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.

U.S. lags behind western democracies in enacting anti-workplace bullying laws despite growing problem 2

U.S. lags behind western democracies in enacting anti-workplace bullying laws despite growing problem

dreamstime_xs_29765084By Supreeta Sampath

According to the National Bullying Institute, one-third of Americans are bullied at work, and workplace bullying is on the rise.  Recently the issue of bullying made national headlines when Miami Dolphins offensive tackle Jonathan Martin, accused lineman Richie Incognito of physical and verbal abusive behavior.  The absence of state or federal legislation to address this troubling trend sends bullies the message that they can get away with such behavior as yelling, screaming, humiliating, and sabotaging an employee’s career.  The legal void also signals to employers that they can turn a blind eye to bullying without fear of legal repercussions.

Compared to other western democracies, including Britain, Canada, France and Australia (which have all enacted anti-bullying legislation) the United States is in the dark ages on this important mental health issue.  But at the state level, there are signs that this may be changing.

Suffolk University Law Professor David Yamada has drafted model anti-bullying legislation, known as The Healthy Workplace Bill.  The Healthy Workplace Campaign defines workplace bullying as “repeated, health-harming mistreatment” that involves verbal abuse, offensive conduct that is threatening, humiliating, intimidating or work sabotage.

Since 2003, anti-bullying legislation has been introduced in 25 states (including California). While none has been enacted into law, there are currently 11 states that have bills under active consideration.

This kind of legislation will undoubtedly ignite the business lobby with their well-worn opposition arguments.  Employer groups will continue to argue that anti-bullying legislation will open up the floodgates of litigation and clog our already overburdened courts because “overly sensitive” employees will run to file a lawsuit every time they have a bad day at work.

But this focus on the frivolous is a straw argument that trivializes the real cost of bullying to workers and businesses alike.  The concern about legislating workplace civility can be addressed by careful drafting.  Rather than fighting workplace bullying laws, employer lobby groups should put their energies into crafting a law that will prohibit abusive or humiliating treatment that no decent employer would sanction, while leaving supervisors free to constructively manage and discipline employees.

It would be nice if internal policies and company grievance procedures had put an end to the harm of workplace bullying.  But that has not happened.  What we know from past experience is that sometimes it takes a change in law to change behavior.

Before the passage of laws like Title VII and California’s Fair Employment and Housing Act, it was legally permissible to harass and discriminate against employees on the basis of their race, color, gender, sexual orientation, disability, age, and other now protected categories.  Once these laws were in place, U.S. companies began holding their managers and employees accountable to  eliminate discrimination and sexual harassment in the workplace.

The good news is that, according to a survey by one human resources professional organization, 56% of U.S. companies already have some sort of anti-bullying policy.  Drawing on models from employers themselves, we should be able to frame a law that would eliminate frivolous claims by definition by requiring claimants to show not only of out-of-bounds conduct, but also documented harm.  While there may be some who still try to file unworthy suits, careful crafting of legislation will ensure that their suits are tossed out.  But throwing the baby away with the bath water is not the solution to a growing national problem.  It’s time for California and other states in the union to get serious about enacting anti-workplace bullying legislation.

Supreeta Sampath

About Supreeta Sampath

Supreeta Sampath is the founder of The Sampath Law Firm located in San Francisco, California. For over a decade, her legal career has been dedicated to serving the needs of those who have been denied justice. Ms. Sampath has extensive experience representing workers in employment discrimination cases on account of race, national origin, religion, gender, disability, age, sexual harassment, retaliation as well as cases involving labor code violations. From 2011-2014 she has been named a Rising Star in the field of Labor and Employment by Super Lawyers Magazine.

5 New Year’s resolutions for California employers

5 New Year’s resolutions for California employers


By Joan Herrington

It’s the time of year when we think about making a fresh start for the new year.  Since I spend my days witnessing the consequences of workplace problems, I thought I would offer a few New Year’s resolutions I would like to see California employers make.

1.  Communicate with your employees.  Make sure they know what is expected of them and how they can succeed at their jobs.  Uncertainty creates anxiety and anxiety creates inefficiency. Whenever practicable, consult with employees about the things that will affect them.  Few things are more demoralizing than feeling ignored and unable to control your future.

2.  Pay them a living wage.  Your employees will be better able to focus on their work and productivity if they aren’t worrying about paying their bills.  So how about increasing the wages your lowest-level employees earn to something livable?  Some cities are demanding that employers do just that through their living wage ordinances.  And, at the state level, California is raising the minimum wage this year.  Although California’s minimum wage is not due to increase until July 1, 2014, some cities will increase their minimum wage rates as of January 1, 2014.  For example, San Francisco’s minimum wage is increasing from $10.55 to $10.74 an hour and in San Jose the rate will go up from $10 to $10.15 an hour.  Check your city’s ordinances to see if it will also increase the minimum wage rate in 2014.  By bridging the wage gap, we can get the economy back on track for working people.  In fact, studies by renowned economists show that such minimum wage increases can “serve to stimulate the economy as low-wage workers spend their additional earnings potentially raising demand and job growth.”

