Accessing Pornographic Websites, Quirky Question # 109
We recently discovered that one of our company’s computers was used to access pornographic websites. Many different employees had access to this computer, but we believe we know who is responsible. In part, our conclusion is based on the fact that he is the only male employee who has access to that computer.
We’re thinking about terminating his employment based on our impressions. Frankly, we would rather be sued by him than by our female employees who use that computer, a number of whom complained about the pornographic websites that now often pop up on the computer. Any risks associated with terminating the male employee?
Roy’s Analysis:
Whoa, slow down! As one of our readers remarked in response to this question, don’t jump to the conclusion that the person responsible for accessing the pornographic Websites is your male employee, simply because only one male employee had access to the computer in question. (See the reader’s reaction below.) Although your intuition may be correct, and your male employee may indeed be the person who visited the pornographic Websites, it would be imprudent for you to terminate this employee before conducting an appropriate investigation.
The investigation could consist of several parts. First, presumably a forensic analysis of the computer in question should enable your company to determine which sites were accessed and when.
Second, you could compare the times these sites were accessed with your employees’ work records. If, for example, your work records demonstrated that your male employee was on vacation during a week when the pornographic Websites were repeatedly accessed, that is pretty exculpatory evidence. Conversely, if he was the only employee working when the Websites were being contacted, the opposite inference is warranted.
Third, you should evaluate whether employees needed to log on to access the computer. If so, this could reveal important information to you.
Fourth, regardless of the outcome of your forensic analysis, I recommend that you interview the employees who had access to the computer. Find out what the employees have to say about their use of the computer, their access to the Websites, etc. Discharging an employee without at least interviewing him or her about the wrongful conduct will likely have at least three consequences: a) it will increase the likelihood that your decision is misguided or based on erroneous data; b) it will increase the likelihood of litigation by the discharged employee; and c) it will increase the likelihood that the fact-finder, whether judge or jury, will perceive your approach to have been procedurally unfair. Gather the pertinent facts. Give the employees a chance to offer any exculpatory evidence. Consider the information collected during the interview process. Then, make your decision.
Fifth, it is possible that just one employee accessed the pornographic Websites. But, it also is possible that multiple employees were visiting the sites. If both male and female employees were accessing the Websites and there was not a demonstrable distinction in their conduct, it would be unwise for you to terminate or otherwise discipline just one of those employees. If, however, there were significant differences in the employees’ conduct, a differential disciplinary response may be appropriate. For example, one of the employees may have been responsible for visiting the sites or adding them to a “Favorites” list, while other employees simply may have accessed them once they were available. Similarly, one of the employees (or several of the employees) may have accessed the sites frequently, whereas for others, there may have been one and only one visit. For example, one of the employees may have forwarded information or pictures from the Websites to others in your company, whereas other employees may not have. These, or other distinctions, may warrant a different disciplinary response.
Some of these issues were recently addressed by the Seventh Circuit Court of Appeals in the case of Farr vs. St. Francis Hospital and Health Centers, No. 08-3203 (June 29, 2009). Farr sued the defendant hospital for sex discrimination after being discharged. Farr, one of seven respiratory therapists at St. Francis (and the only male in that position), shared a computer with the other respiratory therapists. Although the computer required the employees to log on with a user name and password, and although employees were supposed to log off when they were finished using the computer, the standard practice was that one employee would log on in the morning and all of the employees would use the computer under that person’s name throughout the course of the day.
One employee noticed that several “lurid” and “obscene” Websites had been added to the computer’s “favorites” list and notified HR of this issue. Farr was the person who had logged on to the computer at the time the Websites were accessed. Farr was interviewed and denied knowledge of why the sites had appeared at the time he was logged on to the computer. Consequently, the computer was then sent to the hospital’s Information Services Department for a forensic analysis. After the IS Department analyzed the hard drive, it wiped the hard drive of all information, without imaging the hard drive. (Needless to point out, this is not a best practice and would not have been done by any competent forensic analyst. The hard drive itself or a copy of the hard drive should have been retained.)
St. Francis then compared the times when the computer was used to access the Websites with the respiratory therapists’ work schedules. That comparison showed that Farr was the only employee who had worked on a particular Sunday when the computer had been used extensively to access the pornographic Websites. (The computer also had been used to access “hacking” Websites, an issue of equal concern to the Hospital.) Farr was interviewed a second time and still denied using the computer for inappropriate purposes. Consequently, further investigation was conducted, which corroborated the fact that other employees had not used the computer to access the pornographic or hacking Websites. Based on the investigations conducted, Farr was fired.
Farr then sued for sex discrimination, contending that he had been fired because he was a male. Farr retained his own forensic computer expert. Farr’s expert determined that the pornographic Websites had been added to the computer through “mal-ware” (malicious-software) when it was otherwise being used for a proper purpose and without Farr’s knowledge. Nevertheless, in connection with the information he provided his own expert, Farr admitted accessing 17 of the 31 Websites at issue. Farr reiterated these admissions when he was deposed.
