Posted on

Employees Off-Work, But Online

This post was written by E. David Krulewicz and Cindy Schmitt Minniti.

Facebook, MySpace and Twitter have become household names, a ubiquitous part of the daily lives of many and often a tool for keeping in touch with friends and family. These websites are increasingly being used by individuals to document their daily lives and activities, voice their concerns and post their opinions for the world to read and to respond. The business community has also turned to these “social media” websites as means for marketing their brands and, in some instances, for obtaining information about current employees and prospective job applicants. A series of recent cases reminds us there are significant risks related to the posting and/or use of information discovered on “social media” websites.

For example, in Pietrylo and Marino v. Hillstone Restaurant Group, a case pending in the Unites States District Court for the District of New Jersey, two individuals sued their former employer after they were terminated for posting complaints about their workplace on an invitation-only discussion forum on MySpace.com. Much to the employees’ surprise, managers from Hillstone Restaurant Group were able to access this discussion board (although the parties dispute whether the managers had a right to do so) and were less than pleased with what they read. The employees were quickly terminated and a lawsuit followed. 

In their complaint, the former employees assert their employer not only violated state and federal Wiretap and Stored Communications Acts by accessing the invitation-only forum, but wrongfully terminated them in violation of New Jersey’s public policy favoring free expression and privacy as embodied in the U.S. and the New Jersey Constitutions. Their employer has denied the claims and asserts the plaintiffs were “at-will” employees who could be terminated for any reason or no reason at all.

Ultimately, the question of liability may hinge upon whether the employees had a right to privacy for statements made online and whether the employer has a right to make disciplinary decisions based on an employee’s off-duty conduct.

Although legal commentators and privacy advocates debate how the trial will unfold when the case goes to trial later this summer, they all agree the case highlights real- world issues that can follow an individual’s seemingly innocent decision to post his or her thoughts on a social networking website. This is far from an isolated incident – indeed, the sports media recently reported a similar incident involving the Philadelphia Eagles’ termination of a long-time employee for disparaging the team’s management and its decision to release a prominent player on his Facebook page.  

While it is unclear if any of the companies in the cases above had a policy or provided instruction to their employees on these issues, it should not surprise you that increasingly business employers are finding they must do so. Clearly, before making decisions or taking action against employees for online, but off-duty conduct, employers should seek legal counsel from lawyers who understand these issues and can guide you in this dynamically evolving environment – where federal and state (and sometimes municipal or local) law may apply and little, if any, precedent currently exists. Worried? Need help? Need to understand more? Contact E. David Krulewicz or Cindy Schmitt Minniti or the Rimon lawyer with whom you work. 

Update:  Today, May 20th, after this story was posted, the U.S. House of Representatives also approved the bill regulating some common credit card and gift card industry practices. It is likely President Obama will sign the bill once it arrives on his desk.

Posted on

Give Credit (Card), No Give a Gift (Card)! Why Not Give Both?

Although consumer credit regulation is hardly new – Regulation E, the Fair Credit Reporting Act, Regulation Z and laws regulating disclosures, debt collection practices, billing statements and the like have been around for decades – for the first time in U.S. history, Federal legislation is tackling pricing, rate modifications, advertising disclosures and fees, and adding a gift card angle as well. 

While the House has not yet passed this or any other version of the legislation, those in the know believe a similar, if not identical, bill will be approved by the House of Representatives and that the President is likely to sign it. 

