Tag Archives: employment lawsuit

Beware of Fee Shifting by Lawyers: The Hidden Danger of EPLI

Sometimes, it’s good to be a plaintiff’s attorney. Why? Fee shifting. You don’t need a big win in lawsuits where stat­utes allow the court to make the defendant pay the plaintiff’s legal fees. Even if the plaintiff only obtains a small award (as little as a dollar), a “win” entitles plaintiff’s counsel to submit fees to the defendant for reimbursement. It seems almost too good to be true! But that is what the law allows in most employment-related cases.

You might ask: What stops plaintiff’s counsel from submitting made-up or inflated fees for reimbursement? Nothing!

The plaintiff’s counsel submits the fee petition to the court, and the court is the only gatekeeper that decides the appropriateness of the request. In a perfect world, a court would review the fee petition carefully, scrutinizing counsel’s listed activities to make sure that those services were actually rendered and that the time billed to those activities was reasonable. But in the real world, courts usually only make reductions for entries or ac­tivities that are clearly duplicative, exorbitant or outrageous.

Based on these fee-shifting provisions, it is important to caution your clients that any employment claim, no matter how seemingly minor, can turn into a case that exhausts their insurance policy limits. For example, in a recent case in San Francisco (Kim Muniz v. United Parcel Service, Inc.), plaintiff Muniz had demanded $700,000 to settle her case. No settlement was reached, and the case went to trial. At trial, Muniz was only awarded $27,000. However, that award was soon followed by a $2 million fee petition by plaintiff’s counsel. The court reviewed the petition and reduced the fees submitted to approximately $700,000. Although the reduction was substantial, what was a minor victory for the plaintiff still resulted in a major victory for plaintiff’s attorneys.

When you add it all up, the bottom-line expenses for the employer in the Muniz matter would include the following: 1) plaintiff’s award of $27,000, 2) plaintiff’s counsel fee award of $700,000, and 3) estimated defense expenses at least equal to the plaintiff’s $700,000 fee and likely much more.

If your client had a $1 million employment practices liability policy, the policy would almost have been exhausted just by the client’s own defense expenses, leaving little to fund an award or the award of plaintiff’s attorney fees. Unless your client had other applicable insur­ance coverage, the client would have to dig into its own pocket.

What does this mean for your clients? It means that when clients seek insurance protection for employment-related lawsuits they should consider not only the potential award but also the possible fees for plaintiff’s attorneys if even $1 is awarded to the plaintiff. Even the smallest of victories for plaintiffs can still leave the employer holding the bag.

Buyers beware! Carefully consider your client’s EPLI coverage and ask yourself: Are their limits adequate? 

Can Employers Ever Monitor Employees' Personal Social Media?

Yes, but be careful! There is no denying that the use of social media sites such as Facebook, Twitter and LinkedIn has exploded. The explosion includes both personal and business use of social media. It also includes use that is beneficial to employers and use that can be very damaging. Unfortunately, the influx of employment lawsuits that have followed the explosion have had limited practical value in guiding employees and employers on the permissible use and oversight of social media in the workplace. While many questions remain, the California State Legislature's recent enactment regulating employer use of social media does provide some guidance.

California Labor Code section 980 was enacted to prevent employers from (1) requesting an employee disclose usernames or passwords for personal social media accounts; (2) requiring an employee to access his or her personal social media in the presence of the employer; or (3) requiring an employee to divulge any personal social media to the employer. Applicants are protected in the same way as employees. The new statute, coupled with existing privacy laws, limits what employers may monitor when it comes to the personal social media of employees and applicants.

Definition Of Social Media
In what appears to be an effort to account for the ever increasing development of new social media, the new statute broadly defines social media as an “electronic service or account, or electronic content, including, but not limited to, videos, still photographs, blogs, video blogs, podcasts, instant and text messages, e-mail, online services or accounts, or internet web site profiles or locations.”

Prohibitions On Employers Monitoring Social Media
Employers may not require, or even request, that an employee or applicant:

  • Disclose a username or password for the purpose of gaining access to the employee or applicant's personal social media;
  • Access their personal social media in the employer's presence; or
  • Divulge any personal social media.

Employers are also prohibited from retaliating or threatening to retaliate against an employee or applicant who refuses to comply with a request or demand that violates the statute.

Despite the statute's broad definition of social media and its restrictive prohibitions on employers, it does provide some exceptions under which employers may request and gain access to employees' personal social media. For each exception, however, pitfalls exist. Employers need to know them in order to avoid costly mistakes.

Accessing Social Media As Part Of An Investigation
The statute does not affect an employer's existing rights to obtain personal social media “reasonably believed to be relevant” to an investigation of employee misconduct. Under this exception, the employer may only access the employee's personal social media under the condition that it is used strictly for purposes of the investigation or a related proceeding. While the statute does not define what “reasonably believed to be relevant” means, California Courts evaluate employee privacy concerns utilizing a balancing test, weighing the employee's reasonable expectation of privacy against the employer's legitimate business needs for accessing the information. It is wise for employers to evaluate each instance carefully before requesting an employee to divulge his or her personal social media under this exception.

Employer-Issued Electronic Devices
The statute does not preclude an employer from requiring an employee to disclose a username and password for the purpose of accessing an employer-issued electronic device such as a computer, smartphone or e-mail account. Employers should exercise caution, however, before digging through an employee's use of personal social media on the employer-issued device.

It is a violation of the federal Stored Communications Act to access a restricted or password protected site without the owner's consent. So, while it is permissible for an employer to require an employee to provide his or her password for access to the employer-issued device, an employer may be violating the law by accessing social media information on the device. For instance, having the IT department look up the employee's Facebook password stored on the employer-issued device in order to gain access the employee's personal Facebook page.

Adverse Action Against Employees
The statute does not prohibit an employer from terminating or taking adverse action against an employee or applicant if otherwise permitted by law. For instance, an employer may discipline an employee for violating company policy and using personal social media during work time. Nor does the statute specifically prohibit employers from accessing publicly available social media. This means that employers may view the personal social media of its employees that is available to the general public on the internet, such as blogs and other websites that do not restrict user access.

But, before taking any adverse action against an employee based upon the content of his or her personal social media, employers must keep in mind that California law prohibits employers from discriminating against an employee based upon the employee's lawful conduct occurring away from the employer's premises during non-work hours. Moreover, the National Labor Relations Board has held that employees may use social media to voice concerns over working conditions. While an employee complaining about working conditions or an issue with a manager on his or her Facebook page may reflect negatively upon the organization, the employee's use of social media to criticize working conditions may qualify as protected speech for which an employee cannot be lawfully disciplined.

What Is An Employer To Do?
First, be patient. The law develops at a snail's pace compared to the development of new technology and cultural trends. More guidance will come. In the meantime, employers should approach social media issues with careful consideration and planning. This should start with the development of a written social media policy, and not a sample or template policy. The policy needs to be specifically tailored to the employer and should discusses the importance of social media, the impact that social media has on the workplace, and how employee's use of social media reflects upon the organization. The policy should also define the permitted use of technology owned by the organization and employee's expectations of privacy or lack thereof.

If an employer elects to have a policy restricting personal social media use during work hours, it should ensure that the policy is applied even-handedly to avoid claims of discrimination. Employers should also consider the pros, cons and legal issues that relate to restrictions on supervisors' social media interaction with subordinates. For most organizations, it would be advisable to inform employees that they are not required to interact with supervisors on personal social media and will not be retaliated against for refusing to interact with supervisors.

A carefully planned and well written social media policy that outlines the organization's goals and expectations of employees' use of personal social media can help ensure compliance with the new rules and prevent costly disputes with employees.