Checking job applicants’ credit as part of the screening process is a common practice, but it is declining.  In 2009, when only two states prohibited such inquiries, a survey by the Society of Human Resource Management reported that 60 percent of employers checked the credit of at least some prospective hires.  Only a year later, that rate dropped to 47 percent.  We expect that rate will continue to fall.  Simultaneously, employers are realizing that screening everyone is generally a poor idea.  For example, in 2010, only 13 percent of employers conducted credit checks on all prospective hires. 

Advocates of checking credit say it can help screen out irresponsible applicants and even future criminals.  A study by the Association of Certified Fraud Examiners found that the two most powerful indicators of potential fraud are living beyond one’s means and experiencing financial difficulties.  Even though not everyone with those indicators commits fraud, the information is valuable to companies who will suffer if they pick the bad apple.

Opponents argue a bad credit report may be a result of financial struggles that are not the employee’s fault, such as a serious illness in the family or a layoff.  Many credit reports contain errors and others may be flawed due to identity theft.  Some argue discrimination based on credit puts people in a catch-22 where they cannot pay their bills because they have no income, but they cannot find a job because of their poor credit.

Employers who check credit need to ensure they comply with applicable state laws and should consult with counsel to determine whether the exceptions for employees with financial access apply in their specific case.  Brody and Associates regularly advises management on complying and remaining up to date with state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

1. Develop a social media policy.  Given the prevalence of social media, this is an absolute must.  But with the National Labor Relations Board scrutinizing policies in search of labor violations, employers should have their policies drafted or reviewed by qualified labor and employment counsel to ensure compliance.
2. Train management to spot social media issues.  Often supervisors don’t know what to do when they hear about an employee’s embarrassing off-duty, on-line conduct.  Many may think, “it didn’t happen at the company, so it’s none of my business.”  Other supervisors, in an attempt to be a company hero, may engage in inappropriate (or even illegal) attempts to investigate the employee’s actions (e.g., impersonating a friend to gain access to the offending post).  Training supervisors and managers to be aware of what’s going on and to respond appropriately is crucial to minimizing a scandal and avoiding allegations of company misconduct.
3. Consider contract language for high-profile employees.  Many executives and other high-profile employees have employment agreements which allow for termination or forfeiture of benefits in the event of workplace misconduct.  However, their agreements often don’t address off-duty, but equally damaging, activities.  Since many of the concerns applicable to company-wide social media policies don’t apply to agreements with management-level employees, you should consider including a provision addressing on-line or other off-duty misconduct.  Obviously, you should consult your labor and employment counsel to help draft such language.

While you may have a Weiner at work, by being proactive, you can keep him (or her) from embarrassing you and tarnishing your company’s image.

Brody and Associates regularly advises management on complying with state and federal employment laws including privacy laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

The Complaint

By issuing a Complaint, the NLRB’s Hartford, Connecticut Regional Director is merely alleging that, among other things, AMR’s social media policy violated the NLRA.  Specifically, AMR’s “Blogging and Internet Posting Policy” prohibits employees from “making disparaging, discriminatory or defamatory comments when discussing the Company or the employee’s superiors, co-workers and/or competitors.” The Complaint alleges that by maintaining such a policy AMR was “interfering with, restraining and coercing employees in the exercise of the rights guaranteed in” the NLRA.  Among other things, the NLRA gives employees the right to engage in protected, concerted activity, which includes the right to discuss their criticism of management.

The next step in this case is a hearing on January 25, 2011 before an Administrative Law Judge (ALJ).  After a decision is rendered, the parties can appeal to the NLRB in Washington, D.C.  This process can take several months or even years.  Only after an NLRB decision will there be binding authority.  However, further appeals to the U.S. Court of Appeals and the U.S. Supreme Court are possible.  Thus, there is currently no real “takeaway” from the still-pending AMR case regarding employers’ social media policies except that the future may bring changes.

The NLRB’s Current Position

While the position embodied in the Complaint is clearly hostile to social media policies prohibiting company-disparaging communications, this position is only that of one Regional Director, not that of the entire NLRB.  The NLRB’s position, which is more favorable, was expressed in a 2009 “Advice Memorandum” issued by the Board’s Office of the General Counsel.

