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January 2012 Archives

January 3, 2012

Severing the Connection: Who Owns That LinkedIn Account?


An interesting decision from the Eastern District of Pennsylvania is worth noting in this Blog. While its focus is on Pennsylvania common law, the case addresses the novel issue of LinkedIn account ownership, an issue that is likely to arise in multiple jurisdictions throughout the country, including New York.

The case is Eagle v. Morgan, et al., Civil Action No. 11-4303 (E.D.Pa. December 22, 2011), and the general facts will be familiar to anyone with a passing interest in the legal posturing that occurs when a valued employee, particularly a former owner, leaves a long-time employer. Plaintiff Linda Eagle ("Eagle") founded and operated a financial services and training company for over twenty years. She and her partners sold the company, Edcomm, Inc., in October 2010, but remained on as employees until June 2011, when they were fired by the new owner, Sawabah Information Services Company. A lawsuit by the company against Eagle, for securities fraud and other claims relating to the sale of the business, followed a week later, but will not be addressed in this post.

The facts get more interesting when modern technology and new methods of doing business are introduced, in the form of a LinkedIn account. While she owned Edcomm, and later as its employee, Eagle had established a LinkedIn account, which she maintained with the help of her administrative assistant. When Eagle attempted to access her LinkedIn account later that day, access was denied (another founder who was also terminated had the foresight to change his password before the termination meeting). Edcomm had accessed the account with Eagle's password, changed the password and then changed Eagle's account profile to display the name and photo of one of the new owners of Edcomm. Thus, individuals searching for Eagle were routed to a LinkedIn page featuring the name and photo of the Defendant, Morgan, but which included Eagle's resume and CV, her honors and awards, and her connections. Several weeks later, however, Eagle was able to regain control of the account, though the decision does not explain how she did so.

Before regaining control of the account, Eagle brought an action against Edcomm and numerous individual defendants for alleged violations of federal statutes (the Computer Fraud and Abuse Act and the Lanham Act), and various common law torts. Edcomm responded with several counterclaims, including several directed at Eagle's alleged misappropriation of the LinkedIn account in her own name. Many of the claims related to a company-issued cell phone and cell phone number, and will not be addressed in this post, other than to note that most of these claims were dismissed. The more interesting allegations raised by the company relate to the LinkedIn account.

The counterclaim Complaint alleged that while Eagle managed Edcomm the company had required employees to create LinkedIn accounts utilizing their Edcomm email address, utilize a specific template created by the company, with specifically approved language regarding Edcomm's business, the employee's work history and professional activities, photos taken by a company-hired photographer, links to Edcomm's web-site, and a template for replying to inquiries from LinkedIn users. The counterclaim Complaint further alleged that several Edcomm employees were responsible for monitoring the LinkedIn accounts, correcting violations of company policy, and who maintained several accounts on behalf of Edcomm employees. All departing employees were required to return Edcomm-related connections and content from their LinkedIn account.

According to the Court, these factual allegations were sufficient to state a cause of action for Misappropriation of Ideas against Eagle, as well as Unfair Competition. The Misappropriation claim survived because Edcomm sufficiently alleged it had made a substantial investment of time, effort and money into developing Eagle's LinkedIn account, meaning that it was wrong or tortious for Eagle to then access and take the account away from the company after her termination. The tort of Misappropriation of Ideas also requires that the idea be "novel," but the Court did not address how a LinkedIn account could be considered "novel."

The Court rejected, however, the claim that Eagle's retention of the LinkedIn account constituted misappropriation of a "trade secret," because the account information on the LinkedIn account was generally known in the wider business community, or capable of being derived from public information.

Edcomm's unfair competition claim also survived the dismissal motion. Under the Restatement (Third) of Unfair Competition, an unfair competition claim can be made where "the means of competition are otherwise tortious with respect to the injured party." While the Court cautioned that this liberal standard should not act as a "catch-all" for any form of wrongful business conduct, Edcomm's unfair competition claim was viable at the pleading stage because Eagle may have unlawfully misappropriated the LinkedIn account.