Farr attempted to prove his case with both direct and circumstantial evidence. As the appellate court pointed out, when the person claiming discrimination is a member of the majority, he “must set out ‘background circumstances’ that show the employer discriminates against the majority or he must show that there is something ‘fishy’ going on.” (Citations omitted.) [Frankly, I was unfamiliar with this precise legal standard – in the future, I will have to test the factual patterns of my cases against the “something fishy” standard.]
Farr’s initial complaint was that he was the first person investigated about the pornographic sites, a fact he attributed to his gender. The appellate court quickly dispensed with that argument. “That complaint would have more force if it were not also true that he was not the person logged on to the computer at the time the sites were visited. It seems quite sensible (and hardly discriminatory) to begin an investigation with the person who officially was logged on to the computer.”
The court also rejected Farr’s argument that regardless of who had been investigated first, he was fired because of his gender. As the court pointed out, he was fired because the “investigation convinced the employer that he was the one accessing the inappropriate Web sites. In fact, he admitted it.” Finding that Farr had not established anything “fishy” about his discharge, the Seventh Circuit affirmed the lower court’s grant of summary judgment for the employer.
In the Farr case, the employer got it right – it conducted an appropriate investigation to ascertain the underlying facts. Based on the information adduced in the investigation, it made an appropriate termination decision. Although even legitimate discharge decisions sometimes result in litigation, the hospital’s position was quickly vindicated by the lower court’s summary judgment decision, a decision affirmed on appeal. The Farr analysis illustrates the steps your company should pursue before acting precipitously to terminate your male employee. (The decision also illustrates one part of the hospital’s investigation that should be avoided, i.e., destroying the hard drive.) Investigate the facts and then act accordingly. Doing so should minimize the likelihood of litigation by your male employee.
Finally, there are steps that you can take to reduce the likelihood that any of your female employees will sue you. Remove the computer during the investigation. Replace its hard drive before it is put back in service. And use the situation as a “teaching moment,” reminding your employees of their need to comply with both your sexual harassment policy and your electronic communications policy. If your company takes prompt and appropriate action to address the concerns brought to your attention, the chances that you will be sued by one of your female employees are not high. The chances that your company would be found liable, in the event a suit is brought, are even lower.
As noted above, one of our readers provided her reaction to this question. She wrote,
“Why would you want to take the risk by firing anyone, especially since you have absolutely no proof…only gender. You are opening yourself up to a gender discrimination lawsuit. I would suggest you gather everyone together who had access to this computer, give them all a reminder of your electronic systems usage policy (assuming you have one) have them all sign for it and indicate to the that a repeat occurrence will not be tolerated and you will be watching content from that, and all computers, going forward and that further inappropriate use will result in severe disciplinary action. I recently read an article about viewing of porn, and 1 in3 women are currently reviewing pornographic Websites of one kind or another. You should not just assume it is the man and risk ruining his reputation on a guess.”
Stray Remarks, Quirky Question # 108
Quirky Question # 108:
We are a communications company in Colorado. We recently terminated a sales employee for poor performance and he has since filed a charge against our company claiming his termination was the result of age discrimination. In support of his charge, the former employee alleges that over a year ago he overheard the president of the Company say “I’ll be happy when they get rid of some of these old geezers – the younger ones make less mistakes.” The former employee asserts that this statement is indicative of discrimination at our company and will likely want to introduce it as evidence if the case goes to trial. The president in our Company does not make any direct hiring or termination decisions, nor is his approval required for hiring or termination of employees – these decisions are made solely by the direct managers of each department in which the respective employee works. In this case, the president did not oversee the former employee, did not review the employee and, most importantly, did not participate in any way in the decision to terminate employee. In fact, he did not even find out about the termination until the day after the employee was informed of the termination. Further, the president completely denies making the statement.
Will the former employee be able to introduce evidence of the statement at trial to prove discrimination?
[Readers: Quirky Question # 108 was posed to my colleague, Jennifer Good, in our Denver office. If you have any questions about the analysis below, don't hesitate to contact Jennifer at 303.629.3442 or via email at good.jennifer@dorsey.com. Additional background information regarding Jennifer is available at http://www.dorsey.com/good_jennifer/. Regards, Roy]
Jennifer’s Analysis:
Your question raises the interesting issue as to whether “remarks” made by a non-decision- maker – such as the president of the Company in this situation – are admissible to prove evidence of discrimination in an employment discrimination claim. Practically speaking, courts have discretionary authority to admit such statements as evidence. From purely legal perspective, however, a stray remark should not be admitted as evidence of discrimination. The Tenth Circuit and other jurisdictions are generally in accordance with this approach, often holding stray remarks inadmissible as evidence to prove discrimination.
