“That’s Entertainment! Well, At Least The Lawyers Will Enjoy It”

1. “That’s Entertainment!Well, At Least The Lawyers Will Enjoy It” January 22, 2014 Beverly Hills, California Sponsored By Ogletree, Deakins, Nash, Smoak & Stewart P.C. Moderator: Tiffany W. Easton, Esq. Panelist(s): Keith A. Watts, Esq. #IHCC12

2. Overview – Lights! Action! Litigate! • Unpaid interns • Individual expression • Bullying in the workplace • Trade secrets  

3. Overview • Unpaid interns • Bullying in the workplace • Trade secrets • Individual expression • Clashes between the rights of employees and the employer’s business interests.  

4. Interns and Volunteers • “Attention To Detail” is “Key” • State and federal labor laws define “employee” very broadly. • “Employees” are subject to federal and state minimum wage and overtime laws.

5. Interns and Volunteers

6. Interns and Volunteers • The DOL has made clear that most volunteers and interns will be viewed as employees: • “Under the [FLSA], employees may not volunteer services to for-profit private sector employers.” • “Internships in the ‘for-profit’ private sector will most often be viewed as employment . . . .”

7. Interns and Volunteers • Lawsuits brought by unpaid workers such as volunteers and interns are on the rise. • In August a putative class action was brought against MLB by event “volunteers” who worked at All-Star Games and related events, such as FanFest. Potential class could include at least 2,000 people. • Law is short on guidance with respect to volunteers.

8. Interns and Volunteers • USDOL has made clear that sports leagues and teams are subjects of interest. • USDOL has contacted MLB and investigated the wage practices of two MLB clubs. • USDOL will be meeting with all MLB clubs at the Winter Meetings on various topics of concern – including unpaid interns, exemptions, and daily-rate paid employees.

9. Interns and Volunteers • Numerous class action lawsuits have been filed in the sports and entertainment industries alleging that unpaid interns are subject to minimum wage and overtime laws. • E.g., Pittsburgh Power (arena football), Fox Searchlight (interns from “Black Swan” film), MSG, Hearst Corp., Sony, Warner, etc. • State of case law is in flux and several decisions are on appeal. • Expect more cases to filed until standard is clarified.

10. Volunteers • DOL has taken the position that employees may not volunteer services to for-profit private sector employers, • However, there are situations in which they may do so for private, not-for-profit employers if: • the individual neither contemplates nor receives compensation (but may collect paid expenses, reasonable benefits, or a nominal fee); • the services have a civic, charitable, or humanitarian purpose; • the services are provided without pressure or coercion; and • the services rendered are not the same type of services rendered by the individual in his/her capacity as an employee of the same entity.

11. Volunteers • DOL has taken the position that employees may not volunteer services to for-profit private sector employers, • However, there are situations in which they may do so for private, not-for-profit employers if: • the individual neither contemplates nor receives compensation (but may collect paid expenses, reasonable benefits, or a nominal fee); • the services have a civic, charitable, or humanitarian purpose; • the services are provided without pressure or coercion; and • the services rendered are not the same type of services rendered by the individual in his/her capacity as an employee of the same entity.

12. Volunteers • Some leagues, e.g., the NFL, have used a not-for-profit “host committee” to organize their volunteers. • It is, however, unlikely that a not-for-profit entity would escape liability for wage and hour violations stemming from the use of volunteers because the services the volunteers provide is not civic, charitable, or humanitarian in nature.

13. Volunteers • Examples of what the USDOL considers to be “civic, charitable, or humanitarian” in nature: • Men's or women's organizations sending members or students into hospitals or nursing homes to provide certain personal services for the sick or elderly; • Parents assisting in a school library or cafeteria as a public duty to maintain effective services for their children; • Individuals volunteering to perform such tasks as driving vehicles or folding bandages for the Red Cross; and • Working with disabled children or disadvantaged youth.

14. Internships • Private sector employers must pay their interns unless they meet a very rigid six-factor test under the federal law. • Some states, such as California, look at additional Interns and Volunteers factors. • Main focus of analysis is whether the internship is primarily for intern’s benefit.

15. Internships • Private sector employers must pay their interns unless they meet a very rigid six-factor test under the federal law. • Some states, such as California, look at additional factors. • Main focus of analysis is whether the internship is primarily for intern’s benefit.