In that Advice Memorandum, the Board’s Assistant General Counsel was asked whether Sears’ social media policy violated the NLRA by restricting employees’ ability to engage in protected, concerted activity.  The policy in question stated:

          Prohibited Subjects

In order to maintain the Company’s reputation and legal standing, the following subjects may not be discussed by associates in any form of social media:

• Company confidential or proprietary information
• Confidential or proprietary information of clients, partners, vendors, and suppliers
• Embargoed information such as launch dates, release dates, and pending reorganizations
• Company intellectual property such as drawings, designs, software, ideas and innovation
• Disparagement of company’s or competitors’ products, services, executive leadership, employees, strategy, and business prospects
• Explicit sexual references
• Reference to illegal drugs
• Obscenity or profanity
• Disparagement of any race, religion, gender, sexual orientation, disability or national origin

(Emphasis added.) Although the emphasized language is very similar to the language in the recent AMR case, the policy was upheld.

In its analysis, the Advice Memorandum examined the relevant binding cases and concluded:

If [a policy] does not explicitly restrict protected activities, it will only violate [the NLRA] upon a showing that: (1) employees would reasonably construe the language to prohibit [protected, concerted] activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of [protected concerted] Activity.

The Advice Memorandum concluded Sears’ policy “cannot reasonably be interpreted to prohibit . . . protected activity” and that Sears did not issue it in response to union activity or use it to restrict an employee’s NLRA rights.

Employer’s Rights Under Current Law

Based on the complex facts in the AMR case (not fully discussed here), the Advice Memorandum may in the end not be helpful to AMR as, for example, it may be argued that the company was acting in response to union activity.  For everyone else, however, the Advice Memorandum appears to generally allow the protection of a company’s on-line image with properly drafted social media policies.  Qualified labor and employment counsel can draft compliant policies and provide counseling and training regarding the NLRA to help protect your company’s reputation while minimizing the risk of a lawsuit or unfair labor practice charge.

Brody and Associates regularly advises management on complying with state and federal labor and employment laws including the NLRA.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

You could be liable if you use what you find in a hiring decision. Then again, you could be liable if you don’t.

Background checks are designed to use past performance-at work and beyond-to predict future success at work. The key to successful background checks is locating an unfiltered source to reveal what the applicant is really like. Of course, asking the applicant and her references seldom produces useful insight unless you can choose the referral source (e.g. the last supervisor) or get the applicant to unwittingly divulge the truth through careful questioning. Social media now offers a new approach to uncover the truth about your applicant.

The Social Media Explosion

Facebook boasts that over one third of all Americans are members. Add linkedIn, Twitter, blogs, message boards, etc. and the numbers are staggering. While LinkedIn is often a polished view of oneself, the same is generally not true of  Facebook and Twitter. These latter forms of social media encourage users to let their hair down, which gives recruiters a unique opportunity to see the real candidate. While security enhancements are somewhat limiting access to some forms of social media, the limitations are still modest.

What You Can Learn Through Social Media

Much of the social media content is unlawful for employers to consider. The typical Facebook page will reveal race, sex, sexual preference, familial status, ethnic background, and more by just looking at the pictures and profile. Religion, especially if it is a strong part of the member’s belief system, is often front and center. Social causes are also often prominently displayed. As any seasoned recruiter knows, none of these factors should be considered in the recruiting process. However, more information is often available which is legal to consider.

Surprisingly to the inexperienced visitor, social media often offers insight into job satisfaction and performance issues.  Members regularly opine on their desire to find new job opportunities. They also comment on how they feel about their job, their employer, and the stress and strain of work. All of this is very enlightening and lawful to consider.

Real-life Examples

A fast food restaurant was told by a state Wage and Hour Auditor that a specific employee filed the complaint that prompted the wage and hour audit. When we used Facebook to learn more about the Complainant, we found she wrote on Facebook that she hated her job, she thought management was unfair, and she was looking for a new position.  