As you may know, in an employment discrimination action, the plaintiff is required to establish a prima facie case of discrimination by a preponderance of the evidence. Accordingly, plaintiff bears the burden of establishing intent to discriminate by direct or circumstantial evidence. Generally, this burden requires the plaintiff to “produce sufficient evidence of actions taken by the employer from which one can infer, if such actions remain unexplained, that it is more likely than not that such actions were based on an illegal discriminatory criterion.” Furnco Construction Corp. v. Waters, 438 U.S. 567, 576 (1978).
In considering whether evidence presented by a plaintiff alleging discrimination is sufficient, numerous courts in the Tenth Circuit have found that “isolated” or “stray” comments do not themselves establish discriminatory conduct. See, e.g., Klen v. Colorado State Board of Agriculture, 2007 WL 2022061, *18 (D. Colo 2007); Cone v. Longmont United Hospital Ass’n, 14 F.3d 526, 531 (“[i]solated comments, unrelated to the challenged action, are insufficient to show discriminatory animus in termination decisions.”). Further, if relying on such comments, the plaintiff must establish that “a nexus exists between the allegedly discriminatory statements” and the termination. Cone, 14 F.3d at 531. For example, the plaintiff in Cone claimed certain “ageist comments” made by the management of the hospital were evidence of discrimination. The comments made by managerial employees of the hospital included references to the need for some “new young blood”, and statements that “long-term employees have diminishing return.” Id. at 531. The court held that the statements constituted stray remarks, and that such stray remarks were “insufficient to create a jury issue in an ADEA case.” Id. (Emphasis added.) The court also found that while “[a]ge-related comments referring directly to the worker may support an inference of age discrimination…isolated [or] ambiguous comments are too abstract to support a finding of age discrimination.” Id. (quoting Phelps v. Yale Sec., Inc., 986 F.2d 1020, 1025 (6th Cir 1993)).
In order to use such statements to infer discriminatory intent, a plaintiff-employee is required to show that the statement was “made by a decision maker and that there was a nexus between the discriminatory statement and the decision to terminate.” McKnight v. Kimberly Clark Corp., 143 F.3d 1125 (10th Cir. 1998). Generally, courts find no nexus exists in situations where the person making the statement had no role in overseeing the employee. In Vanovur v. Department of Energy, the court held that a statement regarding the manager’s intention “to weed out older employees through the reorganization” was a stray remark because the manager did not “participate in the process of selecting the maintenance managers other than approving the final list of candidates.” 153 F.3d 730 (10th Cir. 1998).
Based on the facts you presented, the statement by the president does not appear to be linked to the personnel decision to terminate the former employee or to the individuals who made the decision, particularly considering the time lag (about 1 year) between when the statement was allegedly made and the employment decision. Additionally, it is possible a court would consider the purported statement too ambiguous and abstract to establish discriminatory intent. Without the former employee establishing a nexus between the supervisor’s statement and his subsequent termination, it seems likely a Tenth Circuit court would find the statement inadmissible as a stray remark.
When the “remarks” are alleged to have been made by the decision-maker or one in a position to actually influence the employment decision, the courts react differently. For example, the Supreme Court has found that remarks by the decision-maker regarding protected class members may be an indicator of discriminatory bias. In Ash v. Tyson Foods, Inc., 546 U.S. 454 (2006), plaintiffs brought a claim of race discrimination against their employer. The Court held that, contrary to the district court’s finding that the plant manager’s repeated use of the word “boy” to refer to the plaintiffs was not alone evidence of discrimination, the remarks were potentially probative of discriminatory animus. Whether the remarks indicate bias depends on the decisionmaker’s meaning which “may depend on various factors including context, inflection, tone of voice, local custom and historical usage.” Id. at 456. Further, when the individual making the statement has influence over the employment action, courts have held certain remarks to be direct evidence of discrimination. See Burns v. Gadsen State Community College, 908 F.2d 1512, 1515 (11th Cir. 1990). In Burns, the court held that the College President’s statement that “no woman would be appointed” as Director of Economic Development constituted direct evidence of gender discrimination when the plaintiff, a woman, had applied for that position.
However, even if the remarks were allegedly made by a decision-maker, the plaintiff still should be required to offer some evidence that the remark was actually related to the employment decision. Cone, 14 F.3d at 531. Absent a connection to the employment decision, stray remarks likely do not suffice as evidence, as noted by Justice O’Connor in her concurring opinion in Price Waterhouse v. Hopkins, 490 U.S. 228, 277 (1989), where she stated affirmatively that “. . . statements by decisionmakers unrelated to the decisional process itself, [cannot] suffice to satisfy the plaintiff’s burden . . ..”
