Ferry Lopez Addresses the “Kill Switch” law in the Daily Journal.
See the entire article below.

Will California’s “Kill Switch” Law Kill An Employer’s Ability To Protect Sensitive Company Information?

Ferry Eden Lopez

In this digital age, smartphone technology has become essential and ubiquitous to business operations. But the surging popularity of smartphones is blurring the divide between business and personal worlds, which can lead to complicated and costly problems for employers, especially in light of California’s new “kill switch” law.

In an effort to protect consumers and discourage smartphone theft, the state Legislature is requiring every smartphone sold in California, beginning in July 2015, to come equipped with an antitheft measure or “kill switch.” The kill switch enables smartphone users to remotely disable their phones when lost or stolen. Unlike current antitheft security features, such as Find My iPhone and Android Device Manager, the California kill switch must be enabled by default during the initial setup of the device, and must be reversible.

Although smartphones undeniably offer convenience and greater efficiency in the business world, the loss or theft of an employee’s smartphone can raise serious data security and intellectual property issues, and expose the employer to potential liability under state and federal privacy law.

To prevent these security concerns, many employers already have the capability to remotely wipe corporate data from employee electronic devices, such as laptops, tablets and smartphones. Once it is wiped, employers can rest assured that the data is gone for good.

The kill switch law transfers that ability to the employee, and also enables the employee to reverse it. It is not yet certain whether employers will be able to wipe confidential data from an employee’s device after it has been disabled through the kill switch. This change in dynamics can lead to uncertainties and risks in data security unless the employer has access to the kill switch.

But can an employer demand access to an employee’s kill switch? Because this implicates employee privacy concerns, the answer depends on whether the smartphone is company-issued or employee-owned coupled with the strength of the company’s technology policies.

Company-Issued Smartphones

The state Supreme Court’s opinion in City of Ontario, California v. Quon, is instructive on privacy issues arising from an employee’s use of company equipment. Quon was a police officer, who used his city-issued pager to send sexually explicit text messages to his wife and mistress. The city’s technology policy stated that it had the “right to monitor and log all network activity including email and Internet use, with or without notice,” and that employees had “no expectations of privacy or confidentiality” in the electronic devices. Because officers were consistently exceeding the monthly text message quota, the police department investigated the amount of text messages attributed to personal use, and discovered Quon’s personal messages. Quon sued the city of Ontario alleging that the city had violated his Fourth Amendment right against unreasonable search and seizure.

The Supreme Court held that Quon’s Fourth Amendment right had not been violated. First, the court found that the city’s technology policy clearly limited the expectation of privacy in city-issued electronic devices. Second, the court found that the city had “a legitimate work-related” reason to review the officers’ messages for personal use.

While Quon is arguably limited to public employees, California courts have applied the same reasoning to private-sector employers conducting searches of employee communications.

In Holmes v. Petrovich Development Company LLC, a state Court of Appeal ruled that an employee’s communications with her attorney from a company computer were not protected by the attorney-client privilege. Petrovich implemented a clear policy prohibiting personal use of company computers, which Holmes signed and acknowledged during her employment. During the course of litigation, Petrovich discovered emails that Homles’ sent to her attorney through her company computer, and used them as exhibits at trial. The appellate court found that Holmes’ acknowledgment of Petrovich’s technology policy dispelled any argument that she had an expectation of privacy in her communications through a company-issued computer. Because her emails from the company computer were not private, they were not privileged.

Under Quon and Holmes, so long as employers have well-crafted policies on employer-provided technology, employees have very little (to no) expectations of privacy in their company-issued electronic devices. Thus, an employer should be able to access an employee’s kill switch to protect sensitive data when a company-issued smartphone is lost or stolen.

BYOD

However, as smartphones become more accessible, employers are progressively doing away with company-issued devices, and instead, allowing employees to use their own personal smartphones for work under “Bring Your Own Device,” or BYOD, policies. Although this approach strikes a better balance between employee convenience and employer cost-savings, it limits the employer’s ability to control access to sensitive data when the device is lost or stolen.

Unlike company-issued smartphones, employees’ expectations of privacy in their personal smartphones are less clear. While employees may have a reasonable expectation of privacy in their own information on their own smartphone, employers still retain ownership of its information. Courts have yet to opine on the proper balance between employee privacy and legitimate business concerns under a BYOD system. Thus, under these circumstances, it is even more important for a company to implement a well-crafted BYOD policy that clearly defines employee privacy expectations and to obtain signed consent for access to the employee’s kill switch. In the event that an employee refuses to comply with these directives, employers should consider requiring the employee to carry a company-issued device.