3.  Don’t underestimate the contributions of older workers.  Older workers are an experienced, dedicated, under-utilized resource.  Studies show that older workers are skillful, reliable, focused, and loyal employees.

4.  Welcome veterans into your workforce.  Our armed forces have had a hard enough time fighting for us in foreign lands.  Don’t make our workplaces another battlefield for them.  Be sure to update your discrimination policies to prohibit discrimination and harassment based on military or veteran status.  Assembly Bill 556 amended the Fair Employment and Housing Act to add military or veteran status as a protected characteristic.  Train hiring officers so that they may inquire into an applicant’s military or veteran status in order to provide a preference in hiring, but make sure they know to keep this information confidential.  And train managers to assist veterans with re-entry into the civilian workforce.

5.  Don’t let a discrimination or harassment complaint become a trigger for retaliation.  Every employee complaint of unfairness deserves a prompt, thorough investigation.  The EEOC provides guidelines on conducting investigations.  If you find that someone engaged in harassment or discrimination, don’t make excuses for them.  Take action to stop the wrong-doing and punish the wrong-doer.  Even if your investigation exonerates an accused supervisor, take affirmative steps to prevent retaliation.  It’s hard for someone accused not to bear a grudge.  Remember that how you handle complaints and prevent retaliation speaks volumes to all of your employees about your quality as an employer.

May 2014 be a productive and fulfilling year for you and the people who work so hard to make your business a success!


Joan Herrington

About Joan Herrington

As a former Administrative Law Judge with the California Fair Employment and Housing Commission, Joan focuses on protecting employment rights. Joan helps the Department of Fair Employment and Housing enforce the Fair Employment and Housing Act by representing employees in lawsuits, such as discrimination and harassment based on race, national origin, color, pregnancy, sex, sexual orientation, disability, medical condition, age, and religion. Joan also focuses on protecting employees and whistleblowers from unlawful retaliation. As a qualified and experienced mediator, Joan also helps resolve employment disputes.

“Donning and doffing”: The Supreme Court will decide an issue of great importance to employees required to wear gorilla suits to work (and to other employees with workplace uniform requirements as well)


By Curt Surls

You recently graduated from a private, liberal arts college in a leafy Midwestern town with a B.A. in Medieval Albanian Poetry.  Nevertheless, you found a job straight out of college.  The good news is that your new job pays a living hourly wage, and you are represented by a strong union.  The bad news is that you have to wear a gorilla suit to work.  Further, the collective bargaining agreement between your union and your employer denies you compensation for the time spent changing into and out of your gorilla suit.  Are you out of luck?

Maybe not.  The US Supreme Court is hearing arguments this week in a “donning” and “doffing” case.  “Donning” and “doffing” are archaic verbs used only by labor lawyers and minor Dickens characters.  In legal parlance, you do not “take off” your gorilla suit after work; you “doff” your gorilla suit.

Ideally, you shouldn’t have to do any doffing on your own time.  Under state and federal law, if you are required to change into a uniform or protective gear at the workplace, you are generally entitled to be compensated for that time.  Your gorilla-suit-donning time should be compensable.

But there’s a wrinkle to this rule in the context of a unionized workplace.  Section 203(o) of the Fair Labor Standards Act (“FLSA”) permits a union to bargain away an employee’s right to compensation for time spent “changing clothes” at the beginning or end of the workday.

Since the late 1940’s, the United Steelworkers union has traded its members’ right to be compensated for “donning and doffing” for other benefits.  And that agreement is at issue before the U.S. Supreme Court now in Sandifer v. United States Steel Corporation.

The steelworker plaintiffs in Sandifer have to outfit themselves in a variety of flame-retardant safety-gear before commencing their shifts.  They argue that the union has no right to bargain away their right to compensation for time spent “donning and doffing” the protective gear because they are not “changing clothes” within the meaning of the FLSA.  The term “changing clothes,” they assert, refers to “substituting certain clothes for others, not merely putting on something else” over them.  The union, therefore, cannot bargain away their right to be compensated for time spent wrestling with the Kevlar.  They want to be paid for this time.

The company, with support from the Obama Administration, is arguing for an expansive definition of “clothes,” that would include protective gear, and other accoutrements such as safety goggles and ear plugs.  In other words, US Steel and the government want union and management to have the ability to bargain away the employees’ right to be compensated for the time they spend “donning” their protective gear.

