Archive for January, 2013

Avoiding Social Media Policy Mistakes

January 29, 2013

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Social networking has become as ubiquitous in work-related communications as it has in our personal interactions. “Water cooler” conversations have recently been elevated to a higher, more public level through social networking, sometimes with cyberspace longevity similar to the half life of uranium. So, while it’s no wonder that many companies have recognized a need to protect corporate reputations, brands and images from online disparagement through the creation of social media policies, we are now warned by the NLRB as to how far those policies can go before they become unlawful in the context of protected rights under Section 7 of the National Labor Relations Act (“NLRA”).

Several recent cases in point provide useful instruction on the subject.  In 2012, reacting to several social media policy challenges, the National Labor Relations Board (“NLRB) stepped in to clarify the nature of protected communications under the NLRA.  The result is new guidance that employers can use to avoid the pitfalls associated with broad, overarching policy statements that tread on rights granted to employees under Federal law while still protecting their right to discipline employees for certain inappropriate acts.

Section 7 of the NLRA protects the right of employees to engage in protected activity related to organizing and collective bargaining.  Section 8 of the Act prohibits employers from interfering with, restraining or coercing employees who are exercising their Section 7 rights.  Recently, the NLRB has made litigation of claims involving allegations of unlawful restrictions on social media activities by employees a priority and, because the NLRA covers all private employers engaged in interstate commerce and not just those subject to collective bargaining agreements, about 6 million employers nationwide are affected by the recent NLRB decisions.

Costco Wholesale Corp

In this decision, the NLRB deemed Costco’s social media policy to be unlawful because it prohibited employees from posting statements about the company on social networking sites including online message boards or discussion groups where the posted messages “defamed any individual or damaged any person’s reputation or violated the policies contained in Costco’s Employee Agreement” noting that violations may be subject to disciplinary action or termination.  Costco’s policy was rejected by the NLRB because it was overbroad and would “reasonably tend to chill employees” in their lawful exercise of their Section 7, NLRA rights.  Thus, we can assume that employers will need to tread lightly when it comes to considering and applying disciplinary action in response to online posts, even when they are clearly uncomplimentary.  On the other hand, there is the case of an employee who was terminated because of a post to Facebook that was not protected under Section 7.

Karl Knauz Motors

This decision involved scrutiny of a social media policy as well as the circumstances leading to the termination of a sales person based on a Facebook posting.  In this case, the NLRB found that the company’s social media policy was illegal, but the termination for the Facebook activity was justified.  Similar to Costco, Knauz Motors maintained a rule in its employee handbook stating in part that, “courtesy is the responsibility of every employee . . . . [and] no one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.”

The NLRB found the policy to be unlawful because employees could construe its broad prohibition against “disrespectful” conduct and “language which injures the image or reputation of the Dealership” as encompassing protected communications, including criticism of working conditions.

On the other hand, the NLRB declined to comment on the termination of the car salesman who posted pictures of an accident at an adjacent dealership on Facebook.  The accident, caused by a 13 year old who drove a Land Rover into a nearby pond, was the subject of the salesman’s Facebook post.  Along with the photos, the salesman added the caption:  “This is your car.  This is your car on drugs.” Knauz fired the salesman citing the Facebook post involving the Land Rover accident as the sole cause for termination of his employment.  Interestingly, on the same day, the salesman also posted Facebook comments related to an event at the Knauz dealership for the introduction of a new BMW model.  At the event, the employee took pictures of a hot dog cart and posted them on Facebook with the comment, “I was happy to see that Knauz went ‘All Out’ for the most important launch of a new BMW in years.”  The Facebook post went on to criticize the company’s offering of an “over cooked wiener on a stale bunn [sic]” to its customers as inadequate for such an important product launch.   Since the second post, which may have been found to have been protected as concerted activity, was not the reason for the salesman’s termination, the NLRB did not rule on the matter.

Walmart

The NLRB in its May 30, 2012 Report of the Acting General Counsel Concerning Social Media Cases completely upheld the legality of Walmart’s revised social media policy, noting that the policy is not ambiguous or overbroad because “it provides sufficient examples of prohibited conduct so that, in context, employees would not reasonably read the rules to prohibit Section 7 activity.”  The policy, in its entirety, was attached to the report and can be found as an attachment to Memorandum OM 12-59.