Key Considerations

Implementing policies that define an employee’s expectation of privacy and control of company information do not in and of itself provide a blanket license for access to an employee’s kill switch. The presence or absence of such policies is just one factor a court will take into account in analyzing whether an employee has a right to privacy. Because employees have very little expectations of privacy in company-issued electronic devices and the need to secure confidential, proprietary, data is great, the balance strikes in favor of providing employers with access to the kill switch of an employee’s company-issues smartphone. The analysis is thornier when employees utilize their own personal smartphones, and the strength of the employer’s policies becomes more important to the equation.

Ferry Eden Lopez is an associate in Hirschfeld Kraemer LLP’s Santa Monica office. She can be reached at FLopez@hkemploymentlaw.com, or via the firm’s website – https://www.hkemploymentlaw.com

Originally published in the Los Angeles Daily Journal, September, 29, 2014. Copyright 2014 Daily Journal Corporation, reprinted with permission.

Monte Grix discusses the Issue of “Entrepreneurs’ or Exploited Workers?” in an article in the Daily Journal.

The full article can be found below.

‘Entrepreneurs’ or Exploited Workers?

By Monte Grix

For years, employers have reacted to the size and breadth of employment laws and regulations in California by finding other means of classifying people who perform services for them. As a result, California employers today frequently attempt to sidestep those onerous regulations by classifying workers as interns or independent contractors.

Those changes have not gone unnoticed by the plaintiffs’ bar and the Legislature. Indeed, there have been several well-publicized decisions against studios, media conglomerates and television shows challenging the propriety of interns who allegedly served as “gofers” or production assistants trying to “break in” to highly coveted entertainment industry positions. And last year, the Legislature increased the penalties for employers who misclassify employees as independent contractors.

The 9th U.S. Circuit Court of Appeals recently entered the fray in Alexander v. FedEx Ground Package System Inc., a decision which underscores the need for caution in classifying workers as independent contractors. FedEx treats its drivers as independent contractors, even though FedEx drivers wear FedEx uniforms, drive FedEx-approved trucks, abide by FedEx grooming standards, and deliver packages according to instructions from FedEx. Ordinarily, when an employer exerts “control” over a worker like that, it is evidence of an employment relationship, not an independent contractor relationship.

FedEx’s novel approach was dictated by the “entrepreneurial opportunities FedEx afforded” to the drivers, namely that under their contracts with FedEx, drivers could take on multiple routes and subcontract for coverage of a delivery route with FedEx’s approval. In other words, FedEx offered drivers the opportunity to run their own business, employ their own employees, and make a profit off of the work of others.

FedEx convinced the trial court of the “drivers’ class-wide ability to own and operate distinct businesses, own multiple routes, and profit accordingly” and thus their status as independent contractors. But in the 1989 decision of S.G. Borello & Sons Inc. v. Department of Industrial Relations — which has long been the California litmus test for the independent contractor versus employee assessment — the state Supreme Court was not swayed by a similar “entrepreneur” argument. In that case, the principal engaged “sharefarmers” as independent contractors where such sharefarmers retained control of their crops from “planting to sale.” The court concluded, however, that the sharefarmers merely retained control over one phase of production, i.e., that they “retain[ed] all necessary control over a job which can be done only one way.” (Emphasis added.) The court concluded that the sharefarmers’ work otherwise “follow[ed] the usual line of an employee,” that the “control” that the sharefarmers exercised (and by implication, the entrepreneurial opportunity) was not “meaningful,” and that they were really employees.

In this case, and consistent with Borello, the 9th Circuit reversed the trial court, centering its inquiry on the degree of control a putative employer exercises over the work performed. Borello found that the single most critical factor is “control”: “[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.”

California courts also consider “several ‘secondary’ indicia of the nature of a service relationship.” The right to terminate at will, without cause; whether the worker is engaged in a distinct occupation or business; the kind of occupation, with reference to whether the work at issue is usually done under the direction of the principal or by a “specialist without supervision”; the skill required for the work or occupation; whether the principal or the worker supplies the instrumentalities, tools and the place of work; the length of time for which the work is to be performed; whether the worker is compensated by time or by the job; whether the work is a part of the “regular business of the principal”; and the parties’ belief regarding their relationship (employer-employee versus principal and contractor).

As can be guessed from the sheer number of factors listed here, the Borello test is a fact-intensive one, and the weight accorded to one factor versus another can and does vary based upon such facts and “often on particular combinations” of such factors.