In the event a court admits a “stray remark,” careful consideration should be given to the potential prejudicial effect of the evidence. Counsel should request a limiting jury instruction when the court permits a plaintiff to present evidence of such remarks. Although this also remains in the court’s discretion, courts admitting stray remarks into evidence generally include a limiting instruction. For example, in DeSanto v. Rowan University, the court admitted stray remarks by the Dean of the College of Education and certain upper administration personnel because the possible influence the individuals had over the employment action. 224 F.Supp.2d 819 (D.N.J. 2002). However, the court also charged the plaintiff with establishing a nexus between the statements and the lack of promotion, stating that “if DeSanto fails to connect the ‘stray remarks’ to person who could have influenced the University’s promotional decisions, then the stray remarks will have no legal significance and the jury will be so instructed.” Id. at 830. Further, in McMillan v. Massachusetts Society for the Prevention of Cruelty to Animals, the First Circuit upheld the district judge’s instructions regarding stray remarks in a gender discrimination case. 140 F.3d 288 (1st Cir. 1998). The judge had instructed the jury to disregard the remark at issue in reaching a verdict if the jury found the remark was “random and completely out of character” and had no “value as evidence” of the employer’s motivations. Id. at 302, n.8.
In sum, a decision-maker’s biased remarks generally do not constitute direct evidence of discrimination unless the remark (1) was related to the protected class of persons of which the plaintiff is a member; (2) was made proximate in time to the complained-of adverse employment decision; (3) was made by an individual with authority over the employment decision at issue; and (4) was related to the employment decision at issue. Rubenstein v. Administrators of Tulane Educational Fund, 218 F.3d 392, 400 (5th Cir. 2000). Although the admissibility of stray remarks remains in the court’s discretion, and each judge may rule differently, case law in many jurisdictions supports the argument that such remarks are generally inadmissible as evidence to prove discrimination.
Finally, the statement made by your president likely will not be admissible as evidence against your company in a discrimination claim by your former employee. I suspect the key battleground will be the extent to which your President’s attitudes were known to the actual decision-makers and/or whether the President influenced the decision-makers in any way.
As described above, the court has wide discretion to treat this issue as it sees fit. Thus, it is prudent for your company (and every employer) to ensure that all employees, but particularly those holding managerial or supervisory positions, refrain from making statements that can be misconstrued or which are arguably discriminatory against a member of a protected class. Consistent and thorough training should be provided to all employees in management or supervisory roles to ensure they are aware of the laws regarding discrimination and harassment.
California Wage and Hour Issues, Quirky Question # 107
Quirky Question # 107:
I keep hearing about companies getting hit with class action lawsuits under California’s tough wage and hour laws. As I understand it, when a company treats its employees the same under a single policy, it is much more likely to have a class action certified against it. Our company’s policy is to treat as exempt from overtime its outside sales representatives.
Does this count as a uniform policy, and does it open us up to a lawsuit? Would we be better off treating some of the sales representatives as exempt and others non-exempt, based on some differences in job duties that already exist or we could implement?
[Readers: As mentioned last week, Quirky Question # 107 was posed to my colleagues in our Southern California office. The analysis below was prepared by Joel O’Malley. Joel recently transferred from our Minneapolis office to our Irvine, CA office. Joel can be reached at omalley.joel@dorsey.com or via phone at 949.932.3602. Do not hesitate to contact Joel if you have any questions regarding the analysis below. Regards, Roy]
Joel’s Analysis:
What you hear is indeed happening. Wage and hour cases are proliferating. Federal cases have tripled in the last decade. California’s onerous wage and hour laws make potential violations by employers even more likely here, and, thereby, increase the threat of class actions in California. So, your question is both timely and important.
First, a little background. Federal and state wage and hour laws place a number of requirements on employers with respect to hourly employees, most importantly, the duty to pay overtime compensation. Certain employees may be classified as salaried and exempt from these requirements. The law offers a number of exemption classifications based on employee duties, including, among others, administrative, learned professional, executive, outside salesperson, and inside commissioned salesperson (generally applicable only to employers in the retail or mercantile industries). Except for the salesperson classifications, the exemptions also require certain salary requirements. When an employee is misclassified as exempt under one of these classifications, the employee may sue the employer to recover past wages and penalties, including for overtime hours that were worked but not properly compensated. When a group of employees are misclassified, rather than individual lawsuits, representative employees may be permitted to bring a class action lawsuit against their employer on behalf of all similarly situated employees. Damages from these wage and hour class actions (as well as attorneys’ fees) can accumulate quickly, which may explain the substantial growth in these kinds of lawsuits.
You are also correct that when an employer treats employees under a common policy, the common issues created by that policy can predominate over issues pertaining to individual employees and create the risk for a lawsuit to be certified as a class action.
It is important to note the difference, however, between an employer’s policy of classifying a group of employees as exempt from wage and hour laws, and other policies that are applied uniformly across a group of employees. Regarding the former, for many types of exemption classifications (including that of ‘outside salesperson’), a policy of classifying a group of employees as exempt does not necessarily increase an employer’s risk of becoming a victim of a certified class action. Regarding the latter, a policy governing the working hours or duties of a group of employees certainly may increase an employer’s risk, depending, of course, on the policy at issue.
