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Employer policies to come under increased scrutiny in 2013

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It's the start of another year, and employers should review their policies when it comes to social media, sales commissions and independent contractors, according to participants at a recent roundtable discussion hosted by The Daily Transcript and sponsored by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC.

Those are three areas that state and federal regulators are cracking down with increasing frequency.

In particular, the National Labor Relations Board (NLRB) has been aggressively interpreting federal statutes that apply to social media.

The agency recently ruled that companies can't prohibit their employees from disclosing confidential information on sites like Facebook or LinkedIn.

"They decided (those prohibitions) could curb employee behavior that relates to protected activity, like discussing wages," said Mitch Danzig, a labor and employment attorney for Mintz Levin. "That's a very aggressive position. Employers need to be aware."

The NLRB also said companies can't have a policy prohibiting employees from disparaging the company online via social media.

A new law also prevents companies from asking employees or potential employees for passwords to their social media accounts.

"It just points to the fact this is a brave new world," Danzig said. "We've all been hearing that (said) as technology keeps racing ahead of the law. We're all trying to get a grip on how to apply the law to all these different things that we didn't think about five years ago, two years ago."

The increased enforcement makes it tricky for companies to protect their brand image while recognizing employee freedom.

"The law says that employees are allowed to talk about their working conditions," said Kim Parker, executive director of the California Employers Association. "But when does that cross from, 'I wish we had more raises,' to 'This company is unsafe; they have poor quality?' When does slander come into play?

"It's just really been tough because the more specific you get, then you're afraid you're leaving yourself open in other areas."

Some companies encourage their employees to use social media as a way to market a product or create buzz around a new company offering.

"We view social media as a recruiting tool," said Alexandria Brown, a human resources specialist with San Diego-based Brightscope, a financial information company. "Because our company's mission is to be open and transparent, it's built into our culture that we can use these things in an intelligent way to better the company, to market our business."

Gary Correia, chief financial officer of Digitaria, said his company also is open about using Facebook and Twitter to advertise their products.

"People are so excited about the work they do, they have a tendency to use social media," he said.

The way to curb negative online chatter from employees is not through strict social media policies, but with cultivating a friendly working environment, according to Natasha Arthur, director of human resources for CaVU Consulting Inc.

"It's about hiring who you hire and how you're managing that relationship," she said. "They won't be posting negative information on Facebook about you if they feel the company is actually a good one and they were engaged and satisfied with their employment, and I think that's the employer's responsibility."

Stan Sewitch, vice president of global organization development for WD-40 (Nasdaq: WDFC), agreed.

"What we're talking about are events that happen after a long period of relationship failures with the employee, starting with the hiring process," he said. "If you're looking at a policy, long before that we could have corrected any need to focus on that policy."

Another concern for employers this year involves sales commissions. California recently passed a law that requires sales commission agreements to be in writing.

Digitaria's Correia took a proactive approach and instituted the written commission agreement last year, and his employees embraced it.

"In fact, sales people like it better because now they have something they can go to," Correia said. "They know exactly how it's calculated; how it's going to be paid. We've found it to be a very positive experience."

It's also the rare instance where a piece of legislation actually favors employers as well in the employee-friendly state of California, according to Danzig.

“It's to your benefit as an employer to really have a tight commission agreement or commission plan, that lays out when a commission is earned,” he said.

Additionally, when there is a dispute, the company will have documented proof of its commission agreement to present before the Department of Labor or other administrative body.

How companies use independent contractors is another area of concern in 2013.

Last year, the penalties for misclassification of independent contractors increased, and with state and federal governments looking for additional revenue in 2013, you can expect increased scrutiny in this area, Danzig said.

"With the cost of employment in states like California going up, these agencies know that people are looking for shortcuts," he said. "One way people will be looking to cut costs is classifying employees as independent contractors."

The scrutiny of company payrolls will only increase as the government implements health care reform, which has certain obligations for companies with 50 or more employees.

"The allegations will be that employers are putting individuals on independent contracts as opposed to hiring them to avoid providing health benefits," said Linde Hotchkiss, the San Diego managing partner of Willis Insurance Services of California.

Roundtable Participants

Natasha Arthur, Director, Human Resources,
CaVU Consulting Inc.

Alexandria Brown, Human Resources Specialist, Brightscope

Laurie Chua, Regional Director, California Employers Association

Gary Correia, CFO, Digitaria

Mitch Danzig, Member, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC.

Linde Hotchkiss, San Diego Managing Partner,
Willis Insurance Services of California

Brandon Moreno, Global Talent Acquisition Manager, ARINC Inc.

Kim Parker, Executive Director, California Employers Association

Jennifer Robinson, CEO, Mission Healthcare

Stan Sewitch, Vice President of Global Organization Development, WD40

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