Are you a bank, payment card association, credit union or financial institution that issues credit cards or gift cards? Here are highlights of the bill that passed the Senate:

  • When marketing, a card issuer would not be permitted to increase any advertised ‘teaser’ rates for at least a year after a new account was opened for the consumer, and promotional rates advertised to consumers must remain in effect for at least six month;
  • Unless the credit-issuing institution can get proof that anyone under 21 can actually repay their credit card debt, credit cards can only be issued to individuals under the age of 21 if a parent, legal guardian or guarantor agrees in writing to be responsible for the debts;
  • If a consumer pays more than the minimum balance due, the excess must be applied to the balance with the highest interest rate;
  • Card issuers will not be allowed to change rates retroactively on existing balances (there is an exception where the consumer is past due by 60 days – which, I guess, presumes that when a consumer can’t afford to pay their balance within 60 days, it’s ok to raise their rates since they probably won’t be able to afford to pay a higher rate either);
  • Bills for balances due must be sent at least three weeks (21 days) before their due date;
  • Card issuers will no longer be able to charge additional fees to consumers for alternate payment mechanisms (e.g., by mail, telephone, online, electronic, wire transfers), unless the consumer requests and the issuer offers some type of ‘expedited’ service;
  • Consumers must be asked if they want to allow ‘over-limit’ credit transactions and if they do not affirmatively consent, the card issuer will not be permitted to charge a fee if the issuer still authorizes the transaction (e.g., your credit limit is $1,000 and you charge something for $1,001 and the authorization system approves the transaction anyway);
  • Changes in the terms and conditions that apply to consumer cardholders will require at least 45 days’ notice; and
  • The minimum amount of time a gift card must remain valid for use will be 5 years. First, it is likely this will apply to gift cards that are consumer-oriented and where full value is paid, and not to discounted, bulk sales, non-consumer, incentive, employer or promotional gift cards – but then the legislation isn’t final yet, is it? Furthermore, the Federal legislation is not likely to preempt more consumer-friendly State law (e.g., California prohibits any expiration date on such gift cards), but it will place a minimum level of consumer protection against earlier expiration, even in States that have no applicable regulation.

There is also consideration being given to removing any current legal and contractual restrictions on merchants that would allow them to differentially price their products and services based on the incremental costs (or savings) of accepting different forms of payment. When credit and debit cards were scarce and cash was king (cash, as in ‘currency’), regulation and industry groups frowned upon differential pricing, arguing that allowing a merchant to charge more for the use of a credit card was discriminatory to the consumer – even though the cost of accepting such payment instruments was higher (the merchant pays a fee (discount rate) to the card-issuing enterprise for the privilege of accepting the particular brand of card). Furthermore, the growth of corporate and purchasing cards and the use of payment instruments in B2B transactions has resulted in situations where a manufacturer accepts a purchasing card (procurement-based credit card) in payment of sales to distributors, wholesalers and retailers – a fee is charged to the manufacturer for the card transaction. This chain continues until a consumer makes a retail purchase, and if any or all of these transactions involve branded payment instruments and not cash, travelers’ checks, bearer bonds or two goats and a chicken, today, a fee would most likely accrue on each payment-card transaction at each step of the way . . . significantly raising the cost to everyone and ultimately the consumer. Stay tuned.

So: Consumer Credit? Co-branded promotions? Loyalty Rewards Programs? Gift Cards? Premiums and Incentives? Retail Promotions? Payment Card Industry (PCI) Data Security Standards? Privacy & Data Protection? Identity Theft? Data Breach? Pre-Screening? Online Digital Payment Systems? Corporate Cards? Purchasing Cards? E-Commerce? Regulation E? Regulation Z? Statement Insert Advertising; Credit/Demographic Market Segmentation? Free? APR? Limited Time Offer?

Any of these sound familiar? It’s what we do? Our Advertising Technology & Media Law Group; our Financial Institutions Group; our Data Security and Identity Theft Group . . . need we say more . . . If you need help (or you are just over stimulated by the flurry of legislation, regulation and excitement), call us or email me at joseph.rosenbaum@rimonlaw.com. We can help.

Posted on

Useless But Compelling Facts – May (CORRECTION)

Last month we broke new ground – one intended and the other completely took us by surprise. The expected break with tradition came as our blog format allowed us to use a visual clue for our Useless But Compelling Fact. We showed you this picture . . . .