A recent opinion by the Ninth Circuit Court of Appeals, In re Wells Fargo Home Mortgage Overtime Pay Litigation, — F.3d —, 2009 WL 1927711 (9th Cir. 2009), demonstrates this dichotomy. The case arose from Wells Fargo’s appeal of a district court order certifying a class of Wells Fargo “home mortgage consultants” for the purpose of determining whether they had been misclassified by Wells Fargo as exempt from overtime requirements.
As with your company, Wells Fargo designated all of its home mortgage consultants as being exempt. After it was sued for wrongly classifying these employees as exempt, and in response to the plaintiffs’ argument that the class’s exempt status created common issues making class treatment appropriate, Wells Fargo claimed – despite the fact it had uniformly treated the employees as exempt outside salespersons – that a class could not be certified because of individual issues surrounding each home mortgage consultant’s daily schedule and duties.
The Ninth Circuit held the employer’s decision to treat all members of a given job title as exempt from overtime was relevant to whether those employees could be treated as a class for purposes of the litigation, but did not warrant the great weight accorded this fact by the district court. The Court of Appeals recognized that, notwithstanding a uniform exemption classification, other issues regarding individual variations in putative class member duties and activities may not be susceptible to common proof. The court remanded the case to the district court to reconsider the class certification issue in light of the individual employees’ varying duties.
The existence of such varying duties may be demonstrated by reviewing the requirements for the outside salesperson exemption. Further, an analysis of how employees classified as outside salespersons spend their working time also may provide a compelling argument to defeat class certification.
For the outside salesperson exemption to apply under California law, an employee must regularly work more than half the working time away from the employer’s place of business performing sales. See IWC Wage Order 7-2001(2)(J).
In the relatively recent California state court decision of Walsh v. IKON Office Solutions, Inc., 148 Cal. App. 4th 1440 (2007), the court affirmed a trial court’s decertification of a class of account manager employees based on the defendant’s affirmative defense that the employees were properly classified as outside salespersons and, therefore, exempt from California’s overtime laws. The defendant presented evidence that the account managers’ tasks varied based on, among other things, territory, number of customers and job orders, amount of time spent outside the office, time spent engaged in sales activities, and “the personal approach of each account manager to the job and customers.” Id. The court held these variations were directly material to whether the outside salesperson exemption applied to any individual putative class member, opining:
[T]he time they spent outside the office in sales, whether outside activities such as pick-ups and drop-offs were used as part of their selling activities, and factors such as orders, CSR’s, sales appointments, and other individual circumstances would affect whether any particular subclass member did, in fact, “customarily and regularly” spend over 50 percent of his or her time outside the office on sales activity.
Id. at 1456. The same individual inquiries into putative class member duties may be present, to varying degrees, under other exemptions from wage and hour laws. In sum, then, classifying a group of employees as exempt is relevant to whether the group can be certified as a class, but it does not, in itself, predetermine the outcome of the certification decision.
That should be contrasted with other uniform policies applied across a group of employees that may demonstrate commonality and raise the risk of class actions. Returning to the outside salesperson exemption, the Ninth Circuit in Wells Fargo explored a hypothetical employer policy that employees be required to be at their desks for 80 percent of their workdays. 2009 WL 1927711, at *4. Such a uniform workplace rule – unlike an exemption classification – certainly would provide a common issue about whether employees are spending at least half their time outside of the office performing sales.
With these guidelines in mind, your idea to classify some of your sales representatives as exempt and others as non-exempt may be a good idea, as long as there are clear distinctions between the groups in job duties and how employees actually spend their days which necessitate the different classifications. One possibility is classifying as non-exempt your sales representatives who are new and still learning the job. Once these individuals’ sales skills and activities are documented (measured perhaps at a 6-month initial review), they could be reclassified as exempt. Another possibility, assuming your business is in the retail or mercantile industries, is to move some employees (again, based on specific work-related criteria) to commission-based compensation. This would allow these employees possibly to meet the tests for both outside salespersons and inside commissioned salespersons. The commission payments would also provide a nondiscriminatory objective means of evaluating employees, blunting any possible claims that employees have been the victim of illegal discrimination based on a protected characteristic (age, gender, race, etc.). In making these differentiated classifications, it would be important to have detailed job descriptions and to use employee performance appraisals to highlight the differences between positions.
Of course, reclassifying employees from exempt to non-exempt has its risks. The mere event of reclassifying employees tends to trigger the idea for litigation in some employees’ minds, and generally creates the risk of later claims based on the notion that employees were previously misclassified and are now owed wages and penalties for those prior time periods. Finally, for whatever reason, employees seem to attach status to being salaried rather than hourly, so reclassifying one portion but not another portion of generally similar employees may create personnel conflicts. You should be cognizant of these potential individual problems as you make these organizational decisions.
