U.S. Supreme Court’s Opinion Regarding Cell Phone Privacy

January 29, 2018

A decision by the U.S. Supreme Court in Riley v. California, concerning cell phone privacy, is worth a read. It is a little lengthy but stick with it.

In the words of Chief Justice Roberts:

Cell phones differ in both a quantitative and a qualitative sense from other objects.… The term “cell phone” is itself misleading shorthand; many of these devices are in fact minicomputers that also happen to have the capacity to be used as a telephone. They could just as easily be called cameras, video players, rolodexes, calendars, tape recorders, libraries, diaries, albums, televisions, maps, or newspapers.

One of the most notable distinguishing features of modern cell phones is their immense storage capacity.… Most people cannot lug around every piece of mail they have received for the past several months, every picture they have taken, or every book or article they have read—nor would they have any reason to attempt to do so.…

But the possible intrusion on privacy is not physically limited in the same way when it comes to cell phones. The current top-selling smart phone has a very high capacity of gigabytes). Gigabytes can translate into millions of pages of text, thousands of pictures, or hundreds of videos.… Cell phones couple that capacity with the ability to store many different types of information: Even the most basic phones that sell for less than $20 might hold photographs, picture messages, text messages, Internet browsing history, a calendar, a thousand entry phone book, and so on.… We expect that the gulf between physical practicability and digital capacity will only continue to widen in the future.

The storage capacity of cell phones has several interrelated consequences for privacy. First, a cell phone collects in one place many distinct types of information—an address, a note, a prescription, a bank statement, a video—that reveal much more in combination than any isolated record. Second, a cell phone’s capacity allows even just one type of information to convey far more than previously possible. The sum of an individual’s private life can be reconstructed through a thousand photographs labeled with dates, locations, and descriptions; the same cannot be said of a photograph or two of loved ones tucked into a wallet. Third, the data on a phone can date back to the purchase of the phone, or even earlier. A person might carry in his pocket a slip of paper reminding him to call Mr. Jones; he would not carry a record of all his communications with Mr. Jones for the past several months, as would routinely be kept on a phone.
Finally, there is an element of pervasiveness that characterizes cell phones but not physical records. Prior to the digital age, people did not typically carry a cache of sensitive personal information with them as they went about their day. Now it is the person who is not carrying a cell phone, with all that it contains, who is the exception. According to one poll, nearly three-quarters of smart phone users report being within five feet of their phones most of the time, with 12% admitting that they even use their phones in the shower.
Today … it is no exaggeration to say that many of the more than 90% of American adults who own a cell phone keep on their person a digital record of nearly every aspect of their lives—from the mundane to the intimate.…

Although the data stored on a cell phone is distinguished from physical records by quantity alone, certain types of data are also qualitatively different. An Internet search and browsing history, for example, can be found on an Internet-enabled phone and could reveal an individual’s private interests or concerns—perhaps a search for certain symptoms of disease, coupled with frequent visits to WebMD. Data on a cell phone can also reveal where a person has been. Historic location information is a standard feature on many smart phones and can reconstruct someone’s specific movements down to the minute, not only around town but also within a particular building.…
Mobile application software on a cell phone, or “apps,” offer a range of tools for managing detailed information about all aspects of a person’s life. There are apps for Democratic Party news and Republican Party news; apps for alcohol, drug, and gambling addictions; apps for sharing prayer requests; apps for tracking pregnancy symptoms; apps for planning your budget; apps for every conceivable hobby or pastime; apps for improving your romantic life. There are popular apps for buying or selling just about anything, and the records of such transactions may be accessible on the phone indefinitely. There are over a million apps available in each of the two major app stores; the phrase “there’s an app for that” is now part of the popular lexicon. The average smart phone user has installed 33 apps, which together can form a revealing montage of the user’s life.…

To further complicate the scope of the privacy interests at stake, the data a user views on many modern cell phones may not in fact be stored on the device itself.… Cloud computing is the capacity of Internet-connected devices to display data stored on remote servers rather than on the device itself. Cell phone users often may not know whether particular information is stored on the device or in the cloud, and it generally makes little difference.… Moreover, the same type of data may be stored locally on the device for one user and in the cloud for another.

Now, here is the kicker. Riley is a 4th Amendment search-and-seizure case. It’s not an employment case. So, why, you ask, is it so important? For the first time, our highest court is recognizing, in great detail, the significant privacy interests we expect in our mobile devices. Does your company have a cell phone or mobile device policy? Does it explain to your employees that they are giving up certain expectations of privacy if they accept your phone or connect their own phones to your network? In light of Riley, if you don’t have this policy containing these disclaimers, you better, because courts are going to become increasingly hostile to claims that individuals do not have privacy expectations in their mobile devices.