Charles Darwin

and asked you to identify the person shown. Although we originally noted that “Unexpectedly, not a single person knew this was Charles Darwin.” We were WRONG. Stuck in the SPAM filter was one brilliant and completely correct answer “Charles Darwin” from John Donald, Senior Counsel at Apple! Congratulations John and given both the degree of difficulty and the fact that you were the only answer this month (trust me, a rarity), we’re sending you not one, but two prizes. Thanks.

And. . .we are leaving this month’s question up for the remainder of this month. What did Charles Darwin and Abraham Lincoln have in common (Hint: ‘neither are alive today’ is not the right answer.) Remember – please DON’T send your answers to the Legal Bytes blog, send them directly to me at joseph.rosenbaum@rimonlaw.com. Good luck.

Posted on

Useless But Compelling Facts – May 2009

Since we stumped you last month and blogs are notorious for “thread continuity,” I’m going to continue this one and go one better . . .

This month we would like you to tell us what Charles Darwin and Abraham Lincoln have in common. Remember—please DO NOT send your answers to the Legal Bytes blog, send them directly to me at joseph.rosenbaum@rimonlaw.com. Good luck.

Posted on

Useless But Compelling Facts – April 2009 Answer

Last month we broke new ground—twice! One time was intended, and the other took us completely by surprise. The expected break with tradition came as our blog format allowed us to use a visual clue for our Useless But Compelling Fact. We showed you this picture . . .

Charles Darwin

. . . and asked you to identify the person shown. Unexpectedly, not a single person knew this was Charles Darwin.

Posted on

Transborder Transfers of Data Outside Europe Need New Rules

The European Commission established a Data Protection Working Party on data protection and privacy—an independent advisory body set up under the Data Protection Directive. This Working Party recently published an opinion relating to the EC’s draft standard contract terms that apply to the movement of data across national borders, notably between Member States within and outside of the EU. 

Specifically, the Working Party recommended that the Commission develop brand new model contract provisions to deal with international and multi-national data processing involving transfers of data outside the EC—a long-standing sore point among companies in countries that have historically been viewed as having "inadequate" privacy and data protections. These model or standard contract terms would establish acceptable contractual protections between entities that control data within the European Union/European Economic Area (EU/EEA) and data processors they use outside the European Community, to ensure protections are comparable.

Continue reading “Transborder Transfers of Data Outside Europe Need New Rules”

E. B. White

“I arise in the morning torn between a desire to improve the world and a desire to enjoy the world. This makes it hard to plan the day.”

Posted on

Digital Dilemma – How To Respond When Law Enforcement Knocks

The SEC shows up at your door asking for documents relating to options and securities granted for the past 10 years. Homeland Security Officers arrive at your plant asking to speak to several employees and asking for copies of employment records. State police, having confiscated laptop computers and CD-ROM files during a drug bust, show up at your door asking to compare database records since they suspect that identity theft or credit card fraud may be afoot. The Department of Justice wants to interview several of your employees, claiming some may have entered the United States on non-immigrant visas. Sound far-fetched? Probably not these days.

With the economy in turmoil, corporate officers on the defensive, immigration under attack, and money laundering, piracy, drugs, terrorism and Ponzi schemes making headlines almost every day, law enforcement and regulatory officials are under increasing scrutiny and increasing pressure to protect the public and get results. It doesn’t take much imagination to appreciate that during the course of a criminal investigation, the most compelling evidence often arises from third parties who aren’t even knowingly involved; airline, credit card, hotel, telephone, email and other records can often document the where, when and sometimes how of criminal activity.

From a civil law point of view, competitive pressures can lead to claims of economic espionage and theft of trade secrets, and antitrust issues can arise that will spawn litigation and the compelled disclosure of evidence. Indeed, any corporate executive or corporate lawyer who has ever been on the receiving end of a third party subpoena issued to them—innocent third parties—knows how burdensome and costly such requests for evidence can be, even if you aren’t a party to the lawsuit.

