Michigan Employment Law Advisor - Leading Insight & Analysis of Employment Law Matters

Michigan recently joined a growing trend of states that have introduced legislation to prohibit employers from asking job applicants and current employees for passwords and other private account information for social networking websites such as Facebook and Twitter.

Specifically, State Rep. Aric Nesbitt (Republican) proposed legislation that applies to state and private employers. Mr. Nesbitt's legislation also prohibits educational institutions from asking for private account information, and penalizes them for dismissing or failing to admit a student who does not provide such details.

Michigan employers should have a number of concerns if this legislation were to be enacted.

First, Michigan employers would be prohibited from: 

• Requesting an employee or an applicant for employment to disclose access information associated with the employee's or applicant's social networking account.
• Discharging, disciplining, failing to hire, or otherwise discriminate against an employee or applicant for employment for failure to disclose access information associated with the employee's or applicant's social networking account.

Second and incredibly, an employer who violates the proposed legislation would be guilty of a misdemeanor punishable by imprisonment for not more than 93 days, a fine of not more than $1,000.00, or both.

Third, an "employer" is broadly defined to mean "a person ... engaged in a business, industry, profession, or other enterprise in this state and includes an agent, representative, or designee of the employer." Thus, any manager, HR professional, business owner, etc. who asked an employee or job applicant for log-in information would be facing these stiff penalties. 

Fourth, an employee or job applicant who is the subject of a violation of the proposed legislation may bring a civil action for that violation and may recover actual damages or $1,000.00, whichever is greater.

Additionally reasonable attorney fees and court costs (as if the misdemeanor is not bad enough) are also available to plaintiffs.

Criticisms of Proposed Employer Ban on Accessing an Employee's Social Media

There is no shortage of statutes and regulations that apply to the employment relationship. And as previously noted by this blog, employers already have a number of reasons for not requiring employees or job applicants to provide access to their social networking information.

But even if I were convinced that companies need another employment statute imposed upon them, this proposed statute is not it.

Consider for example that there are no exceptions available to employers for requiring access to an employee or job applicant's social networks. It is certainly not difficult to come up with circumstances where an employer should be able to bypass this statute: 

• Investigating customer complaints or complaints of workplace harassment or discrimination may require access to an employee's social networking account; or
• An employer may feel the need to review an employee or job applicant's social networking account if a position involves working with children or vulnerable populations like the elderly.

And imagine the litigation landslide this statute would create. It would begin with a single accusation that a manager requested an employee for his or her Facebook password. With that accusation, an employee or job applicant has a ready-made lawsuit complete with a provision for the recovery of attorney fees (but only the reasonable kind) hanging over an employer along with potential criminal charges.

An attorney could make a rich career just on the settlement value of these claims .... hmmmm. Time to rethink the focus of my law practice. Thanks. Mr. Nesbitt.    

One general misconception that business owners have when it comes to social media policies is that it is a silver bullet against disgruntled employees disparaging the company. Certainly this is a serious concern for any employer. But a recent "parting gift" from a Goldman Sachs Vice President illustrates the real danger that social media poses to the business - you simply cannot control the message.

As explained below, it is, therefore, more important for companies to focus on drafting the story that will be told rather than focus on preventing the message. 

The Goldman Sachs Muppet Debacle

It appears that Greg Smith, a former Vice President of Goldman Sachs Group Inc., single-handedly caused Goldman Sachs lose $2.15 billion (yes, billion) of its market value. This loss happened after Mr. Smith's highly critical editorial appeared in the for the New York Times detailing Goldman and its Chief Executive Officer Lloyd C. Blankfein’s treatment of clients as nothing more than cash cows.

An excerpt from the New York Times piece highlights this scathing analysis:  

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.

* * *

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets ...”

The Response by Goldman Sachs 

The Wall Street Journal reported that in a memo to employees of Goldman Sachs employees, its Chairman and Chief Executive Lloyd C. Blankfein and President Gary D. Cohn response essentiall boiled down to two elements:

• Mr. Smith was one "of nearly 12,000 vice presidents" among more than 30,000 employees at the company;" and 
• Mr. Smith's assertions do "not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients." 

The complete Goldman Sachs memo is available here.

Analyzing Goldman Sachs' Response - Is it Convincing? 