Swine Flu, Quirky Question # 106
Quirky Question # 106:
We’ve heard a lot about the swine flu, also known as the H1N1 virus. So far, we have not had many, if any, problems with this flu strain in our workplace. Nevertheless, we are looking for guidance as to how we should handle various issues that could arise if the H1N1 virus becomes much worse with the fall flu season. Any suggestions for how this should be addressed at our company?
Roy’s Analysis:
You have asked for guidance regarding how to deal with the various issues associated with the H1N1 virus (a/k/a, the “swine flu”), especially if it becomes worse in the fall flu season. Nothing particularly quirky about that question, but it is one I am hearing with considerable frequency.
First, the good news. Thus far, in the United States, despite its recent designation as a “pandemic” by the World Health Organization (WHO), the H1N1 virus has not been nearly as severe as was anticipated. The influenza strain has proven highly contagious but the symptoms are more mild than expected, the symptoms appear to respond to standard treatment (stay in bed, drink lots of fluids, etc.), and thus far, the mortality rate has been quite low. Keep in mind that approximately 35,000 people die annually from other types of flu, so the absence of these types of numbers for the H1N1 influenza virus is encouraging. Moreover, the drug companies and the U.S. Government are working on a vaccine that is expected to be available in October or November.
Your question, however, addresses what you need to consider if the virus “ becomes much worse with the fall flu season.” This type of inquiry leads down the path of the not-so-good news. Consider, for example, the so-called Spanish flu strain of 1918. Estimates place the mortality figures associated with that flu virus at between 50 and 100 million, at a time when the world’s population was approximately 1 billion. In short, between five and ten percent of the world’s population died as a result of that flu strain. Project comparable numbers on the world’s current population and the numbers are staggering. The world’s current population is estimated at 6.7 billion people. If ten percent of the population died as a result of the H1N1 virus, you’re talking about a mind-boggling 670 million people. Even assuming that with the advances in modern medicine, the mortality figure would be just one percent, rather than ten percent, you’re still at astronomical numbers – 67 million people.
That is why, despite the fact that the H1N1 virus does not appear to be as severe as expected, there are many who remain extremely concerned. Apparently, the pattern of the 1918 virus was a fairly mild strain in the Spring and Summer, followed by a far more virulent mutated strain in the Fall, the typical flu season. If the H1N1 virus mirrored that pattern, things can be expected to get much worse in the months ahead. Further, there are additional reasons for concern. The World Health Organization now estimates that more than one million people already are affected by the virus worldwide. The Center for Disease Control (CDC) is estimating that perhaps as many as one million people already have been infected in the United States alone.
In Saturday’s (August 15) Minneapolis Star & Tribune, it was reported that Minnesota’s state epidemiologist warned that 1.5 million Minnesotans alone could get the flu in the upcoming flu season, and that about 30 percent of Americans could get the H1N1 influenza virus or other flu strains. Exacerbating the situation, even when the vaccine becomes available, it is anticipated that each person will need three separate flu shots over a several week period. Moreover, it remains unclear how many doses of the vaccine will be available at the beginning of the flu season. As the Star Tribune reported, Minnesota’s epidemiologist estimates that between 15,000 and 172,000 Minnesotans will require hospitalization this fall and as many as 32,900 Minnesotans could die from influenza during the upcoming flu season. If the actual experience is consistent with the high end of these estimates, the health care system faces a daunting challenge. If 30 percent of Americans become ill this Fall with the H1N1 virus or other influenza strains, businesses will have to evaluate how they can continue to function without significant disruptions.
In short, the H1N1 virus could present serious problems both for individuals and for society. As Mike Osterholm, Minnesota’s former state epidemiologist (currently with the University of Minnesota), observed, H1N1 is going to have a disruptive effect on the economy. Just yesterday, as reported by CNN, the nation’s Health and Human Services Secretary, Kathleen Sebelius, stated that the U.S. Government is “preparing for the worst,” while “hoping for the best.”
Given the potentially dramatic disruptive effects of the swine flu, prudent employers should consider NOW how they intend to address the multiple problems associated with the H1N1 virus. To assist in that evaluative process, I soon will add to the “Resources” section of this Blog (located on the left-hand side of this page), various public resources relating to the H1N1 virus. Further, as additional resources become available, I will periodically update this information. To start, consider the following resources:
- Center for Disease Control’s H1N1 site: http://www.cdcgov/h1n1flu/
- Federal Emergency Management Agency’s site: http://www.fema.gov/
- Minnesota Department of Health’s H1N1 site: http://www.health.state.mn.us/divs/idepc/diseases/flu/h1n1/index.html
- Occupational Safety and Health’s Pandemic Flu Guidance: http://www.osha.gov/dsg/topics/pandemicflu/index.html
- The University of Minnesota Center for Infectious Research & Disease Policy’s H1N1 site: http://www.cidrap.umn.edu/cidrap/content/influenza/swineflu/index.html
- United States Government’s Influenza site: http://pandemic.flu.gov/
- World Health Organization’s H1N1 site: http://www.who.int/csr/disease/swineflu/index.html
These sites contain a great deal of information regarding the H1N1 virus and should help you formulate appropriate workplace policies. In particular, the websites www.pandemicflu.gov and www.cdc.gov/business contain business pandemic influenza checklists that you may find helpful.