Thus, it seems that under the right circumstances, a LinkedIn account may not actually belong to the individual whose name appears on the account's home page, and whose professional history and accomplishments are detailed in the account's profile. This is an interesting development, but one that may not withstand further scrutiny, given the Court's acceptance, without much discussion, of the notion that a LinkedIn account is a "novel" idea worthy of protection. The viability of this decision may also be impacted by the LinkedIn user agreement, which states that the "user" is the owner of the account. The Court did not address this fact in its decision, and in this case, if the company's allegations prove to be true, the company may well be deemed to be the account "user."

As it currently stands, the decision may impact how employers do business. In the typical non-compete case, especially in the sales arena, the legal battle often focuses on the former employee's "contacts." This decision may embolden employers to take a more active role in the initiation, development and/or maintenance of LinkedIn accounts by and for their employees, in order to prevent employees from keeping those contacts that are stored on LinkedIn, and strengthen post-departure claims of misappropriation and unfair competition.

WPIX Executive Producer Gets Air-Time in front of a jury on her age discrimination claim


In Karen Scott v. WPIX, Inc., http://www/newyorklawjournal.com/CaseDecisionFriendlyNY.jsp (SDNY 12-28-2011), plaintiff, an Executive Producer for WPIX, who held her job for sixteen years, was terminated for the stated reason of poor Nielsen ratings. At the time, plaintiff was 43 years old and the chief decision-maker was 50 years of age. United States District Court Judge William H. Pauley denied WPIX's motion for summary judgment seeking to dismiss plaintiff's ADEA, Executive Law, and city Human Rights Law claims. Judge Paley found that plaintiff had produced sufficient evidence to satisfy the fourth element of her prima facie case and sufficient evidence to establish a disputed issue of material fact about whether WPIX's stated reason for her termination was pretextual. Here were the critical factors resulting in the denial of summary judgment: (1) although the decision-maker was also within the protected age class (thus weakening the prima facie case), the 8-year age difference coupled with (2) derogatory remarks about older employees ("certain anchors were 'too old' for their jobs"), and (3) other adverse employment actions against older employees. As to establishing pretext, Judge Paley was persuaded by: (1)the lack of documentation of performance-related issues in her employee file; (2) the fact that the station's ratings had fluctuated undermining the claim that she was terminated for "failing ratings"; (3) the disparaging comments and adverse employment actions referred to above in support of the prima facie case. Given this record, and the "more lenient 'motivating factor' standard of the state and city laws," the whole case was cleared to move to trial.

January 5, 2012

First Annual Written Pay Notice under the New York Wage Theft Prevention Act Due by February 1, 2012

            2012 is the first year that private-sector New York employers must provide the annual written pay notice required by the Wage Theft Prevention Act.  Although the initial passage of the Wage Theft Prevention Act over a year ago garnered significant attention, it is worth reiterating now that the February 1 deadline for provision of the annual notice is rapidly approaching and employers should use the remaining time to ensure compliance with the new notice obligations.

           

            On December 14, 2010, then-Governor David Paterson signed the Wage Theft Prevention Act, S. 8380/ A. 11726 (the "Act"), into law in New York State, which amended Section 195 of the New York Labor Law.  Joining a growing number of states with similar wage theft legislation, the Act sought to address classification of employees and payment of statutorily-mandated minimum wages and overtime, and included enhanced civil and criminal penalties for non-compliance.  In effect since April 9, 2011, the requirements applies to all private-sector employers in New York.

 

            Under the Act, every employee, whether full or part-time, whether covered by a union contract or not, and regardless of exempt status, must receive a written pay notice between January 1 and February 1 of each year, including the following information:

  • the employee's rate of pay, including overtime rate of pay, if non-exempt;
  • the basis of the wage payment (e.g., by  the  hour, shift, day, week, salary, piece, commission, or other); 
  • the regular payday;
  • the allowances taken as part of the minimum wage (e.g., tip, meal and lodging deductions); 
  • the employer's official name and any other "doing business as" names; and 
  • the address and phone number of the employer's main office or principal location, and mailing address if different. 

           

2012 is the first year that employers must provide the annual written pay notice, which applies even if none of the information has changed from the prior year.          

 

            Under the Act, the notice must be provided in English and in the employee's primary language if the New York Department of Labor ("NY DOL") offers a translation.  Currently, the NY DOL offers dual language translations in Chinese, Haitian Creole, Korean, Polish, Russian, and Spanish, all of which are available here.  Employers with seasonal employees on layoff between January 1 and February 1 must furnish the notice as soon as the employees return from layoff.  The notice may be distributed electronically, but only if employees' receipt of the notice and acknowledgment is verifiable and if the employee is able to print a copy for their records. 

