Settling is Like Kissing Your Sister!

I just spent the last nine hours in a mediation.  A disgruntled former employee claimed unlawful discrimination and harassment.  The company of course denied any wrongful behavior.  And thus the argument ensued. 

In the end, the parties settled their dispute.  And to the extent that settlement brings finality to fees, frayed nerves and extra work, a settlement is a good thing.  But in the end, it's like kissing your sister.  There's no real satisfaction in that! 

So what are a company's choices?  One is to litigate -- and hopefully prevail.  Otherwise, the company will be paying its attorneys, the plaintiff and the plaintiff's attorneys.  There's absolutely no satisfaction in that outcome. 

The other choice is to avoid the claim in its entirety.  In this case, some good HR practices could have avoided the claim.  It's really true -- an employer needs to spend a few bucks now to avoid paying lots of bucks later. 

One thing I will say, this employer used an arbitration provision.  The plaintiff's attorney fought hard to get out of the agreement.  But she lost.  (Good job on winning that round Travis!)  Being forced into arbitration took some steam out of the plaintiff's sails.  It's much different to present a case to a legally-trained arbitrator as opposed to a sympathetic jury.  (Ahhhh, a subject for another blog.) 

Bottom line:  Spend the time and money to avoid claims.  It is the most satisfying option available to an employer. 

Politicians with Their Knickers in a Wad

Senators Chuck Schumer and Richard Blumenthal have asked Eric Holder whether employers can ask employees for their social media passwords. As federal representatives their only real concern is whether the practice violates a federal law. However, state Senator Leland Yee wants to make it illegal for an employer to ask for social media passwords or ask for a printout of social media activities. Why the big deal? I can't imagine an employer spending time on social media sites unless there is a problem in the workplace. HR professionals are too busy for such activities. We are told it is because an employer might see a protected characteristic of an employee. Sure, that could happen. But by the time you see an employee once, you know most of their protected classes such as age, race, gender and ethnicity. The less obvious protected classes are medical condition, religion and sexual preferences. Avoiding a claim that a workplace decision was made based upon information about a protected class otherwise unknown is another reason an employer would not review social media sites. But there are plenty of reasons to look as well. This world is full of very strange people who do very strange things. They seem to relish in these behaviors so long as they are not publicly known. But if these activities or blogs or postings shed light on a person's character, competencies or judgment, why shouldn't an employer know about them? I doubt any of us will have an opportunity to debate these issues. In California's one party state, whatever an influential Democrat wants (s)he gets. Makes for bad laws! Let's see how long it will take California to enact a "progressive" law prohibiting employers from using relevant Internet information in making employment decisions.

That Music Isn't Free!

Do you play music in your business?  Maybe you own a restaurant and play music from CDs or perhaps even hire a live band.  Be careful.  Due to a recent case, Range Road Music, Inc. v. East Coast Foods, Inc., playing that music may cost you a bundle. 

Roscoe's House of Chicken and Waffles played music that was copyrighted by the American Society of Composers, Authors and Publishers ("ASCAP").  Roscoe's would not pay the licensing fee so ASCAP sent in an investigator to listen to the music played in the restaurant.  He heard eight songs licensed by ASCAP played from a CD player and by a live band.  This led to a lawsuit for copyright infringement. 

The defendants (the company and shareholder) were found liable of copyright infringement and statutory damages of $36,000 were imposed.  On top of that the defendants were hit with attorneys' fees and costs in the amount of $162,728.22. 

Ouch!  That is a substantial penalty for playing eight lousy songs! 

Arbitration Clauses: What to do When Current Employees Won’t Sign

My colleague, Travis Stokes, prepared this blog on arbitration agreements.  We often recommend that our clients use arbitration agreements with employees.  You can avoid a jury and the process is quicker and streamlined.  You can also stay out of the public eye. 

California courts often try to limit the scope, value or effectiveness of arbitration agreements.  In my opinion, courts "create" an issue so that an employee can stay in the court system.  This blog describes how one court prevented an employer from arguing that the employee's behavior constituted an acceptance of an arbitration agreement. 

Recently, employees working for our clients have asserted claims, and filed complaints in court.  Travis has been successful in removing those cases out of the courts and into arbitration.  Arbitration agreements must be carefully drafted.  Please, don't do it on your own.  Call Travis! 

Many employers recognize the value of implementing an arbitration policy for workplace disputes.  Requiring new hires to sign an arbitration agreement before beginning employment usually presents no problems.  The more difficult question is what to do when an employer implements a new policy requiring all employment disputes to be submitted to binding arbitration and current employees refuse to sign.  Is the arbitration agreement valid if the employee continues to work for the company after being presented with the arbitration agreement?  More specifically, does it matter if the employee simply remains on the job and says nothing (and signs nothing) as opposed to an employee who actually objects to the arbitration agreement and states that (s)he has no intention of arbitrating any claims?  Although recent case law sheds some light on these questions, the answer is far from clear.

