike about what it takes to be successful today. Guy explains in more detail about what it takes to be a successful HR manager or have a successful HR department in my interview with him (or click here to listen on iTunes).

California Labor Code section 226.7 provides that employees are entitled to receive premium payment in the form of one additional hour of pay at the employee’s regular rate of pay for a missed meal or rest break. As the appellate court admitted in UPS v. Superior Court, this Labor Code provision is amenable to the two different interpretations offered by Plaintiff and Defendant.

Labor Code section 226.7 provides:

(a) No employer shall require an employee to work during any meal or rest period mandated by an applicable order of the Industrial Welfare Commission. [¶] (b) If an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the Industrial Welfare Commission, the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.

Plaintiff argued that section 226.7 allowed the recovery of two hours of premium wages if a meal and a rest break were not provided. Defendant argued that the language of section 226.7 only allowed Plaintiff to recover one hour premium wage, regardless if the Plaintiff did not receive both a rest and a meal break. The appellate court reviewed the legislative history and administrative history of the applicable Industrial Welfare Commission wage orders, and concluded that the employer is liable up to two hours of premium wages – one hour for a missed meal break and one hour for a missed rest break – per day.

The DLSE takes the view that, on-call or standby time at the work site is considered hours worked for which the employee must be compensated even if the employee does nothing but wait for something to happen. “[A]n employer, if he chooses, may hire a man to do nothing or to do nothing but wait for something to happen. Refraining from other activities often is a factor of instant readiness to serve, and idleness plays a part in all employment in a stand-by capacity”. (Armour & Co. v. Wantock (1944) 323 U.S. 126) Examples of compensable work time include, but are not limited to, meal periods and sleep periods during which times the employees are subject to the employer’s control. (See Bono Enterprises v. Labor Commissioner (1995) 32 Cal.App.4th 968 and Aguilar v. Association For Retarded Citizens (1991) 234 Cal.App.3d 21)

Whether on-call or standby time off the work site is considered compensable must be determined by looking at the restrictions placed on the employee. A variety of factors are considered in determining whether the employer-imposed restrictions turn the on-call time into compensable “hours worked.” These factors, set out in a federal case, Berry v. County of Sonoma (1994) 30 F.3d 1174, include whether there are excessive geographic restrictions on the employee’s movements; whether the frequency of calls is unduly restrictive; whether a fixed time limit for response is unduly restrictive; whether the on-call employee can easily trade his or her on-call responsibilities with another employee; and whether and to what extent the employee engages in personal activities during on-call periods.
 

Among the seven hundred or so new laws that took effect on January 1, 2011 is SB 1411 that makes it a misdemeanor for anyone to impersonate another on the internet “for the purposes of harming, intimidating, threatening, or defrauding another person.” The bill, which was signed into law by Governor Schwarzenegger, adds section 528.5 to the California Penal Code and makes the offense punishable up to $1,000 and one year imprisonment.

The law specifically makes it an offense to open an email account or social networking profile to impersonate another person:

For purposes of this section, "electronic means" shall include opening an e-mail account or an account or profile on a social networking Internet Web site in another person’s name.

The law is intended to prevent cyberbullying that has occurred in schools and the workplace. This law will be an additional aid for employers to prevent any type of abuse at the workplace, and provide victims an additional avenue for protection. In addition to the criminal punishment set forth, it also provides that a victim may bring a civil lawsuit against the defendant for compensatory damages and injunctive relief.

For California employers, the new law stresses the need to keep current with the new obligations employers face in regards to social networking sites and and to review their policies about how they monitor employees’ use of technology, as well as what is appropriate uses of the company’s technology. Under the theory of respondeat superior, employers are vicariously liable for tortious acts committed by employees during the course and scope of their employment. Therefore, if an employee uses a company computer to violate the new law, the company could face joint liability in a civil lawsuit for compensatory damages.