Nonsense, claim the steelworkers, who argue that an expansive definition of “clothes” and “changing clothes” could lead to absurd results.  In an analogy that makes my gorilla suit example seem temperate, the steelworkers question whether an overly-broad definition of “clothes” would include make-up for a KISS cover band or Captain Kangaroos’ wig (that was a wig?!).

In the end, most observers think the US Supreme Court will duck the issue of gorilla suits, KISS make-up and children’s show host hairpieces and adopt the definition of “clothes” proffered by the Department of Labor:  Items like hoods, jackets, gloves, pants, leggings, helmets and boots will be considered “clothes” whether or not they are protective in nature.  Therefore, a union can bargain away the right to compensation for “donning and doffing” those items.

And gorilla suits?  If you’re in a union, and you’re required to wear a gorilla suit to work (admittedly, this may not be a substantial demographic), the Sandifer decision probably won’t affect you; “donning” a gorilla suit would still likely be considered “changing clothes.”  However, workers in dangerous jobs that require extensive safety gear will be watching this case with greater interest.

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.

Are workplace flexibility laws the wave of the future? 2

Are workplace flexibility laws the wave of the future?

By Sharon Vinick

Flexibility in scheduling  and other alternative work arrangements are crucial tools that enable working families to reconcile work and family responsibilities.  Many industrialized countries, including the United Kingdom and Australia, have enacted laws that guarantee employees the right to ask for flexible work schedules, without fear of retaliation.  These laws also require that employers seriously consider a request for flexible working arrangements, and provide a business justification for any request that is denied.

The Working Families Flexibility Act, first introduced in Congress by Representative Carolyn Maloney and the late Senator Edward Kennedy in 2007, would have  guaranteed American workers the same ability to ask for  work options without fear of retaliation.  Although she keeps trying to pass the legislation into law, the Congresswoman’s vision has yet to take hold.

While  Congress has yet to act,  developments at the state and local level suggest that the tide may be turning in the direction of workplace flexibility.

In June, Vermont passed legislation that gives employees the right to request a “flexible work arrangement” for any reason and requires the employer to consider such a request at least twice each calendar year.  The law, which will go into effect on January 1, 2014, defines a “flexible work arrangement” as “intermediate or long-term changes in the employee’s regular working arrangements, including changes in the number of days or hours worked, changes in the time the employee arrives at or departs from work, work from home, or job sharing.”  Once an employee submits a request, the employer must discuss it in good faith and grant the request if it is not inconsistent with business operations.

This month, the San Francisco Board of Supervisors passed the “Family Friendly Workplace Ordinance,” which allows employees to submit a request for an alternative work schedule to better fit their care-giving needs. The ordinance, which is likely to be approved by the mayor, requires that employers meet with employees to discuss requests for flexible work arrangements, and to either grant the request or provide a bona fide business reason for rejecting a request.

While neither the Vermont law nor the San Francisco ordinance  require businesses to grant an employee’s request for a flexible work arrangement, the mere fact that employers are required to consider the requests is a move in the right direction.

Congresswoman Maloney’s Working Families Flexibility Act – version 2013 – is again languishing in committee.  But as worker flexibility laws continue to gain a foothold on American soil, enabling businesses and workers to experience the anticipated benefits in productivity and morale, there is renewed hope for its eventual success.

Sharon Vinick

About Sharon Vinick

Sharon Vinick is the Managing Partner of Levy Vinick Burrell Hyam LLP, the largest women-owned law firm in the state that specializes in representing plaintiffs in employment cases. In more than two decades of representing employees, Sharon has enjoyed great success, securing numerous six and seven figure settlements and judgments for her clients. Sharon has been named by Northern California Super Lawyers for the past five years. Sharon is a graduate of Harvard Law School and UC Berkeley. In addition to being a talented attorney, Sharon is an darn good cook.

It’s none of their business, or is it? 3

It's none of their business, or is it?

By Daniel Velton

About 100 years ago, Ford Motor Company had a “sociological department” of investigators who monitored Ford workers’ off-duty conduct to ensure those employees didn’t drink too much, kept their homes clean and “properly” spent their leisure time.

About two weeks ago, an employer in San Francisco announced a new policy prohibiting the use of all tobacco products on its property by employees, even while on break and even while in their personal cars. With the new rule comes the introduction of a team of “tobacco-free ambassadors” to advise workers of the prohibition. It’s not the first employer to implement a tobacco-free policy, and probably not the last.