   

Courts have acknowledged that when an employer changes a condition of employment such as imposing an arbitration clause, and the employee remains on the job, the employee has impliedly agreed to the changed terms.  (Craig v. Brown & Root (2000) 84 Cal.App.4^th 416.)  To be sure, the Craig court concluded that because the employer mailed the already working employee a brochure that contained the arbitration agreement, and because the employee continued to work for the company for approximately another four years thereafter, an “implied-in-fact” contract was created and the employee was bound by the terms of the arbitration agreement.  Thus, the employee was compelled to submit her claims to arbitration. 

Nevertheless, in the more recent decision of Bayer v. Neiman Marcus Holdings, Inc. (N.D. Cal. Nov. 8, 2011) No. CV 11-3705 MEJ, 2011 U.S. Dist. LEXIS 129277, 2011 WL 5416173, the opposite conclusion was reached based on some different facts.  In Bayer, the already-working employee actually advised the company (verbally and in writing) that he did not accept the newly proposed arbitration agreement.  Although the employee continued to work for the company for another four years after the implementation of the arbitration policy, the Bayer court distinguished the Craig decision by explaining that when an employee expressly rejects the new contract term no implied-in-fact agreement is reached.  Thus, the Bayer court rejected the precedent set in Craig and refused to compel arbitration. 

Bayer is currently on appeal to the Ninth Circuit, and it will be interesting to see if the appellate court clarifies this issue of implied-in-fact agreements versus express rejection of a contract.  For now, employers should realize that implied acceptance of a newly implemented arbitration agreement (such as remaining in employment) may not be sufficient to compel the employee to arbitration and, consequently, the company will be forced to litigate the employee’s claim.

What Does March Madness Cost You?

I am a BYU alumnus.  My team played Tuesday at 6 pm California time, after the workday.  By the way, BYU overcame the biggest deficit in NCAA tournament history -- 25 points and won. 

BYU is on TV, and the Internet (CBS Sports if you are interested) right now -- smack in the middle of the workday.  62 other teams play today and tomorrow and I guarantee your company has a few alums of the schools in the tournament.  But they won't be watching, right???  Wrong!

I am told 8.4 million hours will be lost from workplaces this month due to the Madness.  This equates to $192 million lost. 

What do you do?  Do you monitor employees computer use?  Do you tolerate it?  Perhaps you go one step further -- to create camaraderie at work you sponsor a pool and bet on the games. 

I hope you don't sponsor betting pools.  But you can be sure your employees are part of a few of them!  You certainly have a few things to consider.

Follow the Money

The California Supreme Court heard oral arguments a few days ago in Kirby v. Immoos Fire Protection, Inc.  Kirby claimed, among other things, that his employer did not provide rest periods, and therefore was liable for the one-hour of pay for each violation. 

Kirby did not prevail on this claim.  The employer moved for attorneys' fees under Labor Code section 218.5.  This section states that the court shall award attorneys' fees to the prevailing party in any action alleging non-payment of wages.  Employer contended that the one-hour premium is considered a wage; therefore, it was entitled to fees from Kirby. 

Kirby argued that the lawsuit was governed by section 1194 of the Labor Code which awards attorneys' fees to the employee (but not the employer) if the lawsuit related to claims for minimum wages or overtime. 

The Court of Appeal sided with the employer, awarding $50,000 in attorneys' fees. 

Now the matter is in the Supreme Court.  Let's hope the court upholds the Court of Appeal decision.  It's just not fair that an employee can obtain attorneys' fees if (s)he wins, but the employer cannot.  The better rule is that articulated by the Court of Appeal.  I suspect that employees might think harder before filing a lawsuit for unpaid wages if (s)he knew (s)he might end up paying the employer's legal fees. 

What is good for the goose is good for the gander.  Let's hope we can report to you in a few weeks that the Supreme Court agrees.  Such a ruling could stem the tide of claims for meal and rest period violations. 

Do The Right Thing In The Right Way

One of my law school professors is credited with saying, "It's not enough to do the right thing.  One must do the right thing in the right way."  What great advice in life and in the workplace.  I was reminded of this adage after an event I watched where a person with very strong feelings criticized another over issues that were in part minor and in part not the other person's fault.  I was pleased to see the recipient of the bad behavior respond appropriately, addressing the issues as opposed becoming angry with the attacker. 

However, many employees don't respond in such a fashion.  Some will take the harsh criticism as a personal attack and lash out.  Others might sit meekly and take the abusive behavior then lash out behind the scenes, perhaps on Facebook or in emails or in the break room.  Sometimes an employee responses with poor service, and a "who cares" attitude.  Occasionally, the response is a complaint of harassment or the feigning of an injury. 

Before acting, even if you have reason to be upset, think about this modern day proverb.  Ask yourself, "Am I doing the right thing?"  And then ask the second question, "Am I acting in the right way?"  If you can answer yes to these questions then employees will more likely respond in the right way as well, recognizing that the criticism or discipline was imposed to correct the behavior and improve performance.  If the employee still does not respond correctly, then you might have a "problem" employee. 

You know what I say about problem employees -- they never get better.  At that point it is best to let the employee go, before a complaint can be lodged or an injury feigned -- actions that make termination of employment more difficult.  But until that time, treat your employees with respect and dignity by doing the right thing in the right way.