“The costs and resources invested by ON A WING AND A PRAYER PRODUCT GROUP into growing its followers, fans and general brand awareness through social media are substantial and are considered property of  the Company.  We intend to aggressively protect our customer lists and confidential information, intellectual property, trademark and brands. That’s why we are suing you for misappropriation of our customer list and other trade secrets (aka your Twitter followers). Please pay us $2.50 per follower per month of your unauthorized use.”

The first case to address whether a Twitter account is a corporate asset and how to value the account has been filed in federal court. Initial hearings are later this month.

It’s an important case because as more and more employees post material on Facebook, LinkedIn and Twitter—often on behalf of their companies — the social media account becomes increasingly more valuable to both employer and employee.  The company gets an online voice and brand, and the employee makes often significant personal connections that can impact his career.

In Phonedog v. Kravitz, an employee voluntarily quit a technology review company.  At separation, he was permitted to keep his Twitter account with 17,000 followers, but was asked to occasionally tweet about the company and continue to provide content for blogs and reviews.  At some point he changed his Twitter name to delete the name of the company. The relationship later soured, with the employee filing suit for unpaid benefits and compensation, and the company  contending that the former employee misappropriated the company’s Twitter account and followers, and cost the company thousands of dollars in lost advertising and sales.

Without delving into the details of this particular case, here are some reasons a Twitter account could legitimately belong to an employer:

• The account uses the company’s brand name.
• The account was created specifically to communicate with the company’s customers.
• The account was created to attract new customers.
• There is an applicable non-competition or confidentiality agreement.
• What does the corporate social media policy say?

Reasons the account could legitimately belong to the employee:

• The account name does not include the employer’s brand name.
• Tweets were not exclusively about the company (some about the Tweeter’s life and thoughts, some about the company and its products).
• Followers connect because of the personal relationship with the Tweeter, not because of the brand name of his company.
• Twitter followers (and LinkedIn connections) are not secret, so this is not theft of a trade secret.
• The employee is actually an independent contractor.
• What does the social media policy say?

If you are not hearing my subtext, a social media policy is more crucial than ever.  But there are significant hidden issues in the areas of labor and employment law, intellectual property protection and public relations/disaster recovery.  This is a good time to spend money on an attorney.

Stay tuned for more insight into social media policy.

Related articles

• Who Owns Your Social Media Account? Your Company or You? (intelligentdesignsmedia.com)
• Who owns a Twitter username? How to avoid a Twitter account lawsuit (theredrocket.co.uk)

Heading to the office today, I heard a young man behind me say, “Well, I’d been there six- and-a-half years, so it was time to move on.”  A few steps later, I heard him add, “Well, it was time for me to get health insurance.”

This random comment fell right in line with the just reported findings by Mercer’s October 2011, What’s Working survey.   The survey finds that employees leave for a host of nonfinancial reasons as well, with a key factor being “how you are treated….”

When I’m leading training sessions for human resources professionals, I remind participants that in spite of the many laws they must know, if they will remember but one rule, they will usually get the law right, quoting Maya Angelou: “People will forget what you said, People will forget what you did, but people will never forget how you made them feel.”  When workers believe that they have not been treated fairly they seek to strike back.  Sometimes they vote quietly with their feet because of how they feel about their “work, co-workers, bosses and the general work environment,” according to Colleen O’Neill at Mercer.

Perhaps fueled by the Occupy Wall Street movement, it is clear that more terminated employees are not voting so quietly. The EEOC’s charge statistics certainly show a steady increase.    And, although the year-to-date numbers are not posted, it is clear from speaking with fellow defense oriented employment lawyers, charges are up across the board. To paraphrase the famous line from the movieNetwork, workers are “Mad as H_ _ _ and Not Going to Take it Anymore.”

The tide has clearly turned since the end of the official recession.  Making sure that employees understand their workplace situation is key to your company’s economic health. North Carolina may be an “at-will” employment state, but if employees don’t feel that they have been treated fairly, your company may become part of the EEOC’s new statistics.