You also need to begin considering the types of Human Resources or Employee Relations types of questions that undoubtedly will arise this fall if the pandemic worsens. These questions include the following:
a) Is an employee with influenza entitled to leave under the Family Medical Leave Act?
b) Is an employer required to pay an employee for the time they are out of work with the flu or to care for a family member with the flu?
c) What legal responsibility do employers have to allow employees time off from work to care for sick children that have been sent home from school or day care?
d) Is an employer required to allow an employee to stay home from work to avoid getting influenza?
e) Can an employer require an employee not to take vacation or other PTO in countries/locations where the H1N1 virus is prevalent?
f) Can an employer require employees to wear protective gear such as masks or gloves or take other measures to control the spread of infection?
g) Can an employer require employees to have medical exams or present medical certification related to whether they are carriers of the influenza virus before allowing them in the workplace?
h) Could an employer be held liable if its employees or other third parties contract influenza at the workplace? and,
i) If the employer has unionized employees, does that affect how an employer handles issues related to a pandemic?
These and other questions would require too expansive a response to address in the format of this Blog. But, my colleagues and I have been examining these questions. If you would like to receive our guidance on these inquiries and other related issues, please send me an email at ginsburg.roy@dorsey.com. Please include your name, position, company, email address, and company address. I then will provide you relevant materials addressing these issues.
Finally, I recommend that you give thought now to developing an influenza policy. Similarly, it would be appropriate to develop a sample communication setting forth your company’s position on how you intend to respond to the H1N1 virus, both from a medical and business perspective. Again, we have developed examples of some of these materials, which I will share with you if you contact me as described above.
Everyone remains hopeful that the swine flu will not be as serious, either medically or in terms of the related practical consequences, as many predict. But hoping the problems will not occur, while ignoring practical precautionary steps that should be taken now, would be ill advised.
When Workers Steal Data to Use at New Jobs
When Workers Steal Data to Use at New Jobs
Despite some negative case law, the Computer Fraud and Abuse Act is an effective tool for employers.
By Nick Akerman
In response to the economic crisis, companies have downsized, resulting in some terminated employees stealing vital data to improve their job opportunities with a new employer. In addition to traditional state remedies such as misappropriation of trade secrets, employers have been “increasingly taking advantage of…[the federal Computer Fraud and Abuse Act’s] civil remedies to sue former employees and their new companies who seek a competitive edge through wrongful use of information from the former employer’s computer system.” Pacific Aerospace & Electronics Inc. v. Taylor, 295 F. Supp. 2d 1188, 1196 (E.D. Wash. 2003).
The Computer Fraud and Abuse Act (CFAA), a federal criminal statute outlawing the theft of data, permits a company that “suffers damage or loss” by reason of a violation of the CFAA to “maintain a civil action against the violator” for damages and injunctive relief. 18 U.S.C. 1030(g). Since Taylor, there has developed a body of district court opinions that refuse to apply the CFAA against employees who steal their employers’ data.
Citrin Is Leading Authority
Four of the seven violations of the CFAA that provide a basis for a civil action require the employer to show that the employee’s access to the company computers was “without authorization” or “exceeds authorized access.” The leading authority for using the CFAA against employees who steal their employers’ data is Int’l Airport Centers LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006). Based on the Restatement (Second) of Agency § 112 (1958), the U.S. Court of Appeals for the 7th Circuit held that an employee’s authorization to use the company computers is predicated on his agency relationship with his employer and that, when the employee violates “his duty of loyalty,” i.e., accesses his employer’s computer to steal its data, he voids this relationship and thereby 962 (D. Ariz. 2008). These cases conclude that the CFAA is “generally aimed towards outside, third parties or other ‘high-tech’ criminals, rather than the rogue employee.” Lasco Foods Inc. v. Hall And Shaw Sales, Marketing, & Consulting LLC, 600 F. Supp. 2d 1045.
There are now 11 reported district court decisions that disagree with Citrin and refuse to apply the CFAA to employee data thieves. These courts hold that the intent of the employee in accessing the computer is irrelevant to the question of authorization because employees do have permission to access the company computers. See, e.g., Shamrock Foods Co. v. Gast, 535 F. Supp. 2d 1049 (E.D. Mo. 2009).
