Thursday, April 17, 2014

Why you need employee-invention and IP agreements

Taco Bell is defending claims by two former interns that they invented the Doritos taco nearly 20 years ago. They now want to be paid part of its billions dollars in sales. (ABC News)

The pair and their former employer will likely end up in court over who invented what, and when.

My question is whether Taco Bell required the interns to sign an “inventions” agreement. If they did, then even if the intern’s story is true, they will have little legal leg on which to stand.

A typical employee inventions agreement accomplishes the following:

  • It defines that all rights to any inventions, innovations, developments, designs, etc., related to the employer’s business, and conceived, made, or developed by the employee while working for the employer, belongs to the employer and not the employee.

  • It includes a promise that the employee will execute any documents necessary for the employer to perfect its ownership interest in any such inventions, etc.

  • It provides the employee the opportunity to list, for exclusion, any patents held, or inventions, etc., conceived prior to employment, or for specific assignment to the employer for consideration paid.

These agreements are usually part of a larger confidentiality agreement, or non-competition agreement, but also can be standalone. The point is to avoid any dispute over who created what. If you provide employees the opportunity to list existing ideas and inventions, and to promise that anything they invent while working for you is yours, and not theirs, then nobody should go loco if one of their ideas hits it big, and the employer keeps it.

Wednesday, April 16, 2014

What happens when an HR investigation is staged … and filmed for a beer commercial?


“Do you always wash your hands after using the restroom? … Have you ever told a coworker you like her outfit? … Do you use your work computer for non-work-related activities? … Have you been using your computer to watch basketball this March?”

I don’t recommend taking an HR investigation as a practical joke in your workplace, but this ad is pretty darn entertaining.

Tuesday, April 15, 2014

Hypothetical violations doom employer confidentiality policy

A few months ago I posted on the NLRB’s veto of a workplace confidentiality policy. Late last month, the 5th Circuit court of appeals ruled on another employer confidentiality policy, and the results should trouble employers everywhere.

At issue in Flex Frac Logistics v. NLRB was the following workplace confidentiality policy:

Employees deal with and have access to information that must stay within the Organization. Confidential Information includes, but is not limited to, information that is related to … our financial information …; [and] personnel information and documents…. No employee is permitted to share this Confidential Information outside the organization, or to remove or make copies of any Silver Eagle Logistics LLC records, reports or documents in any form, without prior management approval. Disclosure of Confidential Information could lead to termination, as well as other possible legal action.

The appellate court affirmed the NLRB’s decision that this policy infringed on the rights of employees to engage in protected concerted activity:

A “workplace rule that forb[ids] the discussion of confidential wage information between employees … patently violate[s] section 8(a)(1).” … As the NLRB noted, the list of confidential information encompasses “financial information, including costs[, which] necessarily includes wages and thereby reinforces the likely inference that the rule proscribes wage discussion with outsiders.” The confidentiality clause gives no indication that some personnel information, such as wages, is not included within its scope.

Particularly troubling is the NLRB’s summary rejection of the employer’s argument that the policy should survive because it had never interpreted or applied it to restrict employees’ Section 7 rights, such as the right to discuss wages. As the court noted, “the actual practice of employees is not determinative,” as long as one could reasonably interpret the policy as a restriction on Section 7 rights.

In other words, employers need to safeguard their policies against what-ifs and hypotheticals, a daunting task. In a passing notation, the court does note that Flex Frac’s policy failed, in part, because it did not expressly exclude “personnel information, such as wages.” Going forward, employers should consider including this carve-out in their confidentiality policies to help avoid NLRB scrutiny.

Monday, April 14, 2014

It's illegal to ask employees to give up overtime payments

If a non-exempt employee works more than 40 hours in a work week that employee is entitled to overtime at the required rate of 1.5 times the regular rate of pay. What if, however, an employee says they’d rather forego the overtime premium than not work the extra hours at all? A Cleveland security company learned the hard way that employees cannot volunteer to work overtime at less than the required premium rate.