If you need assistance with workplace decisions, The Workplace Lawyers at Sands Anderson would be pleased to assist you.

This was originally published on Virginia Workplace Law on November 8, 2011.

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As of June 23, 2011, all cities, all counties, and private employers with at lest 25 employees in North Carolina are required to use the federal government’s E-Verify program to verify the work authorization of newly hired employees.
Public universities, community colleges and other North Carolina state agencies are already required to use E-Verify. The new statute applies to municipalities, counties and employers that employ 25 or more employees in North Carolina.

Timeline for employers to register and participate in E-Verify:

• October 1, 2011:  municipalities and counties in North Carolina.
• October 1 2012: Employers who employ 500 or more employees in North Carolina.
• January 1, 2013: Employers that employ 100 or more employees in North Carolina
• July 1, 2013: Employers that employ 25 or more employees in North Carolina

Employers with seasonal temporary employees who work fewer than 90 days in a consecutive 12-month period are excepted from compliance, and the law also does not apply to employers that employ fewer than 25 employees in North Carolina.

An employer covered by the Act will be required to enter a new hire’s information reported on the Form I-9, Employment Eligibility Verification, into the E-Verify program to determine the eligibility of that employee to work in the United States. An employer must retain the records of the verification of the employee’s work authorization during the length of that employee’s employment and for one year after the end of the employment period.

Any person who has a good faith belief that an employer is violating the requirement to use E-Verify may file a complaint with the North Carolina Commissioner of Labor. The complaint may be anonymous. The commissioner will investigate valid complaints and may issue subpoenas for employment records from the employer as part of this investigation.

For a first violation of the Act, the North Carolina Commissioner of Labor will order the employer to file a sworn affidavit within three business days after the determination that the employer has violated the Act. The employer must swear in the affidavit that it has consulted with the employee and requested a verification through E-Verify. Failure to timely file this affidavit subjects the employer to a $10,000 civil penalty. A second violation of the Act subjects the employer to an additional $1,000 civil penalty, and a third violation subjects the employer to a $2,000 civil penalty for each required employee verification that the employer failed to make. The Act contains a provision allowing an employer to appeal the commissioner’s determination that the employer has violated the Act.

 For more information about instituting an E-verify program, please call Donna Ray Chmura at 919-706-4200 or dchmura@sandsanderson.com

This is a HUGE change in policy and procedure, and is certainly the DOL’s first step in attempting to move away from the Supreme Court’s opinion in Overnight Transportation Co. v. Missel, 316 US 572 (1942).  Plaintiffs have been arguing for years that the  reliance on Missel to award only a  .5 premium to employees who have been improperly classified as exempt is unfair.  It is my understanding that the DOL will be interpreting any misclassification under this new standard.  So, if the employee received bonuses or premium payments, and they were improperly classified as exempt, the argument the DOL intends to use is that since the fluctuating workweek does not apply, Missel does not apply and therefore the payment premium amount is 1.5 instead of .5. 

In addition, last week, the DOL unveiled a software application (app) that employees may download to their phone to track hours worked. We believe this is an effort to get the first “Blackberry” case going by the DOL (i.e. managers who call non-exempt employees at home to ask questions, or to email, the app will track the hours as compensable hours that should be compensated).

This is very important information, because the “heat” is really on to get those job classifications correctly analyzed. If you have any questions, contact a North Carolina employment attorney.

Imagine you are the owner of a business with about 50 employees.  Your product is well-known and there are limited suppliers in the United States.  Your best salesman generates about 50% of your company’s gross sales – or about $100 million a year.  He is on salary plus commission under his employment contract and is earning at least three times as much as any other employee. 

Now imagine that this super-star has a very messy personal life, and he’s well-known around town for partying and womanizing.  He’s been divorced three times (once after being discovered in bed with another woman by his first wife),  experienced a brutal custody battle, was accused of beating his second wife and now he’s missed a key sales meeting in New York.  Turns out he was found by hotel staff drunk and naked in a hotel room that’s been trashed.  He is hospitalized in New York (his mother rushed to be with him and says it is very serious).  Upon his release, he enters a three-week rehab program. 

