Question

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Ken

Employment contracts… another issue that needs to be discussed black and white or not at all… say the word.

GN

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Answer

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There is no question that the better practice is to use an Employment Contract; one that you have prepared, are familiar with and comfortable with. And, one that addresses the particular needs of your business. Recently I advised that the Standard Form Employment Contract had been updated to include a provision prohibiting disparaging comments about the Employer in social media. Stifling employees in that way raised the issue of First Amendment rights to free speech. Below is an article prepared by a law clerk in my office, Jesse Kirschenbaum [soon to be attorney Kirschenbaum - yes another one - this one's my nephew]. Before I leave you to work your way through Jesse's comment, I want to advise of yet another update to the Employment Contract.

This latest version of the Employment Contract will contain the employee's consent to a back ground check, and permit that report to be released to a subscriber. Why and how did this issue arise? Alarm company installing access control and intercom service in apartment complex was required to perform a back ground check and deliver the report to the subscriber.

Lot's of issues come to mind, but one thing is certain, the Alarm Company wants the work and its employees' personal information is probably not on a high priority compared to the job. It would be prudent to require the subscriber to produce its Red Flag Policy so you know how the information you turn over will be safeguarded. I would also redact all personal information about the employee. I think the subscriber may have the right to ask for the back ground check, and perhaps the right to make sure it was performed, but other than a summary of the report indicating that the employee is cleared for work I don't think the subscriber is entitled to, and should not even want, personal information. In any event, we will include consent for the investigation and report in the Employment Contract.

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Now the article on First Amendment rights versus the Employer's right to silence its employees re negative remarks

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There is no clear answer as to whether the First Amendment protects employees from being fired for making disparaging remarks on social media websites. If the employee posts confidential information on a public website then we are dealing with a breach of a fiduciary duty. However, in many instances an employment contract will prohibit employees from publicly making disparaging or negative remarks about their employer. The First Amendment's protection of the right to free speech is not without its limits and certainly does not entitle a person to say whatever they want whenever they want. When this issue arises in the realm of employment, Section 7 of the National Labor Relations Act (NLRA) protects an employee's right to "protected concerted activity." Generally, a “concerted activity” is an activity in which two or more employees discuss their working conditions, a sort of protection rooted in the right of free association.

Under the NLRA, “Disloyalty and Disparagement of an Employer” is not protected. Employees who make public statements about their employers will be protected only where the communication: (1) occurs in the context of an ongoing labor dispute, (2) is related to that dispute, and (3) “egregiously disloyal, reckless or maliciously untrue.” For instance, employee public statements that are directly related to an ongoing labor dispute are protected and are not maliciously motivated. This type of public statement is often made during a strike or other labor dispute that involves numerous employees. On the other hand, disparaging remarks about an employer’s reputation or product is not protected, even if it is directly relate to a labor dispute.

In a recent case, the National Labor Relations Board (NLRB) filed a complaint against a company for it's social media policy which prohibited employees “from making disparaging, discriminatory or defamatory comments when discussing the Company or the employee’s superiors, co-workers and/or competitors.” The issue arose after an employee made negative remarks about the employer on Facebook. After its investigation, the NLRB found the firing unlawful because it “would reasonably be construed to restrict” employees’ rights to engage in conduct protected by the NLRA. The NLRB also found that firing the employee because of her Facebook comments was unlawful since the Facebook discussion between the employee and her co-workers involved complaints about their working conditions and how they were treated by their employer. According to the NLRB, this fell within their definition of “concerted activity” because it was an on line discussion between co-workers regarding their employer and working conditions.

In addition, the NRLB found was firing was unlawful because it was made pursuant to the employer’s “no disparaging comments” policy, which the NRLB considered to be overly broad. According to a report issued by the general counsel of the NLRB in January 2012, their studies revealed that five out of seven employers’ social media policies were overly broad. The report was based on social media cases that the Board reviewed in 2011. The Board did however note that an exception to its rule applies when the company fires an employee because the disparaging comments actually interfered with the employee’s own work, the work of other company employees, or the company operations. This case however happens to deviate from the general rule that disobedient and disloyal remarks made by an employee is adequate cause for discharge.

While the NLRB has provided a small window for employees to be protected when making public statements about their employer, it is only available when the comments are between co-workers and regarding actual working conditions. Mere insults or disparaging remarks about one’s employer made on a site such as Facebook are not protected. In a case against Wal-Mart, an employee was terminated for making disparaging remarks about his supervisor, specifically complaining about “management tyranny.” According to the NLRB, these remarks were not protected activity and therefore the employer was justified in firing the employee.

In New York, an employer in such an action must prove “injurious falsehood,” which consists of three elements: (1) falsity, (2) malice and special damages. Special damages means direct financial loss, which must be proved with in precise detail. When the special damage claimed is loss of customers the employer must establish the actual people who ceased to be customers.

Federal law protects social media companies in this type of situation. For instance, Facebook is granted immunity for comments made by other people that are posted on their forums. This protection is only available to the media company however and not the poster making the disparaging remarks. In most cases, the company cannot prove that the on line disparagement caused the business to lose specific customers and therefore fail to prove special damages. Moreover, statements of opinion that do not imply a defamatory statement of fact are not actionable. For instance, an employee is not protected when he posts a negative statement about his employer as if it were true even though the employee knows it is not.

While this is still a developing area of law, courts have described how employers can protect themselves in these situations. Employers who outlines codes of conduct and rules in their policies should make sure to state what is protected under section 7. This should be followed by stating that the statute does not protect egregious misconduct, including violations of law or rules justified by the employer’s legitimate business concerns. Such rules should be spelled out and examples of egregious misconduct and extreme disloyalty that would undercut protection should be included for the education of employees and management.

Prepared by:

Jesse Kirschenbaum, Brooklyn Law School, Class of 2013