Monthly Archives: January 2011

January 26, 2011

Precedent Regarding the Scope of Workplace Internet Posting Policies Delayed

Employers may have to wait for another case for precedent regarding workplace internet posting policies. In October 2010, the NLRB filed a complaint against the American Medical Response of Connecticut, Inc., after the company fired an employee who made disparaging comments on Facebook about her workplace and boss.

The Complaint alleged violation of Section 7 of the National Labor Relations Act that protects workers’ rights to “self-organization, to form, join or assist labor organizations, to bargain collectively through representation of their own choosing and to engage in other concerted activities for the purpose of collective bargaining of other mutual aid protection.”

At issue in that case was an employer’s policy, which stated “Employees are prohibited from making disparaging, discriminatory or defamatory comments when discussing the Company or the employee’s superiors, coworkers and/or competitors.”

Many commentators expected the new, more employee friendly NLRB, to conclude that such a broad policy was unlawful because it prohibits protected speech. But today, the parties to that case called off a hearing and appear to be engaged in settlement talks.

It might be time to revisit your workplace internet posting policies. Is your policy so broad that it prohibits discussion about wages and working conditions? If so, your policy may be unlawful. Although a court has not expressly decided the issue, plaintiffs’ counsel are on notice that the argument and legal theory has some traction.

January 22, 2011

Understanding the Idaho Trade Secrets Act and its Relevance to Former Employees

by Nicole C. Snyder

It is often concerning when an employee is discharged or quits her job and goes to work for a competitor. In the absence of a non-competition agreement, the former employer may claim that the employee has stolen trade secrets and used them in her new job.

Idaho has adopted the Uniform Trade Secrets Act, codified under Idaho Code § 48-801, et seq. The Act prohibits the misappropriation of “trade secrets,” defined as:

[I]nformation, including a formula, pattern, compilation, program, computer program, device, method, technique, or process, that:

(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy… .

If an employer claims a former employee has violated the Trade Secrets Act, is the claim likely to succeed?

Maybe. It is important for employers to recognize that there are significant limitations on the protections against former employers under the Trade Secrets Act. In a very recent case, Wesco Autobody Supply, Inc. v Ernest, the Idaho Supreme Court recited this language from a prior decision:

[T]he legislature did not intend the [Idaho Trade Secrets Act] to be read so broadly as to preclude the hiring of an employee from a competitor; the legislature also did not intend that merely hiring a competitor's employee constitutes acquiring a trade secret.” Instead, “[a]n employee will naturally take with her to a new company the skills, training, and knowledge she has acquired from her time with her previous employer. This basic transfer of information cannot be stopped, unless an employee is not allowed to pursue her livelihood by changing employers.

In the Wesco case, the Court found it was possible that one employee violated the Trade Secrets Act when the employee took and used the former employee’s customer lists, lists showing customer buying preferences, history of customer purchases, and custom paint formulas. The Court, however, was unwilling to say that other employees had violated the Trade Secrets Act based merely on the fact that their customer relationships caused the customers to follow the former employees to a new employer.

In sum, if a company’s leadership is worried about the risk of employees working for a competitor and using the knowledge and relationships they built for a competitor’s advantage, then reliance on the Idaho Trade Secrets Act may be inadequate. In such cases, it is important to utilize carefully-crafted noncompetition agreements.

January 21, 2011

DRI 2011 Employment and Labor Law Seminar

I am member of DRI and will be speaking at the 2011 DRI Employment and Labor Law Seminar. Anyone that may have interest in attending can link to http://events.linkedin.com/DRI-2011-Employment-Labor-Law-Seminar/pub/538168 for more information. The seminar will be held at the Westin Kierland in Scottsdale, AZ from Wed, May 18 to Fri, May 20.

Steven M. Gutierrez–http://www.hollandhart.com/peopleprofile.cfm?IDName=PersonID&ID=5174.

January 17, 2011

How to Properly Withhold from Employees’ Final Paychecks in Nevada

Dora Lane

In Gordon v. City of Oakland, Case No. 09-16167 (9th Cir., Nov. 19, 2010), the United States Court of Appeals for the Ninth Circuit (which includes Nevada) held that the City could properly require an employee who had left a job within a specified period of time to reimburse the City for training costs that the City had paid in anticipation that the employee would remain employed with the City for that period of time, without violating the Fair Labor Standards Act ("FLSA"). An important part of the Gordon decision was the fact that the City actually paid the employee's full final paycheck, but later sent her a reimbursement request for the training costs she had previously agreed to repay. The employee unsuccessfully argued that the City's repayment request violated the FLSA and California wage and hour laws because, had she had to pay for the training, her wage rate would have fallen below the applicable minimum wage for the final pay period. In affirming the lower court's decision to throw out the employee's case, the Ninth Circuit noted that, by advancing the training costs to the employee, the City had essentially given her a loan, and that there was a difference between withholding earned wages and asking for a loan repayment.

The Gordon decision brings to the forefront a frequent practice by Nevada private employers which, unfortunately, also frequently runs afoul of Nevada law. For example, it is not uncommon for Nevada employers to issue credit cards to employees, or entrust them with expensive equipment or materials, or permit them to use a company vehicle in the course of their employment. In those circumstances, employers also often require the employee to execute an authorization, allowing the employer to deduct any related costs for which the employee is responsible, from the employee's final paycheck (e.g., any outstanding credit card charges for personal expenses, loss of materials or equipment, etc.) Employers should be mindful, however, that Section 608.160 of the Nevada Administrative Code provides that, with very limited exceptions, an employer may not deduct any amount from the wages due an employee unless:

(a) The employer has a reasonable basis to believe that the employee is responsible for the amount being deducted by the employer;

(b) The deduction is for a specific purpose, pay period and amount; and

NAC 608.160 specifically provides that "[a]n employer may not use a blanket authorization that was made in advance by the employee to withhold any amount from the wages due the employee." Rather, as stated in NAC 608.160, the employer must secure the employee's written authorization for the deduction "for a specific purpose, pay period and amount." In other words, the authorization which the employee made before actually incurring the expense (and on which employers often rely) is likely insufficient to support the deduction from wages under Nevada law.

Employers often find this requirement troublesome because employees may refuse to execute the authorization or may be otherwise unavailable to do so, or both (as in cases of terminated employees). Many employers feel that withholding money from the employee's final paycheck is the only way they could ever recoup the losses that the employee caused the employer to suffer. While in reality that may sometimes be the case in reality, the proper way to recoup these losses (absent a written authorization consistent with NAC 608.160) is to bring a separate action against the employee to recover the losses. Ordinarily, the disputed amount is under $5,000.00, which allows an employer to file a lawsuit against the employee in Small Claims Court, even without an attorney. If the amount exceeds $5,000.00, but is less than $10,000.00, an employer can file a lawsuit in Justice Court..

On a final note, even where the employee properly authorized the wage deduction, employers should be mindful of whether the total wages paid to the employee for the respective pay period fall under the applicable federal and Nevada minimum wage rates. If this is the case, the full deduction may still be inappropriate.