 

            In addition, the Act requires employers to obtain a signed and dated acknowledgment of the notice from each employee.  Employers must retain copies of the notice and accompanying acknowledgment for six years, and provide them to the NY DOL upon request.  If an employee refuses to acknowledge the notice, an employer should still give the notice and note the refusal on its retained copy.  Moreover, an employee cannot waive the written notice requirement.  The NY DOL can assess penalties of $50 per week per employee if a proper written notice is not provided, and employees can sue for not receiving a proper written notice with damages capped at $2,500 per employee. 

 

            With the February 1, 2012 deadline rapidly approaching, employers should take any remaining steps necessary for to meet the annual notice requirements.  The NY DOL provides web-based, printable model templates for employers seeking guidance, which are available here.  The Act does not require the use of these particular forms, and employers may develop their own forms so long as all the information legally required is included.  The NY DOL has also published a Fact Sheet on the Act, available here, and a set of FAQs, available here.

 

            This post was authored by Matt Lampe, Joseph Bernasky, and Jenny Ma of Jones Day.  The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.

 

 

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January 12, 2012

Spotlight On Legal Complexities Of Telecommuting After Second Circuits Calls It Potential Reasonable Accommodation

            The Second Circuit Court of Appeals recently ruled that telecommuting is a potential reasonable accommodation under the Americans with Disabilities Act ("ADA") and the Rehabilitation Act.  Although new technologies have made telecommuting more commonplace, not all employers have embraced the work-from-home concept.  The Second Circuit's recent opinion, as well as recently proposed and enacted telework legislation, highlight that employers cannot ignore telecommuting, and should consider the myriad legal issues that telecommuting presents, including wage-and-hour liability, privacy and data protection concerns, workplace safety, and other obligations. 

 

The Second Circuit's Opinion on Telecommuting as a Reasonable Accommodation

 

            In Nixon-Tinkelman v. N.Y. City Dep't of Health & Mental Hygiene, No. 10-3317-cv, 2011 WL 3489001 (2d Cir. Aug. 10, 2011), the plaintiff suffered from several physical ailments including cancer, heart problems, hearing impairment, and asthma.  The plaintiff had worked at the New York City Department of Health and Mental Hygiene ("DOHMH" or the "Department") since 1984 and had worked out of DOHMH's Queens office for 21 years as a Regional Director.  In January 2006, she was transferred to the Department's Manhattan location.  The transfer resulted in a longer and more difficult commute for Ms. Nixon-Tinkelman.  As a result, she requested, as an accommodation for her disability, to be reassigned to a "work location closer to home in order to reduce the stress and anxiety associated with the hour and a half commute each way every day."  Representatives from the Department met with Ms. Nixon-Tinkelman to discuss possible alternative assignments.  DOHMH concluded that one of the assignments in which Plaintiff expressed an interest was "inappropriate" because the job required extensive travel and therefore would not resolve Ms. Nixon-Tinkelman's commuting issue.  DOHMH further concluded that Ms. Nixon-Tinkelman's suggestion of a transfer to the Department's Pest Control Office in Queens was not a "viable" option.  Because the Department believed that there was no suitable reassignment that could be made within the organization to accommodate Ms. Nixon-Tinkelman, they denied her request.  Ms. Nixon-Tinkelman filed suit under the ADA and sections 501 and 504 of the Rehabilitation Act, alleging that the Department failed to make a reasonable accommodation.

 

            Under the ADA and Rehabilitation Act, an employer has an affirmative duty to provide a reasonable accommodation when it is aware that an employee has a qualifying disability that prevents the employee from performing essential job functions, so long as the accommodation does not unduly burden the employer.  Granting summary judgment for the defendant, the Southern District of New York ruled that commuting was beyond the scope of the plaintiff's job, and "not within the province of an employer's obligations under the ADA and the Rehabilitation Act."  The Second Circuit reversed, relying on two prior cases in which the Second Circuit ruled that an employer might have an obligation to assist with an employer's commute:  Lyons v. Legal Aid Soc'y, 68 F.3d 1512 (2d Cir. 1995); and DeRosa v. Natl's Envelope Corp, 595 F.3d 99 (2d Cir. 2010). 

