Law Office of Marc J. Smith, LLC
Employment Law and Litigation Counsel

Employment Law Blog

Firm Settles Large Sales Commission Case Against Public Tech Company

Late last year, we began representing a sales executive of a publicly traded technology company with unpaid commission claims exceeding $1 million dollars. Our client had greatly exceeded his assigned sales goals that triggered accelerators under his compensation plan that significantly enhanced his commissions. The unique legal issue in the case involved the employer’s attempt to retroactively amend our client’s compensation plan in an effort to offset the huge commission that had accrued. In fact, after the plan was “amended,” the company claimed our client actually had obligation to repay thousands of dollars in commissions that had been paid to him when the original compensation plan was in effect. It was our position that such retroactive changes were permissible only with respect to future commissions, but were unenforceable for commissions that had already been earned.

Recognizing its tenuous legal position, the company agreed to settle just prior to the initiation of binding arbitration. After months of negotiations, the company agreed to pay a substantial portion of the commissions we claimed were owed.

Marc Smith
New Maryland Law Prohibits Employer Use of Applicant and Employee Credit Information

Many employers require applicants to sign forms providing authorization for the employer to access an employee’s credit report — particularly in the banking and financial services fields. When negative information is uncovered, such as poor credit or bankruptcy, that information is often used as the basis for denying employment.

However, effective October 1, 2011, a new law will severely constrain the ability of Maryland employers to request or use an applicant’s or employee’s credit report or credit information to make employment decisions. The Job Applicant Fairness Act applies to all employers (with several exceptions outlined below) and allows an employer to request or use an applicant’s credit information only after an offer of employment has been made. Even then, credit information cannot be used: (i) to deny employment; (ii) as the basis for terminating the employee; or (iii) to determine the terms, conditions or privileges of employment, such as the employee’s salary level.

Although most employers will be required to comply with this new law, the Job Applicant Fairness Act does not apply to various financial institutions, as well as employers who are required to inquire into an applicant’s or employee’s credit history under federal or state law.

The Act does not provide a private right of action — i.e. individuals cannot sue for violations. Rather, a complaint must be filed with the Commissioner of Labor and Industry who can assess a civil penalty of up to $500 for an initial violation and up to $2500 for repeat violation.

For more information, see House Bill 87.

Marc Smith
Court Issues Judgment of $70,000 To Client In Wage Payment And Collection Law Case

Last year, we began representing an employee of a local business in an unpaid wage case involving rather extraordinary facts — the employer had issued an astounding total of 57 paychecks to our client which the bank would not honor due to insufficient funds. We filed suit in the Circuit Court for Montgomery County seeking treble (triple) damages and attorney’s fees under Maryland’s Wage Payment and Collection law which requires employers to promptly pay their employee’s wages or face severe penalties.

On March 31, 2011, the Court entered judgment in favor of our client and against the defendant employer for $70,000. Unfortunately, the individual defendant than proceeded to file a Chapter 7 bankruptcy seeking to avoid her obligation to our client. For the short term, the defendant’s bankruptcy filing stays any effort on our part to collect the judgment entered in favor of our client; however, we anticipate challenging the defendant’s ability to discharge her obligation to our client on the grounds of fraud.

Marc Smith
Maryland Agency Suspends Policy Of Requiring Applicants To Provide Usernames and Passwords To Facebook and Other Social Media Accounts

Not long ago, I wrote about the unfortunate waitress who was fired after posting derogatory information about her employer’s customers on her Facebook account. In this day and age, workers should understand that employers routinely scour social media sites in conjunction with hiring decisions, when confronted with troubled employees and in a myriad of other circumstances. Putting aside the legal pitfalls associated with this practice, employees and job applicants have discovered the brutal consequences of posting information, pictures or videos that employers may take a dim view of. Think about it — if two qualified candidates with equal credentials apply for the same position but one had explicit and inappropriate information plastered all over his “wall,” which would you hire?

Recently, a large Maryland employer decided to push the envelope on this issue and demanded that applicants and some employees provide their usernames and passwords to their social media accounts as a condition of employment.  According to the ACLU, the Maryland Division of Corrections (“MDOC”) “has a blanket requirement that applicants for employment with the division, as well as current employees undergoing recertification, provide the government with their social media account usernames and personal passwords for use in employee background checks.”   According the ACLU’s blog, an employee of MDOC was required to provide his Facebook login and password during a recertification interview. Once he provided it, the interviewer logged on to his account and reviewed the content. The ACLU’s letter to Maryland’s Public Safety Secretary and a video of the employee telling his story can be found on the ACLU Blog.