Looking first at the issue of control, the court determined that FedEx exercised significant control over the “manner and means” by which the drivers accomplished their work, and that this primary factor strongly favored plaintiffs. Although the drivers’ relationship with FedEx was governed largely by a written “operating agreement” that went into great detail about the parties’ roles as principal and contractor, the court noted that it would look behind such descriptions to the substance of the relationships: “California law is clear that ‘[t]he label placed by the parties on their relationship is not dispositive, and’ … [w]hat matters is what the contract, in actual effect, allows or requires.” The agreement, the court found, permitted FedEx to control an entire range of authority over such work, from the uniforms that the drivers wore, to the appearance and configuration of the delivery vehicles that the drivers used (including specifying the exact color of the van, the logos affixed, and the dimensions of, and materials used, for the parcel shelving inside such vehicles), to how and when such vehicles are loaded with parcels for delivery, to how long (and when, generally) the drivers are engaged in package delivery on a daily basis.

In the court’s view, three of the secondary factors slightly favored FedEx, five favored (sometimes slightly) the plaintiffs, and one was neutral. For example, the fact that FedEx’s ability to terminate its drivers was somewhat constrained (compared to at-will termination), and that the equipment necessary to perform the work, including delivery vehicles and package (radio frequency) scanners, was owned by the drivers, favored FedEx. On the other hand, the drivers had little choice but to buy the scanners and other equipment from FedEx, and in any event, the purchase or provision of tools by a worker was not dispositive of the independent contractor issue (consistent with the holding of Borello, among others).

As to the contracting parties’ beliefs, the responding party noted that the operating agreement expressly recited that the drivers and FedEx were contractors and principal, respectively, and that this factor slightly favored FedEx since other parts of the agreement clearly expressed a degree of control by FedEx over the drivers that belied any such independent contractor status. Moreover, the court reiterated that the parties “perception of their relationship as one of independent contracting” is not dispositive. In sum, the few pluses that FedEx garnered did not outweigh the numerous and more significant minuses.

So, does this case really change anything? Yes and no. If anything else, the decision refocuses attention on the level of control exerted by a putative principal/business. For FedEx, it was enough that the company dictated what the drivers wore, what trucks they drove, and how and when they worked. And, to be sure, the “entrepreneurial opportunity” argument will be met with great scrutiny now that the 9th Circuit rejected it — at least in this context. Employers offering that defense should be very sure that such opportunities are real and that they really do offer workers an opportunity to start a business, rather than being a subterfuge for saving costs attendant to having employees.

Monte Grix is an attorney in the Santa Monica office of Hirschfeld Kraemer LLP. He can be reached at MGrix@hkemploymentlaw.com, or via the firm’s website https://www.hkemploymentlaw.com.

Originally published in the Los Angeles Daily Journal, Sept., 19, 2014. Copyright 2014 Daily Journal Corporation, reprinted with permission.

Hirschfeld Kraemer Partner Kirstin Muller’s article entitled “Spotlight on Pregancy Discrimination” published in the Daily Journal can be found here.

In 1964, Nicholas Katzenbach, the Attorney General of United States, ordered Ollie’s Barbecue, a tiny restaurant in Birmingham, Ala., to desegregate. When the U.S. Supreme Court upheld that order, the newly passed Civil Rights Act of 1964 was held to be constitutional and had to be accepted by the states.

Buried away in that landmark law was a then less-publicized provision prohibiting discrimination in employment. Today, employment discrimination cases dominate state and federal dockets around the country. The Equal Employment Opportunity Commission reports nearly 100,000 charges alleging discrimination, harassment or retaliation filed every year, and that number does not include the thousands of other charges that are filed with state agencies across the country.

Although Title VII of the 1964 Civil Rights Act could only be enforced by the attorney general when it was passed, the law changed rapidly and became much more accessible to the people. Originally, the EEOC was given the power to bring suit on behalf of discrimination victims and then ultimately plaintiffs were allowed to bring private claims in court. While the relief available to victims was originally limited, eventually Congress amended Title VII so that lost pay, emotional distress, punitive damages and attorney fees could be recovered. And substantively, the law expanded not only to protect victims of discrimination, but also those who had been unlawfully harassed — regardless of whether they suffered a tangible job loss. Ultimately, age and disability discrimination were prohibited, the law required employers to provide affirmative accommodations to certain covered employees, and recently the law was amended to prohibit discrimination based on genetic characteristics.