In another instance, an employer wanted to confirm the employment history of an individual, and it searched the person’s name on LinkedIn. The Company discovered a current job that it was unaware the person had obtained. 

The final example is the most devastating. A law student obtained an offer from a prestigious metropolitan law firm. As her last hurrah before graduation, she made a sexually revealing video tape of herself and placed it on YouTube. Her law firm found the clip and withdrew the offer.

Legal Concerns

For more than 50 years, recruiters have been told there are certain factors that must not be considered in the recruiting process. Social media doesn’t change this. It simply grants the recruiter an enhanced likelihood of coming upon such protected information. The following is a list of some of the more common laws that prohibit consideration of such factors. As you review each factor, imagine how social media will enhance the likelihood that a recruiter will learn of such factors. Please note: this article assumes the recruiter is doing the background check “in house.” If this responsibility is assigned to an outside vendor, make sure there is full compliance with the Fair Credit Reporting Act.

Civil Rights Statutes

Federal, state, and local governments all have statutes prohibiting adverse employment actions based on such things as the applicant or employee’s race, sex, age, religion, national origin, sexual preference, arrest record, disability, etc. To the extent any such qualities are discovered in the interviewing process or in a background check, including through social media, they must not be considered.

State Off-Duty Conduct Statutes

Many states across the country have statutes that declare it unlawful to discriminate against an employee based on engaging in legal conduct while off duty. Examples of such conduct include owning a firearm, consuming alcohol, smoking, and participation in political activities. To the extent such information is found through social media, it should not be considered.

The National Labor Relations Act

The National Labor Relations Act is a federal law that regulates union related activity in the United States. It also regulates “concerted” or group activities by employees involving the workplace. To the extent one learns an employee is an advocate for other employees at work, that conduct is protected and should not adversely affect the candidate.

One Final Concern-Negligent Hiring

As a recruiter, your job is to find the best candidate. If you are wrong about a candidate, the new hire leaves, you (hopefully) redo the search and life goes on … but not always.  There is a concept knows as “negligent hiring.” This occurs when a candidate is hired, he or she damages another person – usually a customer or fellow employee (physically or their property) – and then you learn that something in the candidate’s background foretold of this risk/damage.

The worst cases are when convicted pedophiles are unknowingly hired to work with children or convicted thieves are allowed access to a customer’s home. In a few cases, where a reasonable background check would have uncovered such history, the employer has been held liable for the damages this employee caused. Now consider if social media would have helped you discover such a hidden background. If so, the next question is: are you liable for not using social media to this end?  We know of no such case, but as social media becomes part of our everyday lives, this theory is bound to be argued. Only time will tell if it succeeds and huge judgments against an employer follow.

Conclusion

One out of three managers already use Google as part of their background check, and one out of five use social media.  The question is whether everyone else will embrace this or try to fight it. If you want to fight it, how will you win the fight? Since fighting this is nearly impossible, why not prepare for it and advise your team how to use it? Remind everyone that the laws that limit areas of legal inquiry, such as age and family status, are as strong as ever. The source of prohibited information is no defense. Therefore, remind everyone of the rules, and remind them not to makes notes about information that is not job-related and is protected. At the same time, take advantage of the legal information social media may provide.

In this case, the Ontario, California police department gave officers on the SWAT Team pagers capable of text messaging.  After a few months where Officer Quon exceeded the monthly allowance for text messages sent, the Department conducted an audit to see whether the overage was due to personal or business use.  In the course of the audit, the Department discovered sexually explicit messages sent while Quon was on-duty.  As a result, Quon was discharged, and he sued claiming the audit violated his privacy rights.

Since the Department is a public employer, and thus, an extension of the government, the Court’s analysis was based on the Fourth Amendment, which protects against unreasonable searches and seizures by the government.  The Court concluded that since the Department’s search was reasonable, Quon’s Fourth Amendment rights were not violated, even if he did have a right to privacy in the on-duty text messages.  Needless to say, there is no practical application for the private sector. 

One lesson private employers can learn is this whole issue could have been avoided if the Department had a proper policy covering text messages.  The Department’s policy only covered “all network activity including e-mail and Internet use” and stated that users “should have no expectation of privacy or confidentiality when using these resources.”  As a result, Quon was able to argue that “text messages” were not covered and should be deemed private.  It is therefore crucial to publish a clear policy that covers all company-issued communications equipment.