An NBC report states that the MDOC simply wanted to make sure that their employees are not engaged in any illicit activities. The MDOC has issued their own statement, defending and explaining their actions: “DPSCS reserves the right to inquire about a possible candidate’s Facebook account during the hiring or re-certification process. However, it does not require/demand it as stated in the ACLU release. A candidate’s refusal is not grounds for disqualification.”

Not surprisingly, MDOC recently suspended its Facebook-password policy for job applicants following the negative publicity resulting from the ACLU blog post in opposition to the practice. Maryland Public Safety Secretary Gary Maynard notified the ACLU that he had suspended the social-media password requirement for 45 days pending a review of the policy.

Marc Smith
“Working” Tavern Owner Not Entitled to Share in Tip Pool

In a recent case of first impression in the Fourth Circuit, the Court ruled that the owner of a restaurant/tavern, who is also a bartender, may not lawfully participate in his employee bartenders tip pool under the Fair Labor Standards Act. In Gionfriddo v. Zink, the court observed that [e]very court that has considered the issue has unequivocally held that the FLSA expressly prohibits employers from participation in employee tip pools.

While the general rule is that employees must be paid minimum wage, i.e., $7.25 per hour under the FLSA, an exception exists for tipped employees such as bartenders and waitstaff. Tipped employees are those who customarily and regularly receive more than $30 a month in tips. For employees who can legitimately be classified as tipped employees, an employer satisfies the FLSA if it pays tipped employees at least $2.13 per hour, and that wage, combined with tips, equals or exceeds $7.25 per hour.

In its ruling, the Court held that it would be an anathema to the purpose behind the FLSA to simultaneously allow [an owner] to take tips from a collective tip pool that was set up to allow him to pay his employees at a rate substantially below the minimum wage and that a contrary finding would broaden the FLSA s tip credit provisions to a point where they would become meaningless.

Marc Smith
Court Enters $1.3 Million Dollar Judgment In Favor Of Two Employees For Unpaid Wages

On February 18, 2011, Judge John McDowell, a Washington County Circuit Court Judge, entered judgment in favor of two clients who were former employees of Defendant IOT Systems. As described in our Complaint (a copy of which can be found here), during the course of our clients’ employment, IOT missed its weekly payroll on a number of occasions. Indeed, by the time our clients resigned last year, one client was owed over $250,000 in unpaid wages and the other was owed over $180,000.

At a hearing conducted this morning, Judge McDowell awarded both clients all of their back pay and awarded nearly treble (triple) damages under Maryland’s Wage Payment and Collection law. One client was awarded over $700,000 in back pay and additional damages under the Wage Payment and Collection law, and the other client was awarded over $500,000.

The Court also imposed personal liability on the president and owner of the company for violating the provisions of the Fair Labor Standards Act. In this regard, the Court accepted our argument that for the weeks our clients were not paid, IOT Systems violated the provisions of the Fair Labor Standards Act (“FLSA”) by not providing our clients with at least minimum wage. Accordingly, Judge McDowell imposed personal liability and entered judgment against the president and owner of IOT Systems (as authorized by the FLSA) for nearly $90,000 of the unpaid wages sought in the lawsuit.

Marc Smith
Using Employer’s Email To Communicate With Attorney May Lead To Loss Of Attorney-Client Privilege

In an interesting recent case, an employee who had sued her employer claiming discrimination was not entitled to assert the attorney-client privilege with respect to her email communications with her attorney in the litigation because they were sent from her work email account, a California appeals court has ruled.

According to the court, the email was not a protected confidential communication because the employer, the Petrovich Development Co., had warned that employee emails were not confidential and were subject to monitoring. According to the court, “the emails sent via company computer under the circumstances of this case were akin to consulting her lawyer in her employer’s conference room, in a loud voice, with the door open, so that any reasonable person would expect that their discussion of her complaints about her employer would be overheard by him,” the court said.

Not all courts have agreed with the California court. Last March, the New Jersey Supreme Court protected emails sent from a personal account on a work computer to a lawyer. The court noted that the emails weren’t clearly covered by the employer’s policy, and they contained the standard warning that they were confidential attorney communications.

The lesson here is avoid communicating with your attorney while using your employer’s email. Employees should be aware that employers can and often do monitor their employee’s emails. Some employers even have the capability of monitoring emails sent/received by employees on private email accounts like Yahoo and Hotmail if they access those emails using company computers.