In a digital world, it is also far too easy to collect, maintain and copy vast amounts of information—information accessible with several keystrokes, available on easily transportable magnetic media. For corporations and their executives and managers, growing and often regular dilemmas must be confronted when law enforcement or regulators show up at the door and start asking questions or requesting information. Corporations have legal obligations involving compliance and cooperation with law enforcement and regulatory officials. But they also have responsibilities and legal obligations to their employees and their workplaces—and to their shareholders. If not done properly, cooperating with law enforcement and regulators can lead to lawsuits by employees, customers and, sometimes—if large amounts of time and money are expended because of improper or inadequate procedures—even shareholders. 

Continue reading “Digital Dilemma – How To Respond When Law Enforcement Knocks”

Posted on

FTC Releases Mobile Marketplace Report

Earlier today, the FTC staff issued a report concerning consumer protection issues arising in the mobile commerce marketplace. A copy of the full report, Beyond Voice, Mapping the Mobile Marketplace is available by clicking the link. The key findings in the report:

  • Cost disclosures about mobile services continue to generate consumer complaints. The FTC staff intends to monitor cost disclosures, bring law enforcement actions, and work with industry to improve self-regulatory enforcement
  • The FTC and its law enforcement partners should continue to monitor the impact on consumers of unwanted mobile text messages, malware and spyware, and take law enforcement action if and as needed
  • Although spyware and malware are not yet significant problems on mobile devices, the FTC is encouraging development of strategies to prevent or minimize their spread, since the issue is likely to magnify as consumers increasingly use mobile devices for a wider range of applications, including Internet access
  • Increasing use of smart phones to access the mobile Web presents unique privacy challenges, especially regarding children. The FTC will expedite regulatory review of the Children’s Online Privacy Protection Rule to determine whether the rule should be modified to address changes in the mobile marketplace. This review was originally set for 2015, and will now begin in 2010 instead.

Given the numbers of wireless and mobile devices in the hands of individuals under the age of 18 (and 13), and the increasing proliferation of mobile devices, this will become a hotter topic in the months and years ahead. As if this point needed to be emphasized, it has been reported that as of January 2007—two years ago—there were approximately 800 million cars, 850 million personal computers, 1.5 billion television sets, but already 2.7 billion (yes, billion) wireless and mobile devices in use around the globe, with more than 800 million e-mail and 1.8 billion SMS text-messaging users.

The sheer numbers are staggering, and we are on top of this issue big time. Contact Joe Rosenbaum, John Feldman or Douglas Wood if you need more information or assistance.

Posted on

Don’t Be Green With Envy – Be Green with a Limerick

Valuable insight in an insightful land.

Political leadership throughout the world is changing, nowhere more so than in the United States. With that will come major changes in regulation, at the local and federal levels or through voluntary compliance with industry standards. Member states in the EU find themselves struggling to respond to local concerns while maximizing their combined market strength. Globalized media and interactive technology are providing consumers worldwide with greater control and choice in what they experience. Local markets are now boundary-less – confounding attempts at local regulation. What are today’s rules? How should advertisers and their counsel respond to the merged but dissonant marketplace and how can they balance competing attempts at regulation in the United States and Europe?

If you are a lawyer looking for high quality CLE or an advertiser hoping to get a glimpse (or make sense) of the law – or if you just want to hear where rhyming is an art and a science, then come join some of the most experienced corporate counsel and outside practitioners in Limerick, Ireland for Advertising Law in the United States and Europe — The Challenges Ahead sponsored by the Franklin Pierce Law Center and the University of Limerick. The course, being held at the end of July on the campus of the University of Limerick, a short distance from Shannon, Ireland will be as exciting and vibrant as the countryside.

Faculty is comprised of professors, practitioners and government leaders from both sides of the Atlantic, including Douglas Wood of Rimon LLP.