Such a rapid change in a body of law over only 50 years begs an obvious question: In the next 50 years, will the law of discrimination peter out or are we on the cusp of other groundbreaking decisions in this field? The answer: With advances in technology, changes in the moral zeitgeist and the increasing political polarization of our country, there are many significant changes on the way. Here are three to keep on your radar.

1. The Ubiquity Of Information

In a discrimination case, motive is always an issue and in some cases — especially in cases involving claims of disability discrimination — employers simply do not know that the plaintiff is in a protected class. With the explosion of social media in the last 10 years and the ability for anyone to find out just about anything about anyone else, that argument is less and less common.

And that’s with just today’s developments. In the not-too-distant future, employee monitoring will be made simpler and more automated and wearable technology, like Google Glass, will be present in every workplace. With all of that information easily at hand, it will be increasingly difficult for employers to claim that they did not know about an employee’s condition.

2. Religious Conflicts With Changing Societal Mores

It took 18 years after the passage of Title VII for any state to ban discrimination based on sexual orientation. Today, 21 states and the District of Columbia have such bans and recently the Obama administration banned sexual orientation discrimination for federal contractors and subcontractors. All of these changes happened as there was a sea change in public opinion about same-sex marriage and as states began to recognize their validity.

While it was not surprising that religious conservatives led the fight against adding sexual orientation to the list of the classes protected from workplace discrimination, the theory they relied on — religious liberty — caught many off guard. Many expected them to lament that prohibiting sexual orientation discrimination made it harder to employ people, but the opponents argued instead that they had a religious right to exclude people whose lifestyles violated their religious principles.

The contours of these supposedly conflicting rights are playing out in the courts now and will continue to do so for many years more. In the last two years, for example, the Supreme Court struck down the Defense of Marriage Act, which denied gay couples the right to certain federal benefits, but at the same time, it has recognized that corporations under some circumstances have religious rights and can exercise them by refusing to participate in laws that violate their beliefs.

Undoubtedly, sexual orientation discrimination laws are on a collision course with religious liberty claims. And it’s not limited to that. Some states have enacted laws prohibiting discrimination against transgender employees and many states now recognize same-sex marriage, but the Supreme Court could upend those laws if they exempt employers who claim a religious conflict with them.

3. The Changing Nature Of The “Workplace”

When the Civil Rights Act was passed, most employees sat at a desk or work in a fixed workstation at the same place as all other employees. Today, the “workplace” is an almost metaphysical concept. People routinely do work at home, while driving or even while exercising or getting coffee.

To be sure, the evolving and more mobile nature of the workplace has led to all sorts of changes in wage and hour and workers’ compensation laws. But it is starting to have a significant effect on discrimination law, particularly with disability discrimination.

In many ways, technological innovations have been very uncontroversial and mutually beneficial for employers and employees alike. For example, there are free app’s available which serve as virtual dictation machines allowing employees who have difficulty typing to record their thoughts in writing.

The biggest challenge facing employers is how to deal with requests to telecommute. Just ask Marisa Mayer, the CEO of Yahoo who, while acknowledging that “people are more productive at home” nevertheless decided to end telecommuting because it had a negative effect on collaboration and innovation. The validity of Mayer’s predictions remain to be seen, but right or wrong, every company faced with a disabled employee requesting to telecommute will have a difficult decision to make.

It’s been a busy 50 years in the world of employment discrimination law since the federal government took aim at a small Southern barbecue restaurant and it does not appear to be slowing down. As the workplace and the workforce begin to change, the law will have to change with it. The future remains to be seen.

Daniel H. Handman is a partner in Hirschfeld Kraemer LLP and the editor of the California Workplace Advisor blog, where the firm recently digested the 50 biggest changes over the last 50 years in its series, “50 For 50: Five Decades Of The Most Important Employment Discrimination Law Developments.” He can be reached at DHandman@HKemploymentlaw.com or https://www.hkemploymentlaw.com.

“Originally published in the Los Angeles/San Francisco Daily Journal, Aug., 4, 2014. Copyright 2014 Daily Journal Corporation, reprinted with permission.”

HK Partner John Baum addresses the subject of telecommuting policies in an article in the Daily Journal.

You can see the article here.

HK Partner John Baum addresses how employers can learn from the world of professional sports as it pertains to employment law on Human Resource Executive Online.

The article can be found here.

Rob Flemer is on secondment to Kim & Chang in Seoul, Korea.  He recently wrote this article, which was published on the International Law Office website.

Legal departments in every organization are being asked to do more with less. Helwick gives general counsels six suggested practices to make operations more cost effective.

To read the article, click here.

To read the article, click here.