Marc Smith
Overtime Compensation — Myths and Realities

If you keep up with legal news, you will almost certainly have noticed the proliferation of litigation concerning entitlement to overtime compensation, including collective actions where large numbers of employees sue their employers for unpaid overtime. Liability for unpaid overtime can be staggering, especially in cases involving collective actions, because employees can potentially reach back three years for unpaid overtime and may be able to recover liquidated (double) damages and attorney’s fees.

Over the years, I have handled a large number of cases involving alleged unpaid overtime on behalf of both management and employees. While some cases are novel and may turn on an arcane exemption (i.e. a classification of jobs for which no overtime is required) or a unique position that does not fall neatly within any of the numerous exemptions recognized under the Fair Labor Standards Act (the federal law governing the payment of overtime) and/or Maryland law, I have seen employers stumble on many of the same issues time and time again.

Characterizing Employees as Independent Contractors. Characterizing workers as “independent contractors” has long been a favorite device used by employers to avoid overtime, provision of benefits and other privileges traditionally provided to employees (just ask Microsoft). Unfortunately, while true independent contractors are not entitled to overtime, based upon my experience, employers are usually on the wrong side of the law when they attempt to classify workers as independent contractors. One of the problems is that different agencies, like the IRS and Department of Labor apply different tests to determine whether a worker is truly an independent contractor. One of the keys is whether the worker is under the control of the employer and receives direction concerning how the work is to be performed. Other questions include whether the worker is performing a service that is part of the employer’s core business, whether the worker works at the employer’s site using tools provided by the employer and whether the worker works exclusively for the employer. If the answer to these questions is “yes,” then the worker is very likely an employee and is entitled to overtime and other benefits provided to employees.

Mischaracterizing Employees as Exempt. The Fair Labor Standards Act and Maryland law provide overtime exemptions for employees who are considered “executives,” “professionals,” “administrative employees,” computer professionals, outside sales professionals and a number of other exemptions for certain occupations — some quite arcane. The determination of whether an employee falls within any given exemption depends upon an employee’s actual job duties — i.e. titles are virtually irrelevant. In my view, correctly classifying employees is one of the more difficult tasks confronting employers and one that has generated abundant litigation. For example, not every administrative employee falls within the “administrative” exemption (i.e. your receptionist and secretary are probably NOT exempt). Likewise, your inside telesales representative is not exempt (ask Dan Snyder, the owner of the Redskins) nor is your employee whose duties are limited to setting up computers for new employees. This is one area where it makes sense to obtain qualified legal advice in situations where proper classification is unclear.

Paying by Salary to Avoid Overtime. This is another very common misperception of the law. An employer CANNOT avoid overtime obligations simply by paying workers by salary rather than by an hourly wage. While paying a salary is a requirement to maintain a worker’s “exempt” status, the provision of a salary does not create an exemption. Rather, as set forth above, it is the worker’s actual job duties that govern whether he or she is entitled to overtime.

Paying “Straight-Time” for Overtime Hours. Over the years, I have seen countless employers pay their hourly, non-exempt workers their regular hourly wage, even when the worker works more than 40 hours per week — the threshold at which the obligation to pay overtime kicks in. In reality, employers are required to pay non-exempt employees “time and one-half” the worker’s regular hourly rate of compensation for each hour over 40 worked in any given work week. This means that an employee earning $20 per hour would be entitled to $30 for each hour of overtime worked.

Refusing to Pay Overtime When it is Not “Approved.” Another myth. Any hours of overtime worked by an employee must be paid at the overtime premium, regardless of whether the worker complied with company policy requiring approval for overtime. That is not to say you cannot take appropriate remedial action against the employee with disciplinary measures or, in extreme cases, termination.

Agreements with Workers Not to Pay Overtime. While courts usually respect the concept of “freedom of contract” and provide parties wide latitude about the terms of their contractual arrangements, the courts afford no such freedom in the context of overtime. If a worker is exempt, the courts will strike down any attempt by an employer to contract out of the obligation to pay overtime.

There are many more examples to be sure. Understanding and applying the Fair Labor Standards Act can be a daunting task. This is one of those areas in which an ounce of prevention is most certainly worth a pound of cure.

Marc Smith
Congress Considers Extension of Emergency Unemployment Benefits

As you may have seen in the news, the United States Congress is currently considering an extension of the Emergency Unemployment Compensation (EUC) Program as part of President Obama’s compromise legislation. At this time, the legislation has not been passed and the EUC Program has not been extended.

