PayPal, Dog Food and California’s Anti-Forced Patronage Law: Did PayPal Chief David Marcus cross a line by threatening the jobs of employees who don’t use PayPal products?

PayPal, Dog Food and California’s Anti-Forced Patronage Law:  Did PayPal Chief David Marcus cross a line by threatening the jobs of employees who don’t use PayPal products?


In what passes for celebrity gossip in Silicon Valley, the technology press is abuzz and atwitter over a leaked e-mail from PayPal President David Marcus to the company’s San Jose employees.  In the memo, Marcus bemoans the San Jose staff’s allegedly tepid personal enthusiasm for PayPal products.  At other offices, Marcus noted, the staff is willing to “hack into Coke machines to make them accept PayPal because they feel passionately about using PayPal everywhere.”  Marcus also expressed irritation with employees who can’t “even remember their PayPal password.”

As if password amnesia and a preference for using coins in Coke machines weren’t bad enough, Marcus was especially incensed by those San Jose employees who did not personally use PayPal products.  “Some of you,” Marcus lamented, “refused to install the PayPal app,” a point he underscored in the memo with flamboyant punctuation (“!!?!?!!”).

After urging the “San Jose PayPals” to use the company’s products, he closed with a vague threat, recommending that employees who refuse to install the PayPal app can go find another job.

In the tech word, the internal use of a company’s own software to demonstrate the quality and capabilities of the product is known informally as “eating your own dog food” or “dog-fooding.”  For example, Hewlett-Packard staff once referred to a project using only HP’s own products as “Project Alpo.”  But did Marcus take the “dog food” concept too far by threatening the jobs of employees who refuse to patronize PayPal?

The answer lies in California’s Depression-era Forced Patronage Law.  What is forced patronage, you may ask?  Let me illustrate the concept with a tale from my youth.

Long ago, in a downscale mall in a mid-sized Midwestern city, I got my first and only retail job at a now-defunct rural-themed clothing chain called the “County Seat.”

It is difficult for young people today to appreciate the sartorial horror that was the County Seat.  The clothing seemed targeted at rodeo clowns or the more fashion-forward Amish.  Nevertheless, County Seat staff were forced to buy County Seat clothing at a small discount and wear it on the job – in public!! – as a condition of employment.  The delusional thinking was that turning the sales clerks into human mannequins would stimulate sales. This was classic “forced patronage.”

But that was the Midwest.  Here in California, Labor Code section 450 prohibits an employer from compelling or coercing an employee to purchase goods or services from his or her employer or any other person.  The law was originally aimed at the proverbial “company store” of the coal mine of the remote farm labor camp.  But in modern times, it has been used in class action litigation against employers such as Abercrombie & Fitch (the County Seat of our time) and other clothing chains which require employees to purchase and wear the company’s fashions on the job.

So back to David Marcus and the PayPal e-mail.  Was there a violation of Labor Code section 450?  No one at PayPal, as far as I know, has been fired for refusing to use PayPal products.  And, because the statute prohibits the “purchase of anything of value,” Pay Pal could argue that requiring the download of a free PayPal app is not a violation of section 450.  On the other hand, if PayPal employees are terminated for refusing to purchase PayPal products, that would be a different bowl of dog food.

The evolution of the application of Labor Code section 450 from the coal mine to Silicon Valley shows how old statues are reinterpreted and updated for the cyber age. There is, alas, no specific statute that protects an employee from termination for forgetting a password.  Therefore, we are all very, very vulnerable.

Curt Surls

About Curt Surls

Curt Surls has been practicing in Los Angeles, specializing in employment law, for almost 25 years. Mr. Surls is a Fellow of the American Bar Foundation, a non-profit professional association honoring lawyers whose careers have demonstrated dedication to the welfare of the community and the traditions of the profession. Prior to opening the Law Office of Curt Surls in July 2012, he was a partner with Bornn & Surls for over 15 years. Mr. Surls was also an attorney with the Oakland civil rights firm then known as Saperstein, Seligman & Mayeda, specializing in employment and civil rights class actions. Mr. Surls also worked for the Department of Industrial Relations and the Legal Aid Foundation of Los Angeles.

Let’s drink to the hard working people 3

Let's drink to the hard working people


I fell under the influence of the Rolling Stones as an early teenager and never left.  The other day I was listening to Keith Richards grinding out his raspy lyrics to the song “Salt of the Earth,” which begins with the guiding line, “Let’s drink to the hard working people.”  The Stones understood back in 1968 (and probably earlier) that workers should be appreciated and recognized, and it’s time the rest of us follow suit.