Brody and Associates regularly advises management on complying with state and federal employment laws including privacy laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

America is using social media (e.g. Facebook, MySpace, Twitter, etc.) to publish everything from the profound to the mundane.  For employers, this leads to the tremendous potential for employees to enhance or harm the company’s reputation through their online activities.  Employers doing business in today’s world of Web 2.0 must take control with clear policies prohibiting employee blogs, tweets, or status updates about such things as a new product being developed, a coworker’s obnoxious habits, or the supervisor’s new girlfriend, while encouraging everyone to use Web 2.0 to advance the company’s image.  Here are some guidelines for this balancing act. 

Computer and Internet Use Policies

Employers with computers need a computer use policy.  For openers, confidential passwords should be mandated.  Also, due to the threat of viruses, spyware and other malware, no one should be permitted to download or install any software unless approved by the employer.  This should also help minimize the risk of liability for software piracy. 

If an employer allows personal use of company computers – which is extremely common – limitations are needed in terms of time spent on personal use and what kind of personal use is allowed.  For example, studies show computer games account for a staggering amount of wasted work time.  Such use should clearly be prohibited.  It is also crucial to remind all users that there is nothing on the computer that is kept private from the Company or possibly co-workers.  A nice way to say this without sounding like “big brother” is: “because all computer data (including internet activity) may be accessible to all users and maintenance technicians, employees should not input or access any personal data which they would want to keep private.”  Further, in Connecticut, for employers to electronically monitor computer use, they must post a written notice (in a conspicuous place) of such monitoring.  An effective way to do this is to post the notice on a computer log-in screen that employees see every time they log into a computer.

An additional consideration for employers in Connecticut, and several other states, is compliance with laws relating to the confidentiality of social security numbers and other personal information.  In Connecticut, employers must have a written policy describing procedures for safeguarding such data, including how data stored on computers is protected.

Internet Publication Policy

As Domino’s Pizza recently learned, once information gets onto the Internet, it can be impossible to remove.  Web postings that disclose confidential information or put the company, its employees or customers in a bad light can be devastating.  In the case of Domino’s, it was a YouTube video, viewed over a million times, in which an employee performs disgusting acts with sandwiches before allegedly delivering them to customers.  On the other hand, imagine the profit gained through a good website, an informative blog or Twitter feed.  This is why employers need a good Internet publication policy.  Such a policy should cover everything from prohibiting the disclosure of confidential or defamatory information to the promotion of the company through thoughtful use of social media.  Here are a few examples:

Confidential Information

While this subject should be covered in an employee handbook, it is important to remind employees that updating their Facebook status with information pertaining to confidential work projects could cost the company a client and the employee his/her job.  Also, employers should define what “confidential” means to their business.

Defamation

Even on a password protected site such as Facebook, posting defamatory statements about anyone could lead to legal liability for the company as well as the employee, and such posting should be prohibited. 

Other Harmful Postings

Employers are not limited to prohibiting only defamatory postings, but are generally free to prohibit, for example, any conduct which places the company, its customers or employees in a bad light.  For example, a few months ago, news reports described the firing by the Philadelphia Eagles of employee Dan Leone for making the following Facebook posting: “Dan is [expletive] devastated about Dawkins signing with Denver.  Dam Eagles R Retarted” [sic].  

Images that could harm the company could also be prohibited (e.g. pictures of employees in company uniform, passed out and surrounded by empty beer bottles). 

Keep in mind, however, many states have “off-duty” laws that protect employees from being disciplined or discharged for engaging in legal off-duty conduct.  In Connecticut, for example, employers generally may not punish employees for smoking on their own time and off company property.  In New York, with few exceptions, employers generally may not punish employees for their legal use of “consumable products” such as alcohol.  Thus, employers have to be careful to comply with such laws when drafting and enforcing an Internet publication policy.