 

            In Lyons, the Second Circuit reversed the dismissal of an ADA claim alleging that Plaintiff's employer failed to accommodate her request for a parking space near her office.  The district court dismissed the case on the ground that the accommodation requested by Lyons was unreasonable as a matter of law; however, on appeal, the Second Circuit ruled that the complaint stated a claim on which relief could be granted, holding that "there is nothing inherently unreasonable . . . in requiring an employer to furnish an otherwise qualified disabled employee with assistance related to her ability to get to work."  In DeRosa, the Second Circuit suggested that permitting a disabled employee to work from home was a reasonable accommodation.  The DeRosa court vacated an award of summary judgment for the employer, in which the district court ruled that the plaintiff was judicially estopped from bringing an ADA claim.  In so doing, the Second Circuit did not question the reasonable accommodation--working from home--that the Plaintiff sought.  The Nixon-Tinkelman court's reliance on DeRosa implies that the Second Circuit interprets the decision as standing for the proposition that working from home can be a reasonable accommodation.

 

            In Nixon-Tinkelman, the Court of Appeals explained that the determination of whether an accommodation is "reasonable" must be made on a case-by-case basis and remanded the case back to the trial court to conduct the required "fact-specific inquiry."  The Second Circuit made clear that employers cannot categorically deny requests for an accommodation to work from home or to receive other commuting accommodations.  Rather, employers must assess the circumstances of such requests on an individualized basis as they would with any other request for an accommodation.  The Second Circuit suggested a non-exhaustive list of factors for the trial court to use in evaluating the reasonableness of a potential accommodation, such as:

 

·        The number of individuals employed by the employer;

·        The number and location of the employer's offices;

·        Whether other available positions existed for which the employee was qualified;

·        Whether the employee could have shifted to a more convenient office without unduly burdening the employer's operations; and

·        The reasonableness of allowing the employee to work from home without on-site supervision.

 

The Second Circuit further provided illustrative examples of commuting accommodations that the district court should consider, including whether DOHMH could: (1) transfer Ms. Nixon-Tinkelman back to Queens, (2) permit her to work from home, or (3) provide her a car or parking permit to minimize the burden of her commute and make it easier for her to travel to and from her doctor's appointments.

 

Recent Legislative Initiatives to Increase the Availability of Telecommuting

 

            The Second Circuit's decision is in line with a recent trend favoring telecommuting.  On December 9, 2010, President Obama signed into law the Telework Enhancement Act, which gave federal agencies a six-month window of time to establish a telework policy and notify employees of their eligibility under the policy.  The new law requires each agency to implement a telework policy, designate a telework managing officer to oversee the agency's telework program, and ensure continuity-of-operations planning, particularly when employees' commutes are affected by inclement weather.  Several states, including Connecticut, Florida and Virginia, have also recently implemented or proposed legislation regarding telecommuting.  For example, New Jersey has proposed legislation that provides private sector tax incentives for certain business telecommuting program development and implementation costs and a separate bill that requires state agencies to adopt telecommuting programs.  In June 2010, Connecticut enacted a law to develop and implement telecommuting guidelines for state employees with the goal of having a positive effect on worker efficiency, the environment, and traffic congestion.  In New York, legislation has been proposed to require public employers to establish policies and programs allowing public employees to perform all or a portion of their duties remotely (see, e.g., A00206 / S 1381) as well as establishing tax credits for employers who enact policies to encourage teleworking (see S 2065).  This wave of legislative activity, along with the Second Circuit's recent opinion, provide a good opportunity for employers to consider the legal, operational, and administrative issues related to telecommuting.

 

Wage-and-Hour Concerns Arising from Telecommuting

 

            The Nixon-Tinkelman decision acknowledges that lack of supervision may pose difficultly in allowing an employee to work from home.  This may be particularly true for non-exempt employees.  Aside from the more obvious concern of some employers about a loss of productivity absent on-site supervision, there is also a converse risk that overzealous non-exempt employees would work "off-the-clock," i.e., engage in work without reporting their time, absent on-site supervision.  In the work-from-home context, where the ability of employers to monitor an employee's activity is limited, allegations of violations of federal and state wage and hour laws for such off-the-clock work may prove more difficult to refute than those brought by employees who work at an employer site under direct supervision.  Given this reality, it is important for employers to have specific, well enforced wage and hour policies governing work-from-home employees. 