As noted by the Maryland Department of Labor, Licensing and Regulation (“DLLR”), if the legislation is passed and signed by the President, the DLLR will take immediate action to reinstate the program. According to the DLLR, if the EUC Program is extended it will not add any additional weeks of benefits. If you have exhausted your EUC benefits, no additional benefits will be available.

For more information, check out the DLLR website.

Marc Smith
Marc J. Smith Appears on “Law School for the Public” on Wage and Hour Segment

Recently, I was invited to participate as a guest commentator on a segment of “Law School for the Public,” an educational program appearing on cable television in Montgomery County, Maryland. Rick Vernon, a partner at the Bethesda, Maryland firm of Lerch, Early & Brewer, Chtd., also appeared as a guest on the show hosted by his law partner, Lori Cleary. The half hour show, which focused on many of the Wage and Hour laws applicable to Maryland employers, includes commentary concerning overtime compensation, vacation pay, unpaid interns, independent contractors and other issues from both the employer’s and employee’s perspectives.

The show aired on December 1, 2010 on Comcast cable.

Marc Smith
Extended Unemployment Benefits Expire

On November 30, 2010, extended unemployment benefits, which had been expanded by the federal government by a period of 73 weeks (normally individuals can collect a maximum of 26 weeks), expired potentially leaving several million people without a source of income over the holidays. The fate of a further extension has become a political battle between Democrats and Republicans, with the Republicans refusing to consider legislation without a quid pro quo.

Economists say dropping the extended benefits, could reduce annual economic growth by nearly one percent and could cost up to one million jobs. That’s because the nearly 10 million people relying on an average $290 a week tend to spend the money immediately on necessities like food and shelter. A yearlong reauthorization of the benefits would cost roughly $60 billion — money that would reverberate quickly throughout the economy.

Marc Smith
Arbitrator Awards Attorney’s Fees to Client In Severance Dispute Against Local Financial Company

Early in March 2010, we initiated an arbitration action against a local financial firm that purchases structured settlements and lottery winnings. Our client was employed as an executive with the firm. When filed, the case was premised on the firm’s anticipatory breach of a severance agreement with our client. Subsequently, the firm admitted liability and the only issue that remained was their liability for the costs of arbitration and our client’s attorney’s fees. Rather than settle the dispute, as it should have, the firm chose to continue the fight and cause our client to more than triple his attorney’s fees. The hearing was held on November 4, 2010 and the arbitrator issued her decision several days later, holding that firm had indeed anticipatorily breached the severance agreement and awarded our client his fees and costs incurred during the arbitration.

Marc Smith
Court Orders Facebook to Produce “Private” Information

In an interesting recent case, Romano v. Steelcase, Inc., an employee alleged she had suffered a workplace injury that caused significant physical harm, including an injury to her neck and back and “pain and progressive deterioration with consequential loss of enjoyment of life.” As part of its defense, the employer sought to obtain copies of its employee’s Facebook and MySpace profiles—both the portions that were publicly available and those that the employee had marked as private using the sites’ privacy settings.

After the employer served subpoenas on Facebook and MySpace, Facebook objected to the request on the basis that it cannot release a user’s profile information without the user’s consent because to do so would be in violation of the Stored Communications Act. The employee refused to provide her consent and sought to quash the subpoena.

The employer argued that the public portions of the employee’s Facebook and MySpace profiles showed, contrary to the claims asserted in her lawsuit, the employee actually had an “active lifestyle and can travel and apparently engages in many other physical activities inconsistent with her claims in this litigation.”

The employee claimed that she “possesse[d] a reasonable expectation of privacy in her home computer” and that her employer’s attempt to gain access to her private information would give her employer access to “wholly irrelevant information as well as extremely private information.” Nonetheless, the New York Supreme Court wasn’t buying the employee’s theory. Instead, the court ruled, precluding the employer from accessing its employee’s profiles “would condone [her] attempt to hide relevant information behind self-regulated privacy settings.” he court found that the fact that, based on the publicly available portions of the employee’s profiles, it was reasonable to conclude that the private portions of her profiles “may contain further evidence such as information with regard to her activities and enjoyment of life, all of which are material and relevant to the defense of this action.”

The court also rejected the employee’s argument that the release of the information would violate her Fourth Amendment right to privacy because, by joining the sites, she consented to the possibility that her personal information would be shared with others, notwithstanding her privacy settings. Indeed, that is the very nature and purpose of these social networking sites or they “would cease to exist.”