First, Goldman Sachs avoided the mistake of offering a My Cousin Vinnie response to the public relations debacle. Specifically, there is scene where Joe Pesci's character responds to the prosecutor's opening statement: "Uh... everything that guy just said is bullsh*t... Thank you." While this classic line garners laughs, it does little to offer convincing support for your position.

But instead, of taking this approach, Goldman Sachs responded that its leadership team had implemented policies and procedures to promote and ensure that employees have opportunities to resolve company concerns like Mr. Smith raised. The fact is that when a current or former employee - disgruntled or not - feeds the media with a story like Mr. Smith's, management will want to quickly demonstrate that the company's process and culture inside the company is perceived as "fair" and reasonable.

Building on the preceding point, Goldman Sachs also noted that there was no record that Mr. Smith ever elected to use such policies to voice the concerns raised on his way out the door and through a very public medium.

With both the policy and Mr. Smith's apparent failure to use it, Goldman Sachs is in a better position to turn the microscope back onto Mr. Smith and question his motives. For example, why did Mr. Smith see fit to enjoy whatever perks, bonuses, and compensation came to him during his 12 years with the company yet make a public issue of his concerns on his way out the door. He may have had compelling reasons to do so, but the focus is no longer exclusively on Goldman Sachs because Mr. Smith is now in a position where must explain himself.   

It is important to note, however, that to make the preceding point credible, there must be a company culture where employees are expected to raise questions and concerns. On this point, however, Mr. Smith points to a number of specific issues that make Goldman Sachs look guilty of the cultural lapses described by Mr. Smith and far from the type of  anti-Goldman culture that exist at other investment firms.  

Third, one criticism I have about Goldman Sachs' response is its attempt to minimize Mr. Smith's tenure by noting that he was only one of 12,000 vice presidents in a company with 30,000 employees.

For me, this is a valueless piece of information in that it does nothing to address the issues raised. In fact, it calls into question how much authority or opportunity Mr. Smith actually had to realistically exert any influence over the culture and issues he described. After all, having the title of "vice president" in a company where approximately 2 out of every 5 employees have such a title speaks more to title inflation rather than the type of true leadership function required to change culture.      

Concluding Thoughts

Not every departing employee will have the opportunity to aire their grievances about an employer on the editorial page of the New York Times. But with the ubiquity provided by social media, stages like the New York Times are no longer required to reach a large audience.

And when it comes to social media, no employer will ever be able to control what current or former employees have to say. And under certain circumstances, such an attempt may violate applicable laws, such as under the National Labor Relations Act.

For these reasons, employers should certainly strive to have a better response than Goldman Sachs offered. But in order to do this, up-front planning is required. Part of that planning includes implementing internal policies and procedures that will promote a company's culture and organizational goals. And a social media policy should be an extension of both. At this point, employees should understand and be dedicated to those preferences.

Your Thoughts

I don't have any first-hand insight as to the culture at Goldman Sachs or Mr. Smith's assertions or his motivations. But I would be unlikely to ever become a Goldman client based on Mr. Smith's critique. Do you think, however, Goldman's response offers a compelling reason to revisit this assessment? 

On January 25, 2012, the National Labor Relations Board's General Counsel issued a press release that a second report describing social media cases reviewed by the NLRB has been made available. The first NLRB social media report (PDF) was released in August 2011.

According to the NLRB's press release, this second NLRB report (PDF) was needed to address emerging social media issues. The NLBR further explained: 

Cases concerning the protected and/or concerted nature of employees’ social media postings and the lawfulness of employers’ social media policies and rules continue to be presented to the Regional Offices ... In addition, these issues and their treatment by the NLRB continue to be a “hot topic” among practitioners, human resource professionals, the media, and the public. 

The NLRB's second report covers 14 cases. Half of those cases involve questions about employer social media policies. It is noteworthy from the employer perspective that five of those policies were found to be unlawfully broad and one was found to be lawful after it was revised.

Broad "Savings Clauses" Excluding Section 7 Rights and Activities Not Good Enough

Employers and HR professionals should definitely read both reports. But one case jumped out at me as particularly important. This is because I'm seeing a number of employers follow a similar approach that the NLRB found to be a violation of Section 7 Rights under the National Labor Relations Act (NLRA) when it comes to drafting social media policies. 