 

Privacy and Data Security Concerns Arising from Telecommuting

 

            In addition, employees who do work from home are most likely able to do so via remote electronic access to the employer's network, which can raise  a whole host of concerns over the privacy and security of personal information and confidential company information that the employee may be able to access remotely: 

 

·        Whether the remote access to the employer's network will be made via secure connection, which decreases the risk of a security breach while information is in transit, and whether employees will be able to download files directly to their personal computer, reducing the employer's ability to protect the security of those files. 

·        Whether the employee will be using a company-issued computer or a personal computer.  Employee-owned computers increase security risks because the employer has limited ability to monitor the software on the computer and restrict user access.  For example, a personal computer might contain third-party data sharing software that could access company information that has been downloaded to the computer.  Moreover, employers have limited ability to ensure that other home users of an employee-owned computer would not be able to access company files if, for example, the remote connection is left open.  Either situation could trigger notice obligations under state data breach notification statutes if covered personal information is accessed or acquired by an unauthorized person.

·        Whether necessary files and data can be transferred only via a secure network or whether portable media, such as thumb drives, will also be permitted for file and data transfers, and if so, what level of security, such as encryption and password protection, will be required.  The shrinking size of portable media provide greater freedom, flexibility, and mobility, but also pose greater risk of loss or theft due to their diminutive size.

·        How to ensure the security of a work-from-home employee's workstation.  For example, will the screen be visible to others and how will the remote employee secure paper files? 

 

Employers will need to develop and implement both administrative mechanisms, such as clear policies that put employees on notice of their rights and responsibilities, and operational mechanisms, such as implementing encryption and monitoring technology and other electronic security measures, that balance the need to preserve confidentiality and maintain security while allowing for the flexibility and mobility the employer's off-site employees' need.

 

Workplace Safety Issues and Liabilities Arising from Telecommuting

 

            Further, although telecommuters are not at the workplace, employers must still be concerned with workplace safety issues.  Workers compensation laws, OSHA and other workplace safety regulations can still apply to remote employees, so employers must develop ways to ensure that work-from-home employees comply with relevant safety protocols even in their home offices.  Although OSHA has announced that it will not conduct inspections of employees' home offices, and does not expect employers to conduct inspections, the agency will hold employers responsible for injuries or hazards at remote locations, including home offices, if they are caused or created by materials, equipment, or work processes that the employer provides or requires the employee to use at the remote location.  As well, OSHA will conduct inspections of home-based work sites when it receives a complaint or referral that indicates a violation of a safety or health standard that threatens physical harm.   Most state workers' compensation laws, including New York, are not limited to work related injuries that occur at the employer's fixed physical location, and therefore can apply to work-related injuries occurring at a home office or other work location.  The employee will still have to establish that the injury arose out of and in the course of employment, and not during a break or other non-work related activity. 

 

            Another recent area of liability, brought about by the technologies that have helped expand the mobile workforce, stems from injuries and damages caused by employees texting and talking while driving.  For example, in Bustos v. Dyke Industries Inc., Miami Dade Case No. 01-13370 (2001), an employer settled for over $16 million, after a jury initially awarded over $21 million in damages to an elderly woman who was hit and severely disabled by a salesman who was making a work related call on his cell phone while driving, resulting in the accident.  Again, due to the lack of on-site supervision, employers should, at minimum, enact clear policies on workplace safety issues that consider the particular circumstances of remote employees.    

 

            There may certainly be other concerns associated with remote employees in particular industries, and the issues noted above are but a sample of the concerns that telecommuting can raise.  Given the recent trend towards telecommuting, and the Second Circuit's decision clarifying that, in certain circumstances, it can be required as a reasonable accommodation, employers should take the opportunity to review their own telecommuting policies and procedures and consider the various issues that may arise when their own employees work from home or other remote locations. 

 

            This post was authored by Matt Lampe, Joseph Bernasky, David Krieger, and Mariya Nazginova of Jones Day.  The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.


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About January 2012

This page contains all entries posted to Labor & Employment N.Y. ("LENY") in January 2012. They are listed from oldest to newest.

December 2011 is the previous archive.

February 2012 is the next archive.

Many more can be found on the main index page or by looking through the archives.