Workers, especially low wage workers, are much worse off today than they were 46 years ago when “Salt of the Earth” was released.  According to a recent study from the Center for Economic and Policy Research, 40% of Americans now make less than the 1968 minimum wage.  Had the federal minimum wage kept pace with gains in the country’s productivity since 1968, it would be $16.54 per hour as opposed to its current abysmal rate of $7.25 per hour.  Put another way, the current federal minimum wage is 32% less in 2013 dollars than it was in 1968.

Corporate America’s concerted attack on unions coupled with anti-union legislation has also hurt workers.  On average, unionized employees earn roughly $200 more per week than non-union employees.  Today, unions represent a meager 7% of employees in corporate America, which is one-quarter the level in the 1960s.  In 2013, the union membership rate was 11.3% compared to 20.1% in 1983.  A 2011 study argues that the decline of organized labor accounts for about one-third of the rise in income inequality for men and one-fifth for women — even for people who never belonged to unions.

Our country’s historically high poverty rate, which currently exceeds 15% of the U.S. population, is due at least in part to the failure to recognize and support labor.  Four out of every five Americans will experience near-poverty, unemployment or reliance on welfare programs at some point in their lives.  In 2013, the poverty wage level for a single full-time worker with one child was $8.11, which is almost a dollar more than the current federal minimum wage.

I call on all of us to raise our glass to hard working people and take action to reverse these devastating trends.  An increase of the federal minimum wage to $10.10 per hour would raise the incomes for 17 million Americans.  Federal law should follow California’s lead by imposing significant penalties against employers who fail to pay the requisite minimum wage or who fail to pay wages at all.  Finally, unions should be lauded instead of vilified, especially in the burgeoning high tech industry which has always been hostile to unions.

Workers ARE the salt of the earth, and it’s time for the country to show them the respect and appreciation they deserve.

Scott Ames

About Scott Ames

Scott Ames has been litigating wrongful termination, discrimination, harassment, family and medical leave, breach of contract, wage and hour violations, unfair competition and trade secret matters, and other employee rights cases for over two decades. Mr. Ames’ demonstrated record of success has resulted in him being named among the Top 100 Attorneys in Southern California in 2012 and 2013, a “Southern California Super Lawyer” by Los Angeles Magazine from 2007 through 2014, and a “Best Lawyer in America” from 2006 through 2014. Mr. Ames is also active in his community, and has served on a number of committees and boards of non-profit organizations which seek to improve the lives of the disenfranchised or working poor.

Tackling political speech in the workplace: What we can learn from Chris Kluwe 1

Tackling political speech in the workplace: What we can learn from Chris Kluwe



By Nicolas Orihuela

Chris Kluwe was back in the headlines this week for his public support of Michael Sam, a top NFL draft prospect, who announced on Sunday that he is gay.  Chris Kluwe, a former punter with the Minnesota Vikings, claimed earlier this year that he was released from the team for his public support of gay marriage.

As high profile athletes, Kluwe and Sam command the attention of the media and the electorate when they speak up on important societal issues. Michael Sam has indicated that he will not engage in activism in support of gay rights and will choose instead to focus on his fledgling NFL career.

While I do not know him nor pretend to know his motives, I can’t help but think: is the fear of losing out on a high draft pick or not being signed by an NFL team driving his decision not to engage in political activity outside the locker room?  Losing a job should not be a concern that employees have when considering whether to engage in political activities outside the workplace.   Which brings us back to Kluwe’s situation and the question of whether the Vikings had the right to terminate him, assuming his allegations are true, for voicing his political views on gay rights?

With politics a part of daily life, it is only natural that the world of work and politics will collide.   Unfortunately, it is not uncommon for employees to be terminated when the political opinions within these worlds also collide.  Recently, Dick Metcalf, a well known gun journalist, was fired from his job writing for Guns & Ammo magazine after he wrote a column calling into question the absolute right to bear arms.

And take the recent case of Maria Conchita Alonso, a Latin-American actress, who was to participate in a Spanish language version production of “The Vagina Monologues.”  After voicing her support for a Republican California gubernatorial candidate, Tim Donnelly, she was met with fierce protest and basically forced to resign from the production.

