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.
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.