September 2011 Archives

Employment Basics for Employers - E-mail and Voicemail Monitoring

September 19, 2011,

This blog focuses on an employer's rights to monitor electronic communications.

One of my Mountain View clients recently had an employee leave and wipe out all of his e-mails before he signed off for the last time. The employer immediately had its IT group recover the e-mails, and a corporate officer read through them. They found several emails where the employee was corresponding with others in the company about leaving and forming a competitive company. They called to ask me, after the fact, whether it was okay for them to read the employee's emails and what rights they have now to act on the information.

There are a number of laws that affect access to another person's emails. One of these, the Electronic Communications Privacy Act of 1986 (the "ECPA") prohibits unauthorized persons to access electronic communications, including wire taps and stored communications like e-mails. If you violate the ECPA, you could be subject to fines and prison terms up to one year, as well as civil damages and attorneys fees. However, there are three exceptions which may allow employers to monitor employee communications.

First, there is an exception for employers to monitor communications within the ordinary course of business from telephone equipment provided and used in the ordinary course of business. So, employers can monitor calls, voicemails or e-mails employees use in their regular business affairs. However, if during your monitoring the employer finds that what it is reading is a personal communication, it must stop.

Second, there is an exception when the company has the consent of the employee. This usually means that the company has given the employees actual knowledge of a clear monitoring policy. For example, if your employee handbook says the company policy is that it can monitor and disclose calls, voicemails and e-mails whether business or personal, and the employees sign off on the receipt of the handbook using company equipment, with that policy in it, then you can listen in, read, and disclose communications whether they are business related or not. Also, note that there are differences between monitoring and disclosing information. In particular, California law requires the consent of both the originator and the recipient parties in order to disclose the contents of a message.

Third, there is an exception for the employer as the person or entity providing access to stored electronic communications. In other words, if you provide for voicemail on a telephone system you own, or e-mail on an internal system you own, you can access anything stored on those systems, but possibly only for messages sent internally.

Note that there are different rules related to union organization under the National Labor Relations Act which generally prohibit employer surveillance of protected union activities.

Despite these exceptions, this is a relatively new area of law that has not been enforced much by the courts, so I still recommend that employers only access e-mail for essential administrative and investigative purposes when there is a reasonable suspicion of employee misconduct. This is also important because studies have shown that employee monitoring can lower morale, which will likely lower productivity.

Employment Basics for Employers - Employment Agreements

September 6, 2011,

Silicon Valley employers expect a hiring boom in technology jobs in the next two years, especially in the areas of social networking, cloud computing, and mobile technology, according to a recent study headed by NOVA, a nonprofit, federally funded employment and training agency in Sunnyvale. As a result, many companies will face basic employment issues, such as recruiting qualified employees, performing reference checks on potential candidates, and having solid employment agreements in place. In my last blog I discussed when you should consider using an employment agreement rather than just a simple offer letter for a new employee. Generally employment agreements are used for top executives and high level managers. Here is a brief summary of some of the terms you should have in those high-level employment agreements.

Position
o This can be either a general description for higher executives, or a list of tasks, authority level and who the person reports to for other employees.
o You should include expectations of performance, including statements of the amount of time and effort you are expecting. My agreements often say that the employee is expected to devote substantially all of her time and efforts to the company and may not work for any other employers without the company's permission. For some companies you may also want to say that your employees may not own stock in your competitors.
o Make it clear that the position is at-will, and explain what that means.
o Refer to any company rules and regulations like an employee handbook, if you have one, and don't forget to say that the company can change the rules and regulations at any time and that the employee must comply with any changes.

Confidentiality/Non-competition/Non-solicitation
Be very careful with post-termination non-competition agreements in California, as they are generally against public policy and can only be enforced in limited circumstances. An illegal non-competition clause can actually invalidate the whole agreement if you are not careful. There are additional considerations if the company and/or the employee are outside of California. Make sure you work with an attorney if you are thinking about including a non-competition clause in your employment agreements.

Compensation
o Salary or hourly? Equity compensation? Exempt or non-exempt? Bonus eligibility? Be aware that there are special rules for computer professionals in California.
o Be careful with commissions - there are a lot of traps for the unwary when dealing with compensating salespersons, including wage and hour laws like minimum wage, as well as commission accrual and payment, especially after the employee is terminated. Advanced planning and a good agreement can save your company a lot of time, money and effort when it comes to a salesperson who leaves your company.
o Expense Reimbursements - generally you are required to reimburse employees for expenses in performing their duties, but you want a clear system for pre-approval, and it is often good to set out in their agreement what expenses you expect to cover and what you will not (e.g. cell phones, professional dues, parking, equipment costs).
o List any benefits you provide such as vacation and sick leave, health insurance, life insurance, 401(k) and profit sharing plans.

Term/Termination
o Although most companies will want the employment to be at-will, agreements with executives and senior management usually have some limits on termination without cause, including potential severance pay.
o Your employment agreement should also cover post-termination requirements such as the return of company property and continuing obligations, or a reference to a separate nondisclosure agreement.

No matter what you put in your employment agreement, make sure you include a provision that the company may change the terms without the consent of the employee. However, you should still proceed with caution before making a change so that you do not violate wage and hour laws or cause a constructive termination, potentially giving the employee rights against the company.