Can an Employee be Terminated for “Reasonable Suspicion”?

January 22, 2018

Can an employee, terminated for refusing to submit to a “reasonable suspicion” drug test, sue the employer for discrimination?

According to one recent Federal District Court opinion, the answer is no! Why? Keep reading!

The former employee worked for FedEx for 22 years as a sales executive. At the time of his hire, the former employee signed an agreement that required him to submit to drug and alcohol testing upon FedEx’s request.

FedEx required the individual to submit to a drug screen after his supervisor smelled marijuana in his work vehicle. When the employee refused, FedEx fired him.
The court had little difficulty dismissing the former employee’s claims of discrimination (age and sex), as well as his claims for hostile work environment harassment, retaliation, and breach of contract.

Why did this employer win? Beside the fact the employee refused to take a required drug test, the employer had a policy, to which the employee agreed, that defined when a drug test could be required and the consequences an employee would suffer upon a failed or refused test.

What are some considerations for your workplace drug testing policy? Here are five thoughts:

What is the scope of your policy? When are employees expected to be drug-free? At work? Away from work? How many strikes are employees allowed (i.e., is your policy zero tolerance)?
Under what circumstances can you test employees? Pre-employment (allowed by the ADA for illegal drugs)? Reasonable suspicion (if you reasonably believe, based on objective factors, that an employee might be under the influence)? Periodic or random (but, note that random does not mean at your whim; you need a process to ensure bona fide randomness)? Post-accident (provided there is a reasonable nexus between the accident and potential impairment)?

What are the consequences for failure? Your policy should expressly state the consequences of a positive drug test, or a refusal to submit to, or complete, a test (i.e., termination of employment).

Do you offer resources for employees upon a failed test? The ADA does not protect employees who are under the influence of an illegal substance while at work. Nevertheless, addiction is an ADA-protected disability. Offering assistance to an addicted employee (EAP services, unpaid time off for rehabilitation) will satisfy an employer’s reasonable accommodation requirements for employee-addicts who are not impaired at work.

Do you ensure confidentiality? Drug-test results are medical records protected under the ADA’s confidentiality requirements, and should be treated as such.
The one thing you should not do is drug test employees without a policy protecting both the act of the drug test itself, and any employment actions you take against employees as a result. Put a policy in place if you do not have one.

New Sexual Harassment Guidelines!

January 15, 2018

Well, this is definitely a sign of the times. In addition to fueling the filing of more sexual harassment lawsuits across the country, the recent sexual harassment scandals involving high-powered public figures have led to legislative efforts to prevent settlements of sexual harassment suits from being “confidential,” and to disallow individuals or entities from taking tax deductions for attorneys’ fees and/or settlements related to such claims.  This will have the perhaps unintended consequence of hampering settlement of these cases and instead fueling continued costly litigation in courts whose dockets are already overburdened (particularly in California).

Recent Amendment to Federal Tax Code

As part of the tax bill recently passed by Congress and signed into law, Section 162 of the Internal Revenue Code, which pertains to “ordinary and necessary” business expenses that may be deducted from income, now provides:

(q) PAYMENTS RELATED TO SEXUAL HARASSMENT AND SEXUAL ABUSE – No deduction shall be allowed under this chapter for – (1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement or payment.

Dubbed as the “Harvey Weinstein Tax,” (even though it isn’t a tax), this provision essentially means that the amount of any settlement of a sexual harassment claim that is subject to a confidentiality agreement, and/or the attorneys’ fees incurred in connection with the case, may not be deducted from income on a business’ tax return.  This may have significant consequences for employers entering into settlement agreements in sexual harassment cases because such settlement agreements very commonly contain confidentiality provisions.  And, contrary to public sentiment of late, confidential settlements of harassment cases (just like any other cases) are not a bad thing.  Believe it or not, not all claims of harassment are brought in good faith and not all claims have legal merit.  However, given the exorbitant cost of litigation, it is often economical to settle these cases rather than litigating them through trial.  Including a confidentiality provision in a settlement agreement provides some protection against the “domino effect” that might otherwise occur if a settling employee was free to tell a bunch of coworkers that he or she received a payout.  If employers are not able to include a confidentiality provision in a settlement agreement, this greatly hampers the possibility of settlement, and this is not particularly beneficial to anyone.