16. The Criteria for Internshipsto be Unpaid under Federal Law • The internship is similar to training that would be given in an educational environment • The experience is for the benefit of the intern • The intern does not displace regular employees and works under close supervision of existing staff

17. The Criteria for Internships to be Unpaid under Federal Law (cont’d) • Employer derives no immediate advantage from the activities of the intern, and on occasion its operations may be actually be impeded • No promise of a job at the conclusion of the internship; and • Mutual understanding that the intern is not entitled to wages for the time spent in the internship. Fact Sheet #71, USDOL

18. Federal Exemption May Apply • Interns/volunteers are exempt from federal minimum wage and overtime laws if employees of an “amusement or recreational establishment” and if: • The establishment doesn’t operate for more than 7 months in any calendar year; OR • In the preceding calendar year, the monthly average of total receipts for the lowest six months is not more than 33⅓ percent of the receipts for the greatest six months.

19. Considerations in Relying on Amusement/Recreational Exemption • “Major league baseball teams may properly be considered ‘recreational establishments, or establishments designed for ‘amusement.’” And, “establishments” include “sports events.” Adams v. Detroit Tigers • Case law calls into question proper method of accounting – cash or accrual method? • Consider the practical implications of disclosing confidential revenue figures. • Also consider implications of what is defined as revenue for HRR.

20. Additional Criteria under California Law • Students working as interns or trainees to fulfill licensing requirements, or to qualify for a skilled vocation or profession, are not employees if the training is academically oriented and designed primarily for the benefit of the student. The DLSE requires that the training be an essential part of an established course at an accredited school, or of an institution approved by a public agency to provide training for licensure. • The program may not be for the benefit of any one employer, a regular employee may not be displaced by the trainee, and the training must be supervised by the school or a disinterested agency. The DLSE considers a student receiving on-the-job training with a specific employer to be an “employee" covered by state wage-and-hour laws. An employer may not avoid wage and hour laws by calling an employee a 'trainee.' • An employee may be paid a subminimum wage as a 'learner' during the first 160 hours of employment in occupations in which the learner has no previous or similar or related experience.

21. Don’t Forget! Joint Employer Issues . . . . • “Employer” includes “any person” other than a labor organization “acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). • Thus, more than one employer (e.g., both the league and the club) can be responsible for minimum wage and overtime violations.

22. Potential Liability – Interns • Liquidated damages (double damages) • Attorneys’ fees • Defense costs • Statute of limitations is 3 years under federal law. • Example: • One intern works 30 hours/week at $7.25/hour (minimum wage) for a year = $11,310 • Ten interns working 30 hours/week at $7.25/hour for a year = $113,100 • Ten interns working 30 hours/week at $7.25/hour for 6 years = $678,600 • Liquidated (double) damages = $678,600 • Total = $1,357,200 plus costs and fees

23. Potential Liability – Volunteers • Example: The NFL has 15,000 volunteers, each of whom must work 2 shifts of 4 hours each. • 15,000 volunteers at $7.25/hour for 8 hours = $870,000 • Liquidated (double) damages = $870,000 • Total = $1,740,000 plus costs and fees

24. Possible Solutions • Pay interns and volunteers a minimum wage, limit number of hours worked, and record hours; or • For interns, create a formal internship program with scheduled start and end dates. • Maintain records of hours worked. • Emphasize and put into practice the training and supervisory characteristics of the internship program. • Internship should not be used as a substitute for regular, paid employees or as a trial period for individuals seeking employment at the end of the internship. • Provide a written offer letter to the student intern, stating that (a) the internship is unpaid; and (b) that a job is not guaranteed upon completion of the training or completion of the person’s schooling. And act accordingly. • When publicizing the internship, state that applicants who will receive college credit are preferred.

25. Expression • How to address economic and political activism on and off the job

26. Economic Speech • NLRA Section 7 protects an employee’s right to discuss wages, hours and other terms and conditions of employment • State laws protect similar conduct, i.e., California wage discussions

27. Economic Speech • But there are limits . . . • Sit down strikes • Disclosing confidential business information • False allegations where the allegations are malicious or made with a reckless disregard for the truth • Disparagement of an employer’s business unrelated to employee interests and/or working conditions • Violence, profanity and vulgarity

28. WA ID MT ME MN ND OR WI NY MI SD WY CA NV PA IA UT NE OH IL IN WV CO VA MO KS KY NC AZ NM TN OK TX AK SC GA AL MS LA AK FL HI Political Speech • State laws may protect certain political speech outside the workplace • State laws that apply to any off-duty lawful conduct

29. Non-Solicitation Policies • What should employers do? • Adopt a non-solicitation policy • Ban solicitations / distributions by non-employees on company property • Ban all solicitations / distributions during work hours and in working areas • Ban all organizational solicitations / distributions on company property at all times

30. Non-Solicitation Policies • What should employers allow? • Charitable solicitations • Invitations for personal events • Personal email communications • BUT • Cannot allow some commercial solicitations but not others • Cannot selectively enforce policies • Cannot allow solicitations from one union and not another