According to, Citywide Protection Services has agreed to pay $14,760 in back overtime pay to 30 security guards following a Labor Department investigation. The comapny’s excuse for not paying overtime? The employees asked.
George Lewandowski, Citywide Protection Services’ president, said he was being characterized as a bad guy when all he had tried to do was help out his employees. Lewandowski said workers kept demanding overtime hours because they needed money.…
“I have a lot of employees who don’t make a lot of money, and they have a lot of kids, so they ask for a lot of extra hours,” he said. “I told them that I really can’t afford to pay all those extra hours, but a lot of them kept begging for hours, just begging for hours.
“I said: ‘I can’t pay the overtime. I’ll let you work at straight time,’” Lewandowski said. “They were aware that I could not pay the overtime—no matter what!”
It does not matter whether your motives are altruistic or malicious when avoiding overtime payments. If a non-exempt employee works more than 40 hours in a week, you must pay them overtime. Period. No exceptions. Employees cannot ask to work the extra hours at their regular rate. They cannot choose between receiving less than the full overtime premium and no overtime hours at all. Otherwise, you might find yourself on the receiving end of a DOL investigation or collective lawsuit, neither of which is an option you want for your business.

Friday, April 11, 2014

WIRTW #316 (the “en francais” edition)

From Mashable:

Employers’ federations and two unions in France signed a “new, legally binding” labor agreement on Thursday that encourages some staff to turn off their phones after 6 p.m., in an effort to curb burnout and promote a healthy work-life balance.

According to the deal, the employees covered under the agreement are not supposed to tend to their work-related emails on their computers or smartphones after the 6 p.m. deadline. The onus lies on employers to ensure that their employees don’t feel the need to work after hours (or pressure them to do so).

The upside? No work emails after 6 pm. The downside? Hundreds of work emails to tend to first thing at 8 am. I think I’ll keep my after-hours email.

Here’s the rest of what I read this week:


Social Media & Workplace Technology

HR & Employee Relations

Wage & Hour

Labor Relations

Thursday, April 10, 2014

6th Circuit sends strong signal to EEOC in affirming dismissal of systemic lawsuit

Last January, a Cleveland federal-court judge dismissed a race discrimination lawsuit brought by the EEOC against Kaplan Higher Learning. In that case, the EEOC challenged Kaplan’s use of credit reports in its hiring process as having a systemic disparate impact based on race. To support its claim, the agency retained an expert witness to rate (i.e, guess) the unknown races of various job applicants based on how they appeared in DMV records. The district court excluded the expert, concluding that his “opinion” was nothing more than guesswork that resulted in inherently unreliable data. With no expert testimony to support its claim, the court dismissed the EEOC’s lawsuit.

Yesterday, in a terse opinion issued a mere 20 days after oral argument, the 6th Circuit affirmed the district court’s dismissal. Here is the entirety of the 6th Circuit’s legal analysis:
We need not belabor the issue further. The EEOC brought this case on the basis of a homemade methodology, crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself. The district court did not abuse its discretion in excluding Murphy’s testimony.
This case sends a strong signal to the EEOC that it cannot use junk science to further its agenda of eliminating systemic discrimination. What is so striking of the opinion is the brevity of the Court’s four-line analysis. That the 6th Circuit could make quick work of such an important issue speaks volumes of how little it thought of the EEOC’s litigation strategy.

Yet, the Kaplan case is less about whether credit histories disparately impact African Americans than it is about how the EEOC chose to prove its case. Kaplan did not win this case so much as the EEOC lost it by using junk science to support its claim. Employers should see this case for what it is — a stinging rebuke of the EEOC’s litigation tactics — and nothing more. Employers should not take this case as a license to deploy screening practices that might disparately impact applicants based on race, lest you end up the receiving end of the next EEOC lawsuit.

Wednesday, April 9, 2014

Has workplace drug testing gone to pot with legalized marijuana?

Late last year, I asked the following question: Can an employer fire an employee who tests positive for legally prescribed marijuana? It appears that employers are indeed struggling with this question. New Jersey transit is the latest employer to be sued as a result of an employee’s use of legal marijuana. reports that an employee has sued the transit agency for disability discrimination after it suspended him and sent him into rehab because he is a registered patient with the state’s medical marijuana program.

This case is the latest challenge by an employee who suffered at work through the legal use of marijuana. So far, the employer has won each of these challenges on various legal grounds (see here, here, and here).

Medical marijuana is legal in 20 states plus the District of Columbia. Ohio is not one of these states. Nothing, however, would stop one of your Ohio employees from legally using while on vacation in Colorado, for example. Regardless, marijuana remains illegal under federal law. And, the ADA does not protect employees under the influence of illegal drugs. Thus, I remain confident that you can legally prohibit employees from being under the influence of marijuana while on the job, even if its legally prescribed. As for the lawful use of marijuana by employee outside of work, there is no clear rule of law, even if the cases so far seem to support an employer’s right to regulate. Until the courts sort these issues out, prudent employers should tread carefully and consult with their employment counsel before disciplining or firing any employees who are using legally prescribed marijuana away from work.

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