He comes back to work.  At the local Arts Council fundraising dinner, where your VP of Marketing is getting an award and your company has a table, the employee  complains loudly about what a “stupid, stupid man” you are, how your company is exploiting his sales experience and contacts, he doesn’t get paid enough for all the crap he has to put up with — and your company would be nothing without him. 

Can you even fire someone for their outside conduct that reflects unfavorably on your company?  What are your potential legal liabilities?  Does it matter if the employee had an illegal drug problem? A booze problem? Would it matter if he were bi-polar or otherwise mentally ill? 

Would the answer be any different if the employee were Charlie Sheen? 
 
If we were the employment attorneys advising the company and its owner in this scenario, first we would look to the employment contract.  Is this employment-at-will where the employee can be fired at any time for any reason that is not discriminatory?  Are there notice provisions?  Or are there specific guidelines for termination that must be met before the employee can be fired?

We would make sure the personnel record is up to date and all performance-related conversations and observations are entered. We would look at how the company treated other employees in similar situations. 

In light of the very liberal definitions of disability under the Americans with Disabilities Act (ADA), we would have to consider whether the employee is in a protected class and whether the termination would be in violation of the ADA.  And if his “stupid, stupid boss” comment is made in front of co-workers, we would also consider whether this public comment is protected activity under the National Labor Relations Act. 

The stakes are high if you handle it wrong.  Charlie Sheen was in fact fired after his off-the-clock antics, and in fact sued the studio, the producer and the production company for $100 million.  The complaint alleges breach of contract, conspiracy, and breach of state and federal laws that protect ill employees. 

What do you do when your super-star employees lose their Sheen?

According to an article in the Wall Street Journal which analyzed the survey:

Since July 2008, employment per firm has fallen steadily each quarter, logging the largest reductions in the survey’s 35-year history. Going forward, more small-business owners say they plan to eliminate jobs compared with those that expect to create new jobs over the next three months.

Although the most recent Labor Department findings indicate the US added 290,000 jobs in April, the unemployment rate increased from 9.7% to 9.9%.

Most of the small business owners I work with are experiencing slow sales. They are unsure of the financial impact that health care reform will have on employee health insurance costs. As a result, despite federal tax credits and incentives, they are being extremely cautious in hiring.

Are you hiring? If not now, when?

John Vandenhoff

About two months ago, President Obama signed into law the “Hiring Incentives to Restore Employment Act of 2010″ (the HIRE Act, P.L. 111-147 ). The main thrust of this Act is a payroll tax holiday and up-to-$1,000 tax credit for businesses that hire unemployed workers. The Act also includes a one-year extension of the enhanced small business expensing option under Code Sec. 179 . Let’s look at some of the important details:

1. Payroll tax holiday and up-to-$1,000 credit for employers who hire unemployed workers.

• To stimulate hiring by the private sector, the new law exempts any private-sector employer that employs someone who had been unemployed for at least 60 days from having to pay the employer’s 6.2% share of the Social Security payroll tax on that employee for the remainder of 2010. Your company could save a maximum of $6,621 if it hired an unemployed worker and paid that worker at least $106,800&emdash;the maximum amount of wages subject to Social Security taxes&emdash;by the end of 2010.
• Additionally, any qualifying worker hired under this initiative that the employer keeps on payroll for a continuous 52 weeks, makes the employer eligible for an additional non-refundable tax credit of up to $1,000 after the 52-week threshold is reached, to be taken on their 2011 tax return. In order to be eligible, the employee’s pay in the second 26-week period must be at least 80% of the pay in the first 26-week period.
• Workers hired after the date of introduction of the legislation (Feb. 3, 2010) are eligible for the payroll tax forgiveness and the retention bonus, but only wages paid after March 18 receive the exemption for payroll taxes.