The difficulty lies in how to draw the boundaries around protected speech so that the political beliefs and activities of both the employee and the employer are respected.  Employers will argue their own right to political expression and that they should be able to regulate disruptive political activity in the workplace.  However, employers should not have the power to make employment decisions solely based on the political activities outside the workplace.  An employee should simply be able to take a personal stand on political issues (rightly or wrongly) without fear of retribution.

Like Chris Kluwe, most workers who engage in political activity do so on their own time and outside of the workplace.  But without any statutory protection, employers are able to misuse their economic power to influence the political activities of their employees no matter where those activities take place.

Now, if Chris Kluwe played for the Raiders, 49ers or Chargers — all based in California — his right to political speech would be protected.  Two statutes (sections 1101 and 1102 of the California Labor Code) make it unlawful for private employers to retaliate against employees because of their political affiliations or political activities.  California seems to be one of the very few states that protects employees from retaliation for engaging in political discourse outside of work or while at work.

So where does our punter, Mr. Kluwe, stand?  As a result of his allegations, the Vikings are now investigating his claims and have interviewed Mr. Kluwe about his allegations.  However, there is no guarantee that the team will corroborate what he alleges.  And because he does not live in California, there is also no guarantee that the Vikings will remedy any wrongdoing.  While I hope that the Vikings will do the right thing, the natural tendency is for large employers and institutions to close ranks and do nothing to change.  We’ll see soon enough whether the Vikings decide to punt the issue or tackle the issue head on.

Nicolas Orihuela

About Nicolas Orihuela

Nicolas Orihuela is a founding partner of the employment law firm of Hurwitz, Orihuela & Hayes, LLP and has been practicing since 2002. He represents employees in race discrimination, sex harassment, wrongful termination and disability discrimination related cases. He also handles wage and hour cases.

A Nation at Waste: The long-term unemployed and job discrimination

A Nation at Waste: The long-term unemployed and job discrimination


By Hina Shah

President Obama in his State of the Union speech was upbeat as he pronounced that we had the lowest unemployment rate in over five years.  But this optimistic forecast glosses over the epidemic of the long-term unemployed.  There are 3.9 million Americans who have been unemployed 27 weeks or longer and 2.6 million who have been unemployed for 52 weeks or longer, according to the National Employment Law Project’s report.

Stigmatization and discrimination against the long-term unemployed creates a major barrier to ending this epidemic.  Rand Ghayad, a doctoral student of economics, conducted an experiment where 4800 computer-generated resumes of fictitious workers were sent out with identical credentials with varying unemployment lengths and industry experience.  Workers who reported being unemployed for six months or more were almost never contacted.  “It isn’t that firms aren’t finding the right workers,” Ghayad said, “but that employers are screening out the long-term unemployed.”  This discrimination disproportionately impacts workers who are non-white, unmarried, disabled, impoverished and less educated – the groups who are over-represented among the long-term unemployed.

The President is on the right track when he asked business CEOs to take the pledge to not discriminate against the long-term unemployed and issued a directive to federal agencies not to screen out long-term unemployed workers from consideration for openings.  But even with these measures, we face a real crisis of creating a permanent class of jobless Americans, as Congress gridlocks over extending benefits to the long-term unemployed.  In a recent survey, 25 percent of the long-term unemployed reported that they did not have money for food and 10 percent have lost their home or apartment because they could not pay their rent or mortgage.  Economists all agree that long-term unemployment slows overall economic growth and hurts the nation as a whole.  Harder to quantify, but still real, is the toll that chronic unemployment takes on a person’s confidence and sense of dignity as well as their skill level.

We must do more to insure that the long-term unemployed are not abandoned on the road to economic recovery.  The National Employment Law Project recently issued nine recommendations to address long-term unemployment.  These are bold recommendations that call on the President, Congress and the business community to act to create new jobs and end the practice of discriminating against long-term unemployed individuals.

It is time to look again at the Roosevelt New Deal programs, like the Works Progress Administration that put 8.5 million Americans back to work building bridges, roads, public parks and strengthening America’s infrastructure. If we want to avoid a permanent subclass of citizens living in the shadow of our economy, the President must embrace a bolder path.

Hina Shah

About Hina Shah

Hina B. Shah is an Associate Professor of Law and Co-Director at the Women’s Employment Rights Clinic (WERC) of Golden Gate University School of Law, addressing employment and labor issues faced by low wage and immigrant workers.

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