Another reason to be cautious about what you post on Facebook and other social networking sites.

Marc Smith
Arbitrator Rules In Favor Of Client’s 401(k) Plan In ERISA Breach Of Fiduciary Duty Case

In July 2010, I handled a three-day arbitration in Denver, Colorado on behalf of an employer and its 401(k) Plan in an ERISA breach of fiduciary duty case. In a nutshell, my clients had engaged the services of an outside third-party administrator and registered investment advisor to handle the administration of their 401(k) Plan and to provide investment advice for the company’s 401(k) Plan participants. Unfortunately, the administrators and investment advisor failed to notify my clients and the Plan participants of a “market value adjustment” that occurred when a certain investment held in the Plan was liquidated, and the Plan participants suffered a significant loss as a result.

Following the three-day arbitration, the arbitrator ruled that the administrator and investment advisor were chiefly responsible for the loss incurred by the Plan participants and ordered them to substantially reimburse them for the loss incurred as a result of their failure to inform the participants of the market value adjustment.

Marc Smith
Are Employees Entitled to FMLA Leave For Cosmetic Surgery?

The Family and Medical Leave Act of 1993 (“FMLA”) provides for up to 12 weeks of job protected, unpaid leave each year for certain employees for reasons that include the employee’s own serious health condition. Are employees entitled to leave under the FMLA for cosmetic surgery? The answer depends upon whether the procedure is related to a medical condition that otherwise qualifies as a “serious health condition” under the FMLA. If so, then the answer is yes. For example, reconstructive surgery following a serious injury or illness would likely qualify for FMLA leave.

However, the applicable regulations provide that conditions for which cosmetic treatments are administered (such as most treatments for acne or plastic surgery) are not “serious health conditions” for which FMLA leave is available unless inpatient hospital care is required or unless complications develop. Accordingly, FMLA leave is generally not available for purely outpatient cosmetic procedures. However, the regulations suggests that FMLA leave would be available for a purely cosmetic procedure if the procedure involves an overnight stay in the hospital or results in complications that otherwise meet the definition of “serious health condition.”

Marc Smith
DOL Expands Coverage Under FMLA To Include Same-Sex Partners (Among Others)

The Family and Medical Leave Act of 1993 (“FMLA”) provides eligible employees with up to 12 weeks of job protected leave each year for certain covered events, including for the birth or placement of a child for adoption, or because of a child’s serious health condition.  More information regarding FMLA can be found on this site here.

On June 22nd, the Department of Labor (“DOL”) expanded coverage under FMLA as it applies to a person standing “in loco parentis” to a child.  According to the DOL, there is much confusion as to the question whether FMLA applies when there is no legal or biological parent-child relationship.   The FMLA regulations define “in loco parentis” as including those with day-to-day responsibilities to care for and financially support a child. 29 C.F.R. § 825.122(c)(3).

According to the DOL’s most recent interpretation, the regulations do not require an employee who intends to assume the responsibilities of a parent to establish that he or she provides both day-to-day care and financial support in order to be found to stand in loco parentis to a child.   For example, according to the DOL, examples of persons standing “in loco parentis” who would be entitled to leave under the FMLA, include “an uncle who is caring for his young niece and nephew when their single parent has been called to active military duty,” “a grandmother who assumes responsibility for her sick grandchild when her own child is debilitated,” and “an employee who intends to share in the parenting of a child with his or her same-sex partner.”

Marc Smith
Court Rules Drug Representatives Not Exempt from Overtime Requirements

Several weeks ago, the Second Circuit Court of Appeals paved the way for pharmaceutical sales representatives to pursue overtime claims against their employers.  The decision in In re: Novartis Wage & Hour Litigation vacated a lower federal court decision that had dismissed a class action lawsuit by 2500 pharmaceutical representatives who claimed that they were improperly classified as exempt from overtime.  The decision allows the class action to continue and will likely spur other class actions and individual claims by drug reps.

The Novartis decision homes in on the “outside salesperson” exemption that exists under federal law. If an employee is properly classified as “outside salesperson”, then they are not entitled to overtime regardless of the number of hours worked in any given workweek.  According to the court in Novartis, there is a significant distinction between obtaining commitments to buy and promoting sales.   In the Second Circuit’s view, merely promoting sales isn’t enough — the reps have to actually sell product or services in order to fall within the outside sales exemption.