2. Extension of enhanced small business expensing.

• The new law gives one year of extra time to enhanced expensing rules, allowing qualifying businesses the option to currently deduct the cost of business machinery and equipment, instead of recovering it via depreciation over a number of years.
• For tax years beginning in 2010, the maximum amount that a business may expense is $250,000, and the expensing election begins to phase out when a business buys more than $800,000 of expensing-eligible assets. These dollar limits are the same as those that were in effect for 2008 and 2009, but without the HIRE Recovery Act, would have dropped this year to $134,000 and $530,000 respectively.
• In our next post, we’ll break down some of the benefits of the payroll tax incentives.

Will these incentives change the way you approach your staffing needs for the rest of the year?

Remember the classic Monty Python skit? Eric Praline (John Cleese) walks into the Post Office to get a fish license for his pet halibut (also named Eric) and gets into an argument with the man behind the counter (Eric Idle). Here is an excerpt*:

Praline (pulling out his “cat license” to prove such things exist):
What’s that then?
Man: This is a dog license with the word ‘dog’ crossed out and the word ‘cat’ written in crayon.
Praline: The man didn’t have the proper form.
Man : What man?
Praline: The man from the cat detector van.

It gets sillier from there, but I digress…

Of what possible relevance is this you ask? Simple, this happens all the time in small business. Understandably, business owners want to control costs. Legal fees in particular. In light of the huge volume of legal documents accessible from the web, who can blame a business owner for finding what looks like a perfectly good form, marking it up and using it for a critical contract. This is commonplace, but very risky. I spend a significant portion of my practice time trying to extricate clients from unfortunate situations caused by this casual approach to contracts.

Here’s an example. Suppose business is tight, and you need some additional help, but you’re not prepared to hire a full-time employee. That’s when many businesses turn to “independent contractors” or “1099s” (in reference to the tax form the company sends to the contactor at tax time). This can be an excellent solution to the business problem, but a casual approach to the contract can have consequences far more expensive than the withholding tax that might be saved. In these situations, I have seen numerous examples where the business owner simply takes their standard “employment at will” agreement, does a search and replace substituting “contractor” for “employee” and “contract” for “employment.” What could be simpler?

But here’s the rub. Many of the pro-employer terms in a good employment agreement can have disastrous tax consequences if they remain in an independent contractor agreement. The IRS is not bound by your contract, but it can certainly give them lots of ammunition to use against you. The IRS has a list of 20 characteristics that determine whether the relationship is truly an independent contractor relationship, or merely a disguised employment. One of those key points is whether the relationship is terminable at will by the “employer.” If it is, then the IRS will likely take the position that this is an employment relationship.

So the standard “at will” clause in an employment agreement is the last thing you want to see in an independent contractor agreement. That’s just one of many examples. If the IRS decides your independent contactor arrangement is really just employment in disguise, they will not only assess the employer for unpaid withholding taxes, they can also impose a heavy 100% penalty on the “control persons” who write the checks or authorize the payments. That would generally be the owner. And what’s worse, if the IRS recharacterizes the independent contractor relationship as one of employment, then the contractor/employee may even have a claim against the employer for unpaid overtime, which would include significant damages and legal fees.

Take the same situation, but reversed. If the company dusts off what is really an independent contractor agreement, and tries to use it as an employment agreement, they have probably tossed away their right to terminate the employee “at-will” because the contractor agreement was for a specified task at a set price. As long as the contractor performs the specified task, they have a right to finish the job and get paid. Is this what you want in an employment agreement? Probably not. Keep that in mind if you are considering the DIY approach. Sure, you will probably save some legal fees, but from our experience, they will be dwarfed by what it will cost to untangle the “hairball” you may create.

For more merriment from Monty Python’s Flying Circus, go here.

After much gnashing of teeth and wringing of hands in the local and Internet communities, the city re-thought and suspended its policy.

The city instituted the policy to ensure it was adequately vetting candidates.

I think people’s social media sites are clearly relevant to anyone having a relationship with the person (employment, business partner, vendor, babysitter, student….).

While I think almost everyone agrees Bozeman took it too far, what is appropriate information to ask for? Should business partners, employers or schools be limited to what they can search online by the candidate’s name? Can they ask for your user names? What about a list of sites where you are active? Should there be a different standard for a clerk and a police officer, teacher or garbage collector?