Specifically, page six of the report discusses a case where the NLRB found that an employee's discharge for Facebook comments about the employer was lawful, but the employer's social media policy was not. 

In that case, the employee was reprimanded by a manager and later on the employee's lunch break she updated her Facebook status with a comment consisting of an expletive and her employer's store. She was later terminated for this and similar Facebook comments. Again, the termination was lawful. 

In regard to the employer's social media policy, it provided that when it comes to social networking, employees should generally avoid identifying themselves as employees of the employer unless there was a legitimate business need to do so or when discussing terms and conditions of employment in an appropriate manner. 

This social media policy was found to violate the NLRA generally for two reasons:

1. First, the social media policy's use of "appropriate" was not defined and it implicitly means that the social media policy prohibited "inappropriate" discussions of terms and conditions of employment.  
2. Second, and here is where employers should pay particular attention: The NLRB specifically found that a "savings clause" provision in the employer's social media policy did not bring the policy back into compliance with the NLRA.

That savings provision informed employees that the employer's social media policy would not be interpreted or applied so as to interfere with employee rights to self-organize; form, join, or assist labor organizations; to bargain collectively; or to engage in other concerted activities for purposes of collective bargaining or other mutual aid or protection. 

Personally, I found the explanation for why this provision did not save the social media policy from violating the NLRA to be unsatisfactory. But the fact remains that drafting a broadly worded social media policy that may prohibit conduct protected by the NLRA only to note that the social media policy will not be applied to violate the NLRA is not going to pass muster under the current NLRB regime.

Employer Take-Aways

Shakespeare is credited with the observation that "the devil can cite Scripture for his purpose." And it may appear that the NLRB will find a social media policy violates an employee's NLRA rights and then selectively look to the employer's policy to support the violation. 

None-the-less, the above case should motivate employers to rethink, rather than double down on drafting broad social media policies that contain ambiguous or poorly defined meanings and expect such policies to pass muster with the NLRB simply because an equally broad savings clause provision carves out Section 7 rights and activities.

If there is a bright spot, the NLRB's increased attention on social media issues is also providing a road map (even if the terrain is not entirely charted out) in the form of cases for employers to follow when it comes to drafting and implementing social media policies.

In that regard, it is important to have a competent "social media legal sherpa" familiar with this dynamic intersection of social media, employment, and labor law. Otherwise employers may find themselves in a nasty collision with the NLRB at this intersection.      

Today's Wall Street Journal discussed the increased scrutiny that the National Labor Relations Board ("NLRB") has continued to place on second-guessing employers' terminations of employees who have bad-mouthed their employers and managers through social media outlets like Facebook or Twitter. See Workers Claim Right to Rant on Facebook, by Melanie Trottman.

Briefly, under Section 7 of the National Labor Relations Act (NLRA), employees are guaranteed “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection” 29 USC 157.

It is this last provision that the NLRB and employees have latched onto as a means to protect online rants. It is important for both employers and employees to understand, however, that Section 7 of the NLRA does not protect garden variety gripes - complaints must relate to the rights under this provision.

The WSJ's article provides a great overview of the difficulties employers and employees face when it comes to parsing out what social media postings are or are not protected by the NLRA.

Recommendations for Addressing Social Media & Labor Rights

The best course of action for employers contemplating disciplining or firing an employee for a Facebook posting or related social media use is to examine the issue of protected concerted activity under the National Labor Relations with their labor and employment counsel to avoid ending up in the NLRB’s cross hairs. Two additional recommendations to consider:

• For more information about the NLRB's view of social media employee related discripline, employers and employees should review the NLRB's report detailing the outcome of its investigations into social media policies and firings in relation to the NLRA and the U.S. Chamber of Commerce's comprehensive Report, A Survey of Social Media Issues Before the NLRB.
• Workplace Technology Restrictions: Employees generally do not have a statutory right to use an employer’s IT infrastructure and e-mail system for Section 7 purposes. Thus, an employer’s technology policy prohibiting employee use of the system for “non-job-related solicitations” will generally not violate the NLRA. It is important, however, that technology restrictions for non-solicitation and non-distribution rules are uniformly applied. This is because it can be argued that an employer violates the NLRA if its policy discriminates along Section 7 lines. In other words, an employer cannot permit employees to use e-mail to solicit for one union but not another, or if it permitted solicitation by anti-union employees but not by pro-union employees. 