31. Non-Verbal Expression • What to do with the employees who feel the need to “dress up” for work

32. Religious Discrimination • Cloutier v. Costco, 390 F.3d 126 (1st Cir. 2004) • Plaintiff was a member of the Church of Body Modification • Costco adopted a grooming policy that prohibited facial piercings • Employee refused to remove facial piercings (although no customers complained about the piercing) • she was fired

33. Religious Discrimination • Costco – held: it was an undue hardship to accommodate her religious beliefs given that she regularly interacted with customers, and Costco determined her piercings detracted from the company’s image

34. Religious Discrimination • EEOC v. Red Robin, 2005 WL 2090677 (W.D. Wash 2005) • Plaintiff was a member of Kemeticism, an ancient Egyptian religion • Red Robin’s grooming policy required employees to cover any tattoos • Employee refused to cover his tattoos and (although no customer complained about his tattoo) • he was fired

35. Religious Discrimination • Red Robin – held: that it was not an undue hardship to allow him to show his very small tattoo even though he regularly interacted with customers, and RR determined that his tattoo detracted from its family-friendly image

36. Religious Discrimination • Brown v. F.L. Roberts & Co., 896 N.E.2d 1279 (Mass. 2008) • Plaintiff was a practicing Rastafarian • F.L. Roberts (Jiffy Lube) initiated new grooming policy which required employees with customer contact to be clean-shaven and hair should be clean, combed, and neatly trimmed or arranged

37. Religious Discrimination • Brown v. F.L. Roberts & Co., 896 N.E.2d 1279 (Mass. 2008) • Employee refused to shave or cut his hair, so employee was transferred to work only in lower bay, with no customer contact

38. Religious Discrimination • Brown – held: exemption from a grooming policy could never amount to an undue hardship • once employee made clear he could not comply with the policy for religious reasons, the employer was obligated to engage in an interactive process to find a reasonable accommodation

39. Religious Discrimination What employers should do • Adopt written criteria for the hiring process • Train recruiters about what questions can and cannot be asked in the hiring process  • Don’t ask about an applicant’s religious beliefs, affiliations, participation, commitments and/or past, current, or future practices  

40. Religious Discrimination • What employers should do  • May ask potential employees if they are available to work on weekends / overtime but cannot ask whether employees observe specific religious holidays. • Cannot automatically deny positions to applicants who cannot work the hours because of their religious—accommodation

41. CA -- Wearing Religious Clothing or Hairstyle is Protected Activity • AB 1964 clarifies that wearing religious clothing or a religious grooming practice as a belief or observance is protected by the Fair Employment and Housing Act.

42. Model Grooming Policy • Adopt a Grooming Policy • Provide expectations for professional appearance • Provide business attire examples • Dress shirts, ties, business heels, etc. • Prohibit torn, dirty or frayed clothing • Ban clothing that reveals too much cleavage, stomach or back • Ban beach wear and tattoos and piercings

43. Electronic Expression • Bring Back the Typewriter

44. What Is Bullying? • Bully = A blustering, quarrelsome, overbearing person who habitually badgers and intimidates smaller or weaker people • Bullying = • Attack or intimidation with the intention to cause fear, distress, or harm that is either physical (hitting, punching), verbal (name calling, teasing), or psychological/relational (rumors, social exclusion); • A real or perceived imbalance of power between the bully and the victim; and • Repeated attacks or intimidation between the same children over time. • Cyber-Bullying = bullying that occurs through e-mail, a chat room, instant messaging, a website, text messaging, or videos or pictures posted on websites or sent through cell phones.

45. What Drives Bullying • Driven by perpetrators' need to control the targeted individual(s); • Initiated by bullies who choose targets, timing, place and methods; and • May escalate to involve others who side with the bully, either voluntarily or through coercion.

46. Prevalence of Cyber Bullying • According to a study by the Cyber bullying Research Center, approximately 20% of young people reported experiencing cyber bullying in their lifetimes.  • Another study by Cox Communications and the National Center for Missing & Exploited Children indicates that about 1 in 10 teens have cyber bullied someone online or by text message and 16% have seen or heard of a friend who bullied others.

47. How Serious is Bullying? • Recent instances have led to suicide. • “Bullies” have faced serious criminal charges, including invasion of privacy.

48. What can you do? • Be vigilant. • Be aware: • Visit http://www.stopbullying.gov/ • Visit http://thebullyproject.com/indexflash.html • Speak up.

49. Why Worry About Intellectual Property? • Lifeblood of your business • You paid for it • Advance planning can prevent disputes • You can get blamed for employee abuses

50. Protectable Assets • Confidential information • Physical property • Relationships • With employees • With customers • With suppliers