 Implications for Employers

In both the Costco and Knauz Motors matters, the NLRB specifically focused on the fact that neither company’s social media policy contained any language or specific examples that would clarify, for the benefit of employees, that the prohibitions contained in the policies specifically excluded protected, Section 7 activities.   Thus, a social media policy that is ambiguous and overbroad without examples that clarify acceptable versus unacceptable conduct, like those in the cases cited above, could be found to violate the NLRA.  Take the following into consideration when drafting new social media policies or rewriting existing policy statements:

  • Talking to outside parties and the press.  Employees have the right to talk to the press in certain labor disputes, so a policy that prohibits this type of activity will be found to be unlawful in the context of the NLRA.
  • Inflammatory, offensive or inappropriate remarks.  Employees have the right to criticize their employers’ labor policies and treatment of employees, so a provision warning employees to avoid “offensive, demeaning, abusive or inappropriate remarks” was found to potentially include protected criticisms of the employer’s labor policies or treatment of employees.   But, an admonition to avoid violence, harassment and discrimination during use of social media is lawful because these terms describe egregious behavior that is not protected.
  • Communicating confidential information.  A policy that precludes discussion of confidential information “in a breakroom, at home, or in open areas and public places” was found to be overbroad and unlawful.  If a confidentiality rule is included in your policy, specifically identify what constitutes confidential information and prohibited disclosure.
  • Using social media at work.  The NLRB indicated that completely prohibiting employees from using social media with employer resources or on employer time was unlawful, because employees have the right to engage in certain activities on the employer’s premises during non-work time and in non-work areas.  An acceptable statement is to “refrain from using social media while on work time or on equipment we provide unless it is work-related . . .  [and] do not use employer e-mail addresses to register on social networks, blogs or other online tools that are utilized for personal use.”  It is also acceptable to emphasize to employees that, when disclosing their identity online, they should state that their expressed opinions are their own and not necessarily those of their employer.

Management training on responding to, investigating and handling social media related issues will also reduce an employer’s exposure to potential legal issues with their roots in social networking.  Finally, we would be remiss if we were to ignore recent court decisions related to the composition of the NLRB in 2012 and the fact that many of the Board’s 2012 decisions could ultimately be overturned; however, the guidance referenced in the May 30, 2012 Operations Memorandum should be carefully considered as human resources policies are reviewed and restated with an eye toward achieving improved compliance in 2013.

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The Affordable Care Act Regulations Become Even More Complex With Regard to Employer Compliance

January 13, 2013

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Affordable Care Update:  New proposed regulations were released by the Department of the Treasury and IRS concerning employer shared responsibility provisions under the Affordable Care Act (the “Act”).  The proposed regulations are not yet final, but build on five earlier notices that address, in detail, large employer responsibilities and penalty assessment calculations under the law that goes into effect next January.

The proposed regulations include details on the classification and treatment of various types of employers and employees for purposes of determining whether an entity is a “large employer”  and an individual is a “full time employee” for purposes of the Act.   In general, the IRS has confirmed that the common law standard will be used to determine whether individuals are considered employees for purposes of the Act.  Under this standard, “an employment relationship exists when the person/entity for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work, but also as to the details and means by which that result is accomplished.”  In this connection it is unnecessary for the employer to actually direct or control how services are performed as long as it has the right to do so.   Interestingly, we note that this definition of who is an employee differs from that applied by the Fair Labor Standards Act.

The proposed regulations also confirm that:

  • Large employers (at least 50 full time employees or full time equivalents) that fail to offer minimum essential health coverage to employees and their dependents will be penalized at the rate of $166.66 per month per employee (1/12 of $2,000) in excess of the established threshold of 30 for every month that coverage is not provided when any full time employee receives a premium tax credit or cost sharing reduction that is certified to the employer.  This is known as the Section 4980H(a) penalty.
  • Large employers that offer coverage but still have full time employees who become certified for premium tax credits or cost sharing reductions will be liable for penalties based on the number of employees receiving the tax credits or cost sharing reductions.  The proposed regulations note that this situation may arise when, 1) coverage is “unaffordable” as defined by the Act, 2) the coverage provided does not meet the minimum essential coverage requirements, or 3) the employer offers coverage to least 95% of its employees but less than 100% of the full time workforce and has at least one uncovered employees that receives the tax credit or cost sharing assistance.  This penalty is equal to $3,000 per affected full time employee per year and is referred to under Section 4980H(b).
  • For purposes of the Act, dependents are defined as children under the age of 26.  The proposed rule confirms that spouses are not considered dependents for purposes of the Act.
  • Hours of service including vacation, sick leave, FMLA leave, jury duty and other paid leaves are considered for purposes of calculating full time status.
  • To establish the framework for calculating large employer status, the proposed regulations establish a “look-back measurement period” that can last for up to 12 months, followed by a “stability” period for determining the FTE count.  The proposed rules contain numerous details that address changes in employment status, changes in hours worked, employment breaks, treatment of new employees, measurement of service provided by variable hour and seasonal workers as well as the treatment of common law employees of temporary staffing agencies.

For more detailed information about the newly proposed rules, please request a copy of our whitepaper with full details on shared responsibility rules under the Affordable Care Act.  Please send your whitepaper request to debd@c3advisors.com.