Smooth Transitions : Rob Radcliff : Texas Non-Compete Lawyer & Attorney : Langley Weinstein LLP Law Firm : Dallas Employment & Employee Departures : Smooth Transitions Law Blog

An article in yesterday's Wall Street Journal focused on corporations use of Twitter and scrutiny of Tweets by the SEC.  The article identified the rub between corporate transparency and SEC compliance:

Blogs and tweets can run afoul of Securities and Exchange Commission regulations on corporate communications. But sanitizing such posts risks hurting credibility with online audiences.
 

Some companies are still hesitant to allow their employees to address investor issues online:

 Intel Corp. in May will be among the first companies to allow shareholders to ask questions via the Web and vote online during its annual meeting. But the chip maker avoids blogs and Twitter for investor issues, because it fears violating SEC disclosure rules or inviting public criticism in a company-hosted forum, says Kevin Sellers, vice president of investor relations.

"There's always going to be a person with an axe to grind," he says. "Do we really want to sponsor that?"

The article goes on to suggest that employers have appropriate social-media policies (as discussed here previously) and use appropriate disclaimers.  Ironically, the SEC is now on Twitter.

On a lighter note, below is an instructional video on Facebook manners:

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In Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, the Texas Supreme Court reversed the Houston Court of Appeals holding that an accountant's non-compete agreement was enforceable. The Court stated in part:

We hold that if the nature of the employment for which the employee is hired will reasonably require the employer to provide confidential information to the employee for the employee to accomplish the contemplated job duties, then the employer impliedly promises to provide confidential information and the covenant is enforceable so long as the other requirements of the Covenant Not to Compete Act are satisfied.

In other words, the employer does not have to state in the non-compete agreement that it is going to provide confidential information, that can be implied based on the context and circumstances surrounding the job.

Justice Hecht concurred in the opinion.

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All employment relationships in Texas are presumed to be at-will, meaning an employer can fire an employee with or without cause. There are of course, exceptions.   Rebutting the presumption of at-will employment is an uphill battle. 

In Cahak v. Rehab Care Group, Inc., a 2008 Waco Court of Appeals case, the  Court affirmed a trial court’s granting of summary judgment on John Cahak’s claims against his former employer. Cahak was hired in 1997 by Rehab as a program director for one of its rehabilitation units   After a poor performance review, Cahak was given two options: (1) continue employment with Rehab, “as needed”, and Rehab would assist with developing Cahak’s management skills; or (2) a six-week severance plan. The “as needed” basis placed no obligation on Rehab to provide Cahak with ongoing employment.  Cahak was eventually fired by Rehab after he was caught working for another employer while he was supposedly injured.

Cahak claimed in his lawsuit that Rehab’s offer to continue his employment as long as he participated in a management development program altered his at-will status.  The Court ruled that his fraud claim, based on alleged misrepresentations by Rehab of continued employment, failed because an at-will employee is barred from bringing a fraud claim against his former employer based upon its decision to discharge the employee.

To prove his negligent misrepresentation claim, Cahak had to establish Rehab misrepresented an existing fact rather than a promise of future conduct.  Because the alleged promise made by Rehab of continued employment was a promise of future conduct, rather than statements of existing facts, the Court affirmed summary judgment on Cahak’s negligent misrepresentation claim. 

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In a previous entry I addressed the Fifth Circuit Court of Appeals'  recent ruling making arbitration awards virtually impossible to appeal in Citigroup Global Markets Inc. v. Bacon. 

A few weeks later, the U.S. Supreme Court upheld an arbitration agreement that required employees who were parties to a collective bargaining agreement to arbitrate their age discrimination claims.  Michael Moore's discussion of the opinion in the Pennsylvania Labor and Employment Blog is worth a look on this decision.

So, it's a no brainer, arbitration is the way to go for all employment claims, right?  Not so fast.  Jon Hyman of the Ohio Employer's Law Blog offers a dissent.  Jon cites the escalating costs associated with arbitration as a reason to reconsider the process:

In my experience, however, arbitration can prove just as costly as court. More and more arbitrators are allowing plaintiffs to engage in discovery that is nearly as expansive (and expensive) as what is permitted by trial courts. Additionally, employers have to add into the equation the cost to file the claim, which the employer usually shares. With the American Arbitration Association, these fees can run anywhere from $950 to a cap of $65,000. These fees do not include the arbitrators’ time, which often exceeds $500 per hour, and includes all pre-hearing conferences, discovery and motion practice, the actual hearing time, and the drafting of the opinion. It is not hard to see how in many cases the defense costs associated with arbitration outweigh defense costs in a traditional court proceeding.

He goes on to suggest considering using  jury trial waivers in employment agreements.  Though waivers won't keep pre-trial and discovery costs down, they will make trial cheaper and avoid a runaway jury.  Having a judge as the finder-of-fact usually makes things more predictable.  Of course, make sure the jury trial waiver is enforceable in the jurisdiction where it is going to be used.

 I recently spoke with an employment arbitrator who told me he gives the parties wide latitude on the amount of discovery in arbitrations as long at there is agreement.  His ultimate concern is not so much the amount of discovery, but the length of the case.  He aims to resolve all cases within 6 - 9 months.  The less time lawyers have to work on the case, the less fees incurred.

As an aside, the Texas Legislature is considering legislation to limit arbitration in certain consumer transactions.

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Some employees access twitter and facebook at work.  Some have applications on their company provided handhelds that allow access.  Others are blogging about the workplace.  What is the right social media/web 2.0 policy?   It needs to match company culture and standards. What works for a brokerage firm may not work for an upstart computer gaming company.  So what are companies doing?  Let's take a look:

I like Cisco's policy.  It's long, but the common sense approach is always pragmatic:

Common sense is the best guide if you decide to post information in any way relating to Cisco. If you are unsure about any particular posting, please contact the Cisco "internet postings" email alias for guidance. For instance, if you are writing about Cisco business where you have responsibility, you may wish to make sure your manager is comfortable with your taking that action.

Sun Microsystems wants its employees to consider the consequences:

The worst thing that can happen is a Sun sales pro is in a meeting with a hot prospect, and someone on the customer's side pulls out a print-out of something you've posted and says "This person at Sun says that product sucks." In general, "XXX sucks" is not only risky but unsubtle. Saying "Netbeans needs to have an easier learning curve for the first-time user" is fine; saying "Visual Development Environments for Java suck" is just amateurish. Once again, it's all about judgment. Using your public voice to trash or embarrass the company, our customers, your co-workers, or yourself is not only dangerous, but not very smart.

Finally, the Department of the Navy ("DON") likes Web 2.0, but security is paramount:

While these collaborative tools present many useful opportunities, their application must not compromise data confidentiality and integrity. SIPRNET provides a secure environment to operate Web 2.0 tools; however, NIPRNET is exposed to external threats that could adversely impact Web 2.0 tool operation and data integrity. Therefore, extra care must be taken when implementing Web 2.0 technologies or integrating these tools into the DON environment.

Policies range from company to company.  Some business will encourage blogging, facebooking, or even twittering to help promote their business. Others will prohibit employees from engaging in freelance public relations.  At a minimum, there has to be a standard to hold the employee accountable to.  Companies need policies.

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