Conflicts of Interest

In addition to obvious conflicts, such as selling a competing product on the Internet, employers may generally prohibit employees from making statements adverse to the employer (e.g. a snack food company telling employees not to blog about how snack foods contribute to childhood obesity).  However, employers have to watch out for state laws like Conn. Gen. Stat. 31-51q, which generally prohibits employers from disciplining or discharging employees for exercising certain constitutional rights such as free speech.  There are exceptions to this statute, and a carefully drafted Internet publication policy can protect employers while minimizing the risk of liability.

Marketing Opportunities

In addition to controlling potentially harmful Internet postings, an Internet publication policy should promote smart use of the Internet to enhance the company’s reputation and attract new business.  For example, social media can allow employees to increase business by reaching out to family, friends, former classmates, and even strangers who share common interests.  Employers can take advantage of such opportunities by offering guidance on the best social networking sites to join, how to design an effective profile, and when and how to request permission to use company logos.  While not every company may wish to have a full blown marketing plan including blogs, social networking profiles, and avatars (as an aside, IBM actually has guidelines on employee behavior in 3-D virtual worlds), many companies would benefit from helping Internet-savvy employees make smart decisions that may lead more business.

Conclusion

Employers applying obsolete policies to cutting edge technology are putting leaded gas into a hybrid car.  As the Internet continues to evolve, new laws are passed, and younger generations steeped in the Internet enter the workforce, employers simply must update their workplace policies.  By adopting Internet publication and computer use policies, employers can reap many benefits and avoid many pitfalls of Web 2.0.

In Kearney, two California residents were granted options on their employer’s stock that could be exercised only through Smith Barney. The residents made numerous phone calls to Smith Barney’s Atlanta office regarding their options. These phone calls were recorded, but the residents were never informed that the conversations were being taped. The plaintiff’s sued under the state’s Privacy Act. Smith Barney claimed that Georgia law regulated the company’s conduct since the calls emanated from Georgia, but the court disagreed. Instead, the court held that the California two-consent law applied over Georgia’s one-consent requirement and entered a verdict for the Plaintiffs.

While the decision only holds legal authority in California, it could have a substantial effect on employers across the country. Eleven other states have two-consent requirements, including Florida, Illinois, Michigan, Pennsylvania, Connecticut, Maryland, Massachusetts, Montana, Nevada, New Hampshire and Washington State. It is likely that these states will follow the California Supreme Court’s lead when interpreting their own privacy laws. Thus, employers in the other 39 states with one-consent requirements that secretly record their phone conversations with residents of states with two-consent requirements risk being held liable for violating the two-consent state privacy laws. This could be significant because like California’s law, most two-consent requirements provide for statutory damages and attorney’s fees without proof of actual damages.

If your business records any customer or client phone calls, you need to carefully review all the state laws that may apply. To be safe, consider obtaining the consent of all parties to recorded conversations regardless of whether the parties to the call are located in a two-consent state or a one-consent state. A reminder that a call may be monitored for quality assurance purposes may not be sufficient to establish consent. Therefore, consider new alternatives that will avoid your being found liable for violating one of these privacy acts.

Brody and Associates regularly provides counsel on federal and state employment law issues. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560. ]]> http://brodyandassociates.com/recording-phone-calls-leads-to-employer-liability/feed/ 0 http://brodyandassociates.com/california-employers-fear-new-background-check-law/ http://brodyandassociates.com/california-employers-fear-new-background-check-law/#comments Sat, 15 Jun 2002 17:43:32 +0000 Robert G. Brody http://brodyandassociates.com/?p=790   California’s newly enacted Investigative Consumer Reporting Agencies Act (ICRAA) requires the results of any background check be furnished to the investigated person, including applicants for employment. Any collected data regarding reputation, personal characteristics or mode of living must be reported within one week or at the interview, whichever is sooner. The California legislature aimed to prevent small data errors from causing substantial damage such as identity theft. For example, attribution of erroneous poor credit history might improperly prevent a person from getting a loan, but IRCAA’s furnished report would allow the subject of the background check to clarify the error.