California’s SB 820

Of course California wants to jump on the bandwagon and take the matter was step further. Along similar lines, legislation was introduced a couple of weeks ago before the California Legislature to prohibit confidentiality provisions in settlements agreements concerning sexual harassment and gender discrimination claims.  SB 820 (Leyva) seeks to prohibit provisions in settlement agreements that prevent the disclosure of factual information related to the claims in any lawsuit alleging sexual assault, sexual harassment, gender discrimination, failure to prevent sexual harassment or gender discrimination, or retaliation for reporting sexual harassment or gender discrimination.  The bill would allow the inclusion of a non-disclosure provision only if requested by the alleged victim.  The bill also would allow a limited non-disclosure provision that prevents the parties from disclosing only the amount of the settlement.

SB 820 is newly introduced, and is far from being passed or signed into law in California.  However, this effort, like the changes to the federal tax code, are not good news for employers. I will keep you posted.

Reminder: We are conducting “Active Shooter” Training on a national basis. Contact us to set up an appointment at 626-396-1070.


Clarification of the New Marijuana Law

January 8, 2018

It’s a new year, and there is a lot of publicity about recreational marijuana now being legal in California.  However, many people seem to have the mistaken belief that they cannot be fired or refused a job for smoking marijuana (since it’s legal and all).  Wrong.  It is important for both employers and employees to understand that the new law does not impact employers’ rights to maintain and enforce drug-free workplace policies and drug testing policies that make a positive test for marijuana a terminable offense (or a bar to hiring).

The new law expressly states that that it should not be construed or interpreted to:

  • restrict the rights and obligations of public and private employers to maintain a drug and alcohol-free workplace;
  • require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale, or growth of marijuana in the workplace;
  • affect the ability of employers to have policies prohibiting the use of marijuana by employees and prospective employees; or
  • prevent employers from complying with state or federal law.

Under federal law, marijuana remains a Schedule I drug that is prohibited under the Controlled Substances Act, and the California Supreme Court held in 2008 (Ross v. RagingWire Telecommunications, Inc.) that an employer lawfully may enforce a policy of refusing to hire an applicant who tests positive for marijuana — even if the employee was using the marijuana for medical purposes as has been permitted under California law for several years.  The expanded legalization of marijuana for recreational use in California does not change the legal analysis. Because marijuana remains illegal under federal law (and in most states), employers are entitled to continue maintaining policies prohibiting the use of drugs classified as illegal under federal law and to enforce those policies equally as to applicants and employees regardless of whether the applicant/employee is in California.

But what about the fact that California has a law prohibiting employers from taking adverse action against an employee for lawful off-duty conduct (Labor Code section 96, 98.6)?  If smoking pot off-duty is legal, doesn’t this law protect an employee from being fired solely because of this legal activity?  No.  California courts generally have interpreted these laws to apply to lawful off-duty conduct related to political activity and expression.  They have not been interpreted to protect marijuana use.  Of some note, Colorado, which legalized marijuana a few years ago, has a similar law protecting employees from adverse action based on lawful off-duty conduct.  The Colorado Supreme Court considered whether this law prevented an employer from firing an employee who tested positive for marijuana.  Answering this question in the negative, the court held that because marijuana is still illegal under federal law, its use is not “lawful off-duty conduct” and, therefore, an employee properly may be fired for a positive drug test.  It is likely that a California court would reach the same conclusion under California law, particularly given that California’s recreational marijuana law expressly states that it is not intended to alter employers’ rights to maintain existing drug-free workplace and testing policies.

Employers who wish to maintain such policies should ensure that their policies make clear that prohibited drug use extends to all drugs prohibited by federal law, including marijuana — even in states where medical and/or recreational use has been legalized.  For employers who do not wish to make recreational or medical use of marijuana a bar to employment (for fear that they won’t have a workforce), they may wish to revise their policies to have a carve-out for marijuana in states where its recreational use has been legalized.  However, even these employers will want to maintain a policy that prohibits being under the influence of marijuana while at work and/or performing duties on behalf of the company.

Employers are also reminded that the passage of this new law does not entitle them to suddenly drug test their current workforce.  Employers generally may only drug test applicants for employment (after a conditional offer has been made).  Post-employment drug-testing generally is limited to reasonable suspicion testing.  Random drug testing of current employees is, for the most part, prohibited.  There are exceptions for certain safety-sensitive positions and positions covered by special laws and regulations that require more frequent drug testing and/or drug testing based on certain circumstances (e.g. post-accident testing).  Employers should have clear policies that employees acknowledge (in writing) setting forth the circumstances under which the company requires drug testing of applicants/employees and how the company treats the use of marijuana in states where its use is legal for medical and/or recreational purposes.