In its decision, the court relied on both the regulations and arguments made by the government that “make it clear that a person who promotes a product that will be sold by another person does not in any sense intended by the regulations, make the sale.”  According to the court, the interaction between “physicians and the Reps [is] less than a ‘sale.'”

As noted by the court:

[W]here the employee promotes a pharmaceutical product to a physician but can transfer to the physician nothing more than free samples and cannot lawfully transfer ownership of any quantity of the drug in exchange for anything of value, cannot lawfully take an order for its purchase and cannot lawfully even obtain from the physician a binding commitment to prescribe it, we conclude that it is not plainly erroneous to conclude that the employee has not in any sense, within the meaning of the statute or the regulations, made a sale.

The Second Circuit also rejected the notion that the drug reps fall within the administrative exemption as well because of the ability to bind the company with some financial commitments.

Clearly, this case has significant implications for the pharmaceutical industry and their employees. Pharmaceutical companies now need to reevaluate whether the Novartis decision justifies a reclassification of their drug reps.  For employees who make their living as drug reps and who are working more than 40 hours a week, a door has opened for overtime claims.

Marc Smith
Maryland Amends Wage Payment and Collection Law to Include Overtime Compensation

The Maryland General Assembly recently passed several important amendments to Maryland’s Wage Payment and Collection Law — which requires employers to promptly pay employees for their services or be subject to treble damages and attorney’s fees.

First, the General Assembly amended the definition of “wage” to include “overtime wages.”  Consequently, if a court finds that an employer improperly withheld overtime wages, the employee may be entitled to treble damages in some circumstances.  Effectively, this means the employee may be able to recover his overtime wages (i.e. time and one-half of the employee’s regular hourly rate) plus the treble damage penalty.  For example, an employee earning $15 per hour could recover as much as $540.00 for 8 hours of unpaid overtime.

Prior to the amendment, there was existing court precedent that held an employee could sue for overtime wages under only the federal Fair Labor Standards Act and the Maryland Wage and Hour Law. This amendment should cause employers to take a second look at their overtime policies to ensure that they are properly and timely paying overtime compensation to their non-exempt employees.

The General Assembly also created a new administrative procedure for individuals who have wage claims for up to $3,000.  Instead of going to court, employees with such claims may now file a claim with Maryland’s Department of Labor, Licensing and Regulation which will then give the employer written notice of the claim and 15 days to respond.  The Commissioner of Labor and Industry will then review the claim, conduct an investigation if necessary, and will issue an order requiring the employer to pay the wages if a determination is made that the law was violated.

Marc Smith
DOL Aims To Curtail Overtime Abuses Through Mandatory Reporting Requirements

The U.S. Labor Department has announced its intention to issue a Notice of Proposed Rulemaking (“NPRM”) proposing significant amendments to the FLSA recordkeeping regulations aimed at educating employees as to their eligibility for overtime. As of yet, there are scant details. But DOL says that its new rules will, among other things, seek to require employers:

  • To notify workers of their FLSA rights (apparently, the longstanding requirement to display DOL’s prescribed poster somehow does not accomplish this);

  • To provide “information” about hours worked and wage computation; and

  • To perform and document a “classification analysis” for employees who are allegedly not entitled to overtime which will require the employer to disclose this analysis to the worker, and to provide the analysis to a DOL investigator upon “request”.

Stay tuned as these proposals raise a host of substantial and troubling questions and will likely be highly controversial.

Marc Smith
Waitress Fired For Negative Comments Posted on Facebook

In yet another example of an employee fired for materials posted on a social media site, a 22-year-old waitress employed at a pizza restaurant in North Carolina, was abruptly terminated after posting negative comments about one of her customers on Facebook (the customers apparently lingered in the restaurant for hours and left her a meager tip).  Surprisingly, the restaurant, Brixx Wood Fired Pizza, had the foresight to implement a policy banning workers from speaking disparagingly about customers on social-networking sites.

All of us have observed unhappy restaurant employees complaining about difficult customers to their co-workers — the difference in this case is the size of the audience and the ability of the employer to electronically eavesdrop on its employee. This case highlights important issues for both employees and employers. For employees, it is another example of the importance of considering the potential impact of online posting of seemingly harmless “venting.” For employers, this is a good example of the importance of periodically updating policies that address potential issues that may arise from the current social norms. Although the employer would likely have the right to terminate the employee even if it did not have a policy banning this sort of conduct, it is better for a number of reasons to have a clear and well-defined policy in place prior to taking action against the employee.

As a side note, the restaurant is apparently receiving some negative feedback on Facebook about its decision.

Marc Smith