Nine of the 11 opinions rely on Lockheed Martin Corp. v. Speed, 2006 WL 2683058 (M.D. Fla. 2006), which, along with Diamond Power Int’l Inc. v. Davidson, 540
F. Supp. 2d 1322, 1341 (N.D. Ga. 2007), is within the 11th Circuit and has been effectively overruled by U.S. v. Salum, 257 Fed. Appx. 225, 230-31 (11th Cir. 2007). In Salum, a police officer with the Montgomery, Ala., Police Department was charged with a criminal violation of the CFAA for providing information from the FBI’s criminal record database to a private investigator. Although Salum, as an employee, “had authority to access the [National Crime Information Center] database,” the circuit court held, without citing the lower court opinions of Lockheed Martin or Davidson, that there was sufficient evidence to convict on the element of lack of authorization because Salum knew that the information he accessed was to be used “for an improper purpose.”
The five district courts that adopted the holding in Lockheed Martin and were decided after Salum ignore Salum. See, e.g., US Bioservices Corp. v. Lugo, 595 F. Supp. 2d 1189, 1191-96 (D. Kan. 2009). Lockheed Martin faulted Citrin for relying “heavily on … the Second Restatement of Agency…to derive the meaning of ‘without authorization.’ ” 2006 WL 2683058, at *4. The court complained that “the breadth of the statute given under the Citrin reading is especially disconcerting, given that the CFAA is a criminal statute with a civil cause of action.” Id at *7. In Carpentar v. U.S., 484 U.S. 19 (1987), however, the U.S. Supreme Court, employed the Restatement (Second) of Agency to affirm the mail and wire fraud convictions of a Wall Street Journal reporter who, prior to publication, had provided his upcoming financial columns to confederates, who bought or sold stock “based on the probable impact of the column on the market.” Relying on the Restatement, the Court held that “an employee has a fiduciary obligation to protect confidential information obtained during the course of his employment” and that intentionally exploiting that information for his own personal benefit was a scheme to defraud his employer of confidential information outlawed by the mail and wire fraud statutes. Just as the Restatement prescribes the duty of an employee in the context of these fraud statutes to safeguard his employer’s confidential information, it also prescribes the scope of an employee’s authority to access his employer’s computer in the context of the CFAA.
In the Criminal Context
The first criminal case to deal with the CFAA in the employment context, U.S. v. Nosal, 2009 WL 981336, at *7 (N.D. Calif. 2009), refused to dismiss CFAA charges against a former “high level executive at an international executive search firm” who quit his position “with plans to start a competing executive search firm.” Prior to leaving the firm, he stole competitively sensitive data from his employer’s computer. The court rejected the defendant’s argument that “the CFAA was aimed primarily at computer hackers and that the statute does not cover employees who misappropriate information.” The court adopted Citrin, finding that “ample authority exists to permit criminal actions to proceed based on violations of [§ 1030(a)(4)] by employees, as interpreted by civil cases, and there is simply no statutory basis to suggest otherwise.” The court also emphasized that the defendant was wrong in “focusing exclusively on the later misuse of information by an employee against an employer’s interests,” when the “gravamen of the charge” is that the employee accessed the computer “with the intent to defraud.” Thus, the critical element is that, at the time the employee accessed the company computer, he intended to use it in a fraudulent way. Finally, Citrin is not the only circuit court decision sanctioning use of the CFAA against employees. The Third Circuit recognized that its reach includes actions against employees who steal data from their employers’ computers. P.C. Yonkers Inc. v. Celebrations The Party and Seasonal Superstore LLC, 428 F.3d 504, 510 (3d Cir. 2005). The Fifth Circuit, citing Citrin, has recognized that “authorized access typically arises…out of a[n]…agency relationship,” U.S. v. Phillips, 477 F.3d 215, 221, n. 5 (5th Cir. 2007). In short, although there are 11 district courts that preclude CFAA civil actions against employees, four circuit courts and Supreme Court law strongly suggest that these 11 opinions will ultimately lack precedential value.
Until this issue is resolved by the circuit courts or the Supreme Court, a simple strategy to avoid relying solely on the agency theory in filing a civil CFAA action is to establish unauthorized access through company polices and employee agreements. An employer “clearly has a right to control and define authorization to access its own computer systems” through its company policies. Cont’l Group Inc. v. KW Property Mgmt., 2009 WL 1098461, at *12 (S.D. Fla. 2009). Thus, “written computer access policies maintained by…[the employer] in its Employee Handbook” can “determine whether” the employee “exceeded her authority to access.” Unauthorized access can also be established throug h employee agreements. In EF Cultural Travel B.V. v. Explorica Inc., 274 F.3d 577 (1st Cir. 2001), the court upheld a preliminary injunction based on a violation of the CFAA because the defendants, all former employees of the plaintiff, had accessed and downloaded pricing data on EF Cultural’s Web site by violating their confidentiality agreements with EF Cultural. It is therefore critical for employers to review and amend company rules and agreements to maximize their ability to use the CFAA.
Reprinted with permission from the July 6, 2009 edition of THE NATIONAL LAW JOURNAL © 2009. Incisive Media US Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprintscustomerservice@incisivemedia.com or visit www.imreprints.com. #005-07-09-07
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