Multistate employers should also measure their policies against the marijuana-related laws of other specific states (other than California) where they employ workers. At least one state, Connecticut, has held (contrary to California’s highest court) that employers must accommodate medical marijuana use.  Because there is an increasing public sense of “unfairness” in the fact that an employee could be fired for doing something that is legal in their non-working time, it is possible (and perhaps likely) that more states will begin enacting laws that protect the employment rights of marijuana users where such use has been legalized.  For now, marijuana users in California do not have job protection.

A final note. U.S Attorney General Jeff Sessions has announced he may rescind the “Cole Memorandum” (under the O’Bama Administration) which permitted the State’s the opportunity to legalize marijuana. If this happens the use of marijuana whether for medicinal reasons, or recreational use, will once again be illegal at the State level.

The High Cost of Sexual Harassment

January 3, 2018

NOTE: Not sure why this did not publish on January 2, 2018! Sorry for any inconvenience.

This Blog post is longer than usual but it is for a reason. Please take the time to read it! Stick with it because by now, you’ve probably lost count of how many prominent celebrities, CEOs, and politicians who have publically faced allegations of some form of sexual harassment in the wake of revelations over former Hollywood producer Harvey Weinstein’s decade’s long pattern of sexual misconduct towards women with whom he worked. You could be next!

Title VII

Within the Civil Rights Act of 1964, Title VII is the part of the law that lays out the legal parameters prohibiting discrimination in the workplace on the basis of any “protected class”, including sex (i.e., gender). So, it is not news that discrimination in the workplace is unlawful.  What is newsworthy of late is just how prevalent harassment continues to be more than 30 years after the U.S. Supreme Court decreed that workplace harassment is a form of unlawful discrimination. It never ceases to amaze me how managers and supervisors continue on this path of destruction!

At one time, the damages that could be awarded in sexual harassment cases were limited to recouping back-pay and lost wages, and reinstatement in their previous position if the victim had been fired for bringing the claim. Those days are gone!

Today, when sexual harassment claims do go to court, the plaintiff can now pursue damages that would include “future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other non-pecuniary losses” as well as punitive damages in certain circumstances.

$125,000 (up to millions)

The most easily calculated cost for employers, and probably the most asked about cost when it comes to handling sexual harassment claims in the workplace, are the LEGAL BILLS!

Assuming that the claim is settled out of court, the average harassment claim will typically run an organization anywhere from $75,000–$125,000.

If it goes to court, employers are often looking at more like double those numbers, again in legal fees alone. And, if the employer is found liable in the case, well, that price tag can get pretty big in a hurry. With legal costs that can escalate exponentially, it quickly becomes clear how important it is for employers to both take sexual harassment claims seriously, as well as to create a workplace culture that doesn’t allow them to occur in the first place.

Economic Impact-Millions

A severe lack of research on the economic impact that sexual harassment in the workplace has on companies where it occurs makes putting a dollar figure on anything but the legal bills challenging. Studies have shown businesses can lose as much as $6.7 million per year due to sexual harassment.

But what goes into that $6.7 million number?

  • Absences: Victims call off work to avoid interacting with the perpetrator before, during, and after a formal complaint is filed. Once the allegations come to light, insurance companies have reported that it takes an average of 275 days for a harassment claim to be settled (and this is for unsuccessful claims that simply settle). For cases that do see a court room, any and all parties involved (including any witnesses) may absent from work periodically for court proceedings, investigations, depositions, etc. And of course, personal time may also be taken for any number of reasons connected with the emotional or physical damage caused by the alleged harassment.
  • Turnover: Victims quit, because they don’t think their employer will believe them if they bring these issues to their attention from the start. Victims quit, because they feel ostracized by co-workers after bringing a case of sexual harassment to light. Victims quit, because they are unhappy with how their employer handled their sexual harassment claim. Others in the organization leave for any of the same reasons—employees talk, and if someone doesn’t feel safe or don’t like how a case was handled, it will not positively impact turnover numbers in the long run. And of course, on the other side of the equation, those against whom the allegations are filed (can, depending on the disciplinary standards set out in the harassment policy) get fired.
  • Low productivity: Employees gossip about the harassment case, overall morale is low (How could this happen at our company? Why didn’t they do more to stop this? Am I safe at work?), victims suffer psychological damage that makes it difficult for them to concentrate on their work (especially if the perpetrator is still employed with them), and HR has to spend time conducting internal investigations that could be spent elsewhere if this problem didn’t exist. 

