“Trending Topics”: What the Fashion Industry Needs to Know Now about Employment Law

“Trending Topics”: What the Fashion Industry Needs to Know Now about Employment Law

By Elise M. Bloom and Michelle A. Annese1

"Follow us on Twitter!"  "Like us on Facebook!"  These phrases have become a common part of our everyday lexicon.  However, the social media explosion is not limited to our personal lives, but rather is making its way into the workplace, as employees not only access these sites on or off duty, but use them as a forum to discuss their employers, their employers' businesses, and to search for new employment opportunities.  In a similar vein, employers themselves access sites to review candidate and employee profiles, reach customers, to monitor chatter and direct discussion about their products and services, and to promote their products and services.  While social media applications provide an array of benefits to both employers and employees in the fashion industry, they facilitate the blurring of barriers between work and personal life.  This article will explore the challenges posed by social media applications in the workplace and effective measures employers may take to harness the virtual water cooler.

Social Media & the Increased Possibility of Liability 

An entire generation of new employees and potential employers has grown up using social networking applications and blogs and posting what many would consider extremely personal information in a public forum.  Consequently, employees using these sites at work or to discuss work may not be fully aware of the legal and business ramifications that posting to such sites can have in the workplace.

However, the risks posed to an employer are great.  Besides the obvious issue of non-productivity, employers must recognize the legal risks presented.  Discrimination and harassment may occur on social networking sites, thereby subjecting employers to legal liability based on a respondeat superior theory for comments made by their employees.  Courts have found that a hostile work environment may be created in an online forum.  For example, the New Jersey Supreme Court, in Blakey v. Continental Airlines,2 held that Continental Airlines was liable for derogatory comments about a female pilot posted on an electronic bulletin by other pilots. 

Further, many state and federal laws mandate that employers keep confidential certain employee information.  Employees may, however, post sensitive information online, resulting in an employee's loss of privacy, employee discord, and potential liability for the employer.

The dissemination by employees of trade secrets and proprietary and/or confidential information also poses a significant threat.  For instance, employees may engage in unrestricted posting of information about new products or customer lists.  Such conduct may result in liability, including potential securities law liability. 

Unauthorized postings by employees also subject an employer to potential liability where the comments about the company, its products, or services are inaccurate.  Such liability is likely to turn on a theory of respondeat superior, with a court evaluating whether the posting occurred within the scope of employment, whether the employee intended to benefit the employer, and whether the employer knew or should have known about the posting.

Use of Social Media as a Recruitment Tool

Using social media applications for recruiting and connecting with applicants, interns, and employees is difficult to resist because these applications provide a unique source of information not otherwise available on these individuals and some of which an employer would never request during an interview.  For example, an individual's Facebook profile may contain demographic data, information on the individual's health conditions and political beliefs, as well as suggestive photographs posted by the individual or other Facebook members.  Some sites, like Twitter, allow individuals to post minute-by-minute accounts of their daily lives.

However, employers must remain cognizant of the fact that the use of such information in evaluating applicants or employees could result in violations of a range of antidiscrimination and statutes, including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, and the Americans with Disabilities Act.  Employers who screen these sites may provide rejected applicants or employees subjected to adverse employment actions with a basis for alleging that the adverse decision was taken due to a protected characteristic that was visible through the site.  Even if proving that the employer relied on a protected characteristic in making such a decision is difficult, an admission that the employer screened these sites and came across such protected information may nevertheless make it easier for a plaintiff's claim to survive summary judgment and ensnare the employer in costly litigation.

Wage & Hour Issues Presented by Social Media Applications

Employers should be aware that posting or blogging by employees regarding the company or its products and services may lead to potential exposure under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. ("FLSA") and similar state wage and hour laws.  While the FLSA does not define "work," a broad meaning has emerged from Supreme Court cases, which describe work as exertion or loss of an employee's time that is: (1) controlled or required by an employer, (2) pursued necessarily and primarily for the employer's benefit, and (3) if performed outside the scheduled work time, an integral and indispensable part of the employee's principal activities. 

Posting or blogging by employees, especially where unauthorized or explicitly prohibited by written policy, seem unlikely to fall within the definition of "work."  Nonetheless, uncertainty remains as to how courts will address this issue.3

Recent Cases in the Fashion Industry

On March 23, 2011, several former American Apparel employees and a prospective employee filed a lawsuit against American Apparel and its founder and CEO, Dov Charney in the Superior Court of California, County of Los Angeles, alleging, among other things, sexual harassment, intentional infliction of emotional distress, and assault and battery.  Among the allegations in the Complaint were that Mr. Charney sent sexually inappropriate text messages to and sexually assaulted one of the plaintiffs.  On April 26, two of those plaintiffs, along with another former American Apparel employee who previously filed a sexual harassment lawsuit against Mr. Charney on March 4, 2011 in New York State Supreme Court, Kings County, filed a third lawsuit against American Apparel and Mr. Charney.  The plaintiffs in the April 26 lawsuit allege that following the filing of their initial lawsuits, fake blogs claiming to have been created by them appeared online and some of the blogs featured "nude or semi-nude pictures" of two of the plaintiffs.  The second lawsuit asserts claims for invasion of privacy, online impersonation, and defamation, as well as intentional infliction of emotional distress.

Likewise, on March 29, 2011, Patrice Lataillade, the former CFO of Marc Jacobs International LLC ("Marc Jacobs"), filed an action in New York state court against Marc Jacobs, Louis Vuitton Moet Hennessy Inc., and Robert Duffy, President of Marc Jacobs, alleging claims of sex discrimination and retaliation under New York State and City Human Rights Laws.  Among the allegations in the Complaint was that Mr. Duffy created a hostile work environment by using a photograph of a nude man on Twitter.

Necessary Steps to Harness the Virtual Water Cooler

As the aforementioned cases illustrate, every employer should develop a comprehensive social media strategy tailored to meet their own individual needs, but that provides employees with guidance regarding what is and is not acceptable.  The written policy should explicitly address blogging and other Web 2.0 technologies and should be distributed to all employees.   A well-crafted policy should, among other things, address the use of company resources to access social media applications and whether such use is permitted or prohibited; reserve employer discretion to monitor employee activity; clearly state prohibited conduct and warn employees of disciplinary measures that accompany policy violations; and require that employees put up disclaimers when posting in a personal capacity.  The policy should prohibit employees from using company logos, graphics, or photos without written permission of the company and should require employees to obtain express authorization to blog or post in their roles as company representatives.  Employers should also update the policy regularly to account for developing technologies.

Regulations should also be developed regarding hiring and screening procedures that make use of Web 2.0 applications.  A "wall" should be constructed between the ultimate decisionmaker and the individual conducting the initial online search.  Any irrelevant information should be screened and filtered well before it reaches the decisionmaker.

1 Elise M. Bloom is a senior partner and co-Chair of the Labor & Employment Law Department of Proskauer Rose LLP.  She is also co-Chair of the Firm's Class & Collective Action practice group.  Michelle A. Annese is an associate in the Labor & Employment Law Department of Proskauer Rose LLP.

2 164 N.J. 38 (2000) [enhanced version available to lexis.com subscribers].

3 In Chao v. Gotham Registry, Inc., 514 F.3d 280 (2d Cir. 2008) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law], the Second Circuit held that the FLSA required an employer to pay overtime compensation to employees performing overtime work even where the work was not authorized and was in violation of company policy because the employer had not adopted all possible measures to prevent work it does not wish performed. Id. at 286.  The court, however, placed special emphasis on the fact that the type of work performed during regular hours was the same type of work performed after hours. Id.


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