Much to the surprise of many California employers, IRCAA’s language is drafted broadly enough to encompass employment background checks. Enacted under many employers’ radar, ICRAA’s impact on the modern California workforce is already apparent. Its requirements are much greater than the federal Fair Credit Reporting Act (FCRA), which merely sets reporting agency standards and establishes consumer information rights. FCRA imposes no duty on employers to release a report to the subject. IRCAA’s requirements translate into a sizeable expense because employers must document all the information they gather and report. Companies have already begun to keep background check logs to ensure compliance in the most cost-effective fashion.

In the wake of September 11th, background checks will become an increasingly important tool in hiring a qualified and secure workforce. While the U.S. as a whole has been strengthening security requirements, California’s new law demands the grounds for security precautions be well-documented and disclosed. While IRCAA has placed a new burden on employers to continue this precautionary hiring practice, it is uncertain whether other states will follow California’s novel approach.

Should you have any questions about this article, please call or e-mail Brody and Associates, LLC. We can be reached at (203) 965-0560 or info@brodyandassociates.com. ]]> http://brodyandassociates.com/california-employers-fear-new-background-check-law/feed/ 0 http://brodyandassociates.com/1458/ http://brodyandassociates.com/1458/#comments Thu, 16 Aug 2001 15:38:32 +0000 Robert G. Brody http://brodyandassociates.com/1458/ The Internet is a powerful weapon in the hands of a disgruntled employee.  Internet bulletin boards invite employees to attack their own employer.  The right to free speech under the First Amendment often is the shield that protects employees who speak out on the Internet.  One of the few means to  defeat the First Amendment shield is an employee confidentiality agreement.  Two recent New Jersey decisions highlight how this can be accomplished. 

In Immunomedics Inc. v. Jean Doe, a/k/a “moonshine_fr,” No. A-2762-00T1, 2001 WL 770389 (N.J. Super. Ct. App. Div., July 11, 2001), Yahoo! was forced to disclose the name of an employee of a biopharmaceutical company who placed anonymous messages about her company on Yahoo!’s internet message board.  The employee, “Moonshine,” anonymously described  herself as a “worried employee,” and revealed details about the company’s European operations.  These details included information about the company’s lack of inventory, its poor sales outlook, and an assertion the company would fire its European Manager.

Immunomedics admitted Moonshine’s statements were true, but subpoenaed Yahoo! to disclose Moonshine’s true identity since she violated a confidentiality agreement and employee handbook.  After receiving this subpoena, Yahoo! contacted Moonshine, who filed a motion to quash the subpoena.

The court discussed the necessary balance between an internet message board user’s anonymous free speech rights and an employer’s right to sue for violation of its confidentiality agreement.  It found Immunomedics established a prima facie cause of action for breach of its confidentiality agreement, and the disclosure of Moonshine’s identity was warranted, since: 1) evidence demonstrated Moonshine was an employee of Immunomedics; 2) employees of Immunomedics execute confidentiality agreements; and 3) the content of Moonshine’s bulletin board messages provided evidence of a breach of the confidentiality agreement.

Contrast Immunomedics with Dendrite Int’l Inc. v. John Doe No. 3 No. A-2774-00T3, 2001 WL 770406 (N.J. Super. Ct. App. Div., July 11, 2001), where the same Judge  refused to require Yahoo! to disclose the identity of an anonymous internet user.  The anonymous message board user alleged Dendrite’s President made changes to revenue recognition practices to increase his own earnings, and was trying to sell the Company, but no one was interested.  Dendrite alleged breach of contract, defamation, and misappropriation of trade secrets.  The court determined Dendrite could not overcome the free-speech rights of the anonymous internet poster since the posted information failed to harm the company, either by negatively affecting its stock value or inhibiting its hiring practices.

In both cases the harm to the employer appeared comparable.  The difference was Immunomedics sought to enforce a confidentiality “contract,” while Dendrite attacked the right of free speech.  Unless the harm is extreme, attacking free speech is a poor strategy.  The more effective approach is to protect confidential information through confidentiality agreements and accept the side benefit of minimizing employee internet attacks on the corporation.  Companies should seek advice from counsel to assess the appropriateness of confidentiality agreements, and to receive assistance in drafting these agreements.