    More recent research finds that 80% of women who reported either unwanted touching or a combination of other forms of harassment changed jobs within two years. Basically, sexual harassment makes it harder for everyone in the company to get their work done in ways big and small, and that (not legal bills) is what will likely cost the employer the most money in the long run.

    PricelessDespite all of the facts and figures thrown out above, another damaging price that both employers and employees pay when it comes to instances of sexual harassment in the workplace, does not come with a dollar amount attached. For the employer, reputation is far and away the primary indirect financial concern.

    For those involved in the harassment directly, whether that’s victims, perpetrators, or witnesses, the damaging nature of the harassment itself and the claims brought to light will undoubtedly have long lasting negative consequences.

    From the cost of psychological and emotional damage to career ending (or stunting—in the case of victims who do not come forward or those that come up against an employer that does not take their claims seriously) blowback to bringing down morale among the entire workforce when a toxic workplace culture fraught by sexual harassment is allowed to continue unchecked, these more abstract costs truly cannot be quantified.

    Let 2018 be the year! Start clamping down on this costly area of the law. Zero tolerance is the only way to go!

Joint Employer Standard Overturned!

December 26, 2017

The National Labor Relations Board (NLRB) rendered a great decision last week! It overturned its liberalized joint employment standard announced two years ago in Browning-Ferris Industries of Calif.

That decision overturned decades of precedent, and held that one does not only qualify as a joint employer by exercising actual control over the employees of another, but also by exercising indirect control or potential control. Many (including me) feared that if this standard survived judicial scrutiny, it could prove fatal to many small businesses, including franchisees.

That risk, however, is no more. In Hy-Brand Industrial Contractors, Ltd. the NLRB expressly overturned Browning-Ferris:

“We overrule Browning-Ferris and restore the joint-employer standard that existed prior to the Browning-Ferris decision. Thus, a finding of joint-employer status requires proof that the alleged joint-employer entities have actually exercised joint control over essential employment terms (rather than merely having “reserved” the right to exercise control), the control must be “direct and immediate” (rather than indirect), and joint-employer status will not result from control that is “limited and routine.”

Ironically, the Board concluded that two employers at issue in the case — a contractor and its sub — were joint employers because the general contractor exercised actual control over the essential employment terms of its sub’s employees.

These two issues were the bane of well-intentioned employers for the past few years. Boeing and Hy-Brand will make it significantly easier moving forward for all employers to manage their businesses via well-reasoned, facially neutral work rules, and via arms’-length dealings with other employers.

This is great news for employers!

Prohibiting the use of Cameras & Cellphones for Pictures/Videos at Work

December 17, 2017

Recently, the National Labor Relations Board (NLRB), in a 3-2 decision, issued its most significant decision yet under the Trump administration.  The Board overturned prior Board precedent established in Lutheran Heritage, 343 NLRB 646 (2004) regarding work rules and potential interference with section 7 rights (Union related).  The Trump NLRB reached its decision in Boeing Co. and Society of Prof. Eng. Employees Local 2001, establishing a new standard while noting, “Paradoxically, Lutheran Heritage is too simplistic at the same time it is too difficult to apply . . . producing rampant confusion for employers.”

Under the new standard the Board majority held that, “when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the Board will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.”  As the Board applies this test moving forward, it will classify the rules it analyzes into one of three categories.  Generally, those categories are: 1 – lawful; 2 – warranting individualized scrutiny; and, 3 – unlawful. The Board indicated that the category of lawful rules will include those that “have a reasonable tendency to interfere with Section 7 rights, but the risk of such interference is outweighed by the justifications associated with the rules.”

The Board majority applied this new standard to Boeing’s rule prohibiting employees from using cameras or cell phones to take photos or video in the workplace without a valid business need and prior approval.  It held that this rule was lawful and was justified by important national security concerns.  Board Members Pearce and McFerran each issued their own separate dissenting opinions.

This decision will broaden employers’ ability to implement sensible and neutral rules on security, social media, confidentiality, investigation of complaints and other areas without material concern that the Board might stretch their meaning or scope to find that they are a violation of the NLRA because they could be interpreted in a way that results in an infringement on employees’ Section 7 rights.  We expect further guidance from the Board in this area as more decisions are issued applying section 7 to neutral employer policies and rules.

This decision was very favorable for employers! A neutral policy prohibiting employees from taking pictures and videos without prior permission is huge especially in light of how easy it is to do so with cellphones.