For additional information on Social Media and the challenges and opportunities it presents for employers and employees, contact Jason Shinn. 

It is no secret that the NLRB has put employer's social media policies and employee discipline discharges arising out of social media (a/k/a Facebook Firings) in its cross-hairs.

This fact was recently highlighted in another NLRB Press Release (9/7/11) where an administrative law judge found that a Buffalo nonprofit organization unlawfully discharged five employees after they posted comments on Facebook concerning working conditions, including work load and staffing issues.

Similar to the Buffalo matter, NLRB social media claims generally concern an employee termination related to Facebook postings, blogs, and Tweets, as well as social media policies considered to be overly broad by the NLRB.

Several resources have recently been published that highlight these issues and provide assistance to companies and human resource professionals to avoid ending up in the NLRB’s cross hairs when it comes to social media and the NLRA.

First, the NLRB’s Acting General Counsel recently released a report detailing its investigation into cases involving employer’s social media policies and employee’s use of social media. The NLRB Social Media Report (PDF) is a must read for employers.  

Second, the U.S. Chamber of Commerce released a well-written, comprehensive Report: A Survey of Social Media Issues Before the NLRB (PDF). This should also be a must-read report for human resource professionals and employers. 

The Take-away

The prudent course of action if an employer is considering disciplining or firing an employee for a Facebook posting or other conduct relating to social media is to examine the issue of protected concerted activity under the National Labor Relations, preferably with their labor and employment counsel to avoid ending up as the next NLRB press release. 

Peter Drucker noted that "The most serious mistakes are not being made as a result of wrong answers. The truly dangerous thing is asking the wrong questions." 

Mr. Drucker's advice is particularly appropriate when it comes to legal issues involving social media and employees. In this regard, there is no shortage of general "answers" in the form of sites offering sample social media policies (over 170 policies and counting) and even the potential for very good answers in upcoming publications. 

But businesses should not make the mistake of focusing only on legal "answers" when it comes to benefiting from social media. This is because when social media policies and procedures are addressed strictly from a legal/attorney perspective, most businesses end up with a peanut butter solution, i.e., a social media policy to spread evenly over every possible risk and situation under the sun and several contingent provisions in the event the sun fails to rise.

Case in point, the American Institute of Architects (AIA) social media policy warns its employees to:

Be Sensitive to Antitrust Issues: There are stringent requirements by the AIA that you comply with antitrust laws. What’s antitrust? Antitrust laws promote vigorous competition and protect consumers from anti competitive business practices.

Who doesn't know how to comply with antitrust laws?   

This example is not a knock against risk management, which should be a component of any business process. This social media policy, however, illustrates that managing social media risks requires realistic and practical considerations. Requiring employees to have a working knowledge of antitrust laws to comply with a social media policydoes not fall into either category. 

Two Questions To Ask Before Drafting a Social Media Policies 

Against this backdrop and returning to the importance of asking the right questions, there are numerous legal and business process-related questions that should be addressed. But two fundamental questions employers should ask before implementing a social media policy are as follows:

First, who or what is the first priority you want employees to consider with respect to social media? While this will generally be customers, it may also include a brand, a critical business relationship or products. Once this question is answered, employers are then able to specifically define what is unacceptable when it comes to using social media involving their number one priority. However, this question is answered, it provides a quick check-point for an employee to consider before digitally memoralizing a thought in a Tweet, blog post, Facebook update, or whatever is next. 

Second, what is the minimum level of responsibility your employees should have to your first priority? For example, Liz Heron, the director of social media at the New York Times, recently explained that "[w]e basically just tell people to use common sense and don’t be stupid.” Certainly "stupid" may be subject to varying interpretations. But policies like the New York Times can be effective when employees understand they are expected to not be stupid, i.e., do no harm, to the employer's number one priority. 

Conclusion

There is no "cookie cutter" approach to drafting an effective social media policy. But having a multi-page dissertation of legalese and stock provisions intended to cover every social media situation and legal risk is far from a solution. In fact, such broadly written policies are actually coming under fire by an aggressive National Labor Relations Board.

So instead, a universal goal for employers should be to cut through the clutter of confusing or overbroad restrictions and provisions to provide a social media policy employees are likely and even motivated to follow. Also such restrictions impose an opportunity cost on the employer in terms of trying to actually enforce the policy.