The new policy, like the old one at the turn of the last century, is apt to reignite a debate over workers’ right to privacy and the freedom to do what they want in their free time. Unquestionably, the goal of tobacco free-policies in the workplace is noble. Thousands die of smoking-related illnesses every year, cigarette butts litter smoking areas, and most find that smoke just plain smells bad. Even more important, the workplace at issue here is effectively a hospital environment with numerous medical patients. In announcing its new policy, the hospital itself acknowledges that nicotine forms an addiction as bitterly painful as any to break. (To its substantial credit, UCSF will provide free nicotine replacement gum to help with cravings).

Employer regulation of off-duty conduct has led to numerous laws across the country. In California, for example, Labor Code section 98.6 prohibits terminating or in any way discriminating against an employee because he or she engaged in “lawful conduct occurring during nonworking hours away from the employer’s premises.” Whether smoking in one’s car during a lunch break qualifies as protected off-duty conduct remains to be seen. Either way, those taking part in the inevitable debate over this issue should be mindful of the important interests on both sides. Successfully striking a balance between employee freedoms and patient/coworker rights to a smoke-free environment is going to be as difficult as going cold turkey ever was.

Daniel Velton

About Daniel Velton

Daniel Velton began his career with the largest labor and employment law firm in the world. Using that experience, he brings valuable knowledge and perspective to his current practice, in which he exclusively represents employees in individual and class action discrimination, wrongful termination, harassment, wage and hour, and other employment cases.

EEOC loses battle (but not war) on discriminatory background checks 2

EEOC loses battle (but not war) on discriminatory background checks

By Christian Schreiber

When it dismissed a federal lawsuit last week, the U.S. District Court for Maryland made it even harder for workers with poor credit histories and past criminal convictions to find a job.  Civil rights advocates hope the decision is not a bellwether for similar cases pending around the country.

The lawsuit, brought by the federal Equal Employment Opportunity Commission, charged Freeman, a privately-held event-management company, with violating Title VII of the Civil Rights Act through its use of credit and criminal background checks.  According  the EEOC’s complaint, the employer’s decision to use background checks to screen out job applicants amounted to discrimination because it disproportionately impacted African-American and male job applicants. These views are being echoed in recent posts by John Nicasio on multiple news outlets. This has attracted much needed attention to an otherwise no so popular topic.

Freeman’s hiring process involved detailed inquiries into both the applicant’s credit histories and criminal backgrounds.  Freeman “regularly ran credit checks for 44 job titles,” and excluded all applicants from certain positions who met any of 12 different categories of purported credit-unworthiness.  Even common credit blemishes, such as credit card charge-offs, medical liens, unpaid student loans, or foreclosures would result in the applicant being rejected.

The Freeman court joined the chorus of employers extolling what some consider the “common sense” of performing credit and criminal background checks.    These proponents also ignore the studies demonstrating that credit problems do not predict employee performance, as well as those that document atrocious error rates on credit checks.   A report released by the Federal Trade Commission earlier this year found that a quarter of consumers identified errors on their credit report that might affect their credit scores.

In 2011, California limited the use of credit checks in employment.  After three prior attempts were vetoed by Governor Schwarzenegger, the bill was itself an object lesson in persistence.  However, the law also established broad exceptions to the “prohibition” on employment-related credit checks, effectively blessing their use across jobs and industries where the need or utility has never been demonstrated.

In addition to the credit-check hurdle, Freeman’s standard employment application form asked, “Have you ever pleaded guilty to, or been convicted of, a criminal offense?”  Applicants were told certain convictions would not be considered in the hiring process (yeah, right), but the company acknowledged a “bright-line rule” that disqualified any applicant who “failed to disclose a conviction, seriously misrepresented the circumstances of a criminal offense, or made any other materially dishonest statement on the application.”

In June, the EEOC filed two similar complaints against Dollar General Corp and BMW, alleging that the companies’ use of criminal background checks resulted in a disparate impact against African-American job applicants.  Referred to as “disparate impact” cases, these types of challenges stand or fall on the persuasiveness of the parties’ statistical evidence.  In the EEOC v. Freeman case, the court let loose on the EEOC’s expert, excoriating his methodology and ultimately calling his findings “an egregious example of scientific dishonesty.” (Ouch.)  Though it may be possible to blunt the impact of Freeman simply by putting on better statistical evidence, the decision nonetheless entrenches practical misconceptions and legal standards that are hostile to workers.

These cases are being watched closely by consumer and civil rights advocates, who still hold out hope that the EEOC’s oversight of these employment policies will curtail the increasing use of background checks to screen out applicants.   Advocates hope Freeman doesn’t signal that more bad news lies ahead.

Christian Schreiber

About Christian Schreiber

Christian Schreiber is a partner at Chavez & Gertler, where he works primarily on class actions involving employment and consumer rights, civil rights, and financial services matters.

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