Originally Posted September 28, 2009

Originally Published March 1, 2010 

I.            Introduction

Back in the good ole’ days (about a year ago), employers could confidently brag that they had virtual unfettered discretion to review their employees’ workplace emails.  In fact, recent surveys indicate that more and employers are feeling entitled, or emboldened, or both, to review these communications accessed over the company’s computer networks.  For example, a June 2009 ProofPoint Inc.survey of 220 large US companies found that 38% of the firms read and analyzed the outgoing email of employees, up from 29% a year earlier.  But if some recent court decisions areany indication, a legal backlash against these practices is taking shape, and employers must be prepared for a new world where the balance of power is shifting away from employers’ business needs and towards a greater recognition of an employee’s privacy rights.  

Private sector employees have no Federal statutory right to privacy in emails sent from theirwork computers.  As applied to private businesses, the Stored Communications Act (“SCA”) (18 USC §§2701-2712) provides that any person who intentionally accesses stored electroniccommunications (e.g., emails) without or in excess of authorization are subject to civil and criminal penalties.  Federal courts have consistently ruled that employers have full authority to access emails stored on company-owned servers and their own computer and email systems and in situations when employees consent to employer access to email.  With no effective cause of action against an employer under the SCA for monitoring email, employees have instead relied on state statutes and tort law for legal remedies. 

II.            The Cases 

The case causing the most consternation for employers is Stengart v. Loving Care Agency, Inc., 973 A.2d 390 (N.J. Super. Ct. App. Div. June 26, 2009).  There, Plaintiff served as the Executive Director of Nursing at the Defendant facility.  Before resigning her position, Plaintiff sent her attorney a number of emails from her employer-provided laptop relating to a sexual harassment suit she intended to file against Defendant.  These emails were communicated, not through her corporate email account, but via her personal, password-protected Yahoo account.

Plaintiff eventually filed her lawsuit.  Subsequently, Defendant employed a forensic expert to create a mirror image of Plaintiff’s laptop, and in doing so recovered and reviewed the email communications between Plaintiff and her attorney.  Defendant did not inform Plaintiff that it was in possession of these emails until they were turned over by Defendant’s counsel in the course of discovery months later.

Plaintiff demanded return of the emails and when Defendant refused, Plaintiff moved for emergency relief, which included return of the allegedly privileged emails and disqualification of Defendant’s counsel for violating New Jersey Bar ethical rules.  The trial court denied Plaintiff’s motion, holding that the emails were not protected by attorney-client privilege because Defendant’s electronic communications policy put Plaintiff on notice that any emails sent or received on her laptop was company property, constituting a waiver of the privilege.

On appeal, the Appellate Division reversed.  The Appellate Division determined that the lower court’s decision was premature, because genuine issues of fact still existed as to whether Defendant had actually implemented an email policy, if Plaintiff and other employees had been made aware of any such policy, if the policy covered personal emails sent via a personal email account as opposed to a pure “business” emails and whether Defendant’s claimed policy applied to executives such as Ms. Stengart.  Although the court could have (and arguably should have) stopped right there and remanded the matter to the trial court for resolution of these evidentiary questions, it did not. 

Instead, the court decided to address the following question: assuming that all of the factual issues were decided in Defendant’s favor, would Defendant then have been entitled to review, retain and use these emails in litigation?  The court’s answer: absolutely not.

In a novel approach, the court held that to determine the enforceability of a company policy claiming to “transform private emails or other communications between an employee and employee’s attorney into company property,” it was obligated to balance “the company’s right to create and obtain enforcement of reasonable rules for conduct in the workplace against the public policies underlying the attorney-client privilege.”

Noting that an employer’s policies must advance a “legitimate” business interest, the court again articulated a unique position with respect to the practice of monitoring and reviewing an employee’s personal emails: “[T]he company’s interest . . . is not in the content of these communications; the company’s legitimate interestis in the fact that the employee is engaging in business other than the company’s business.”  Applying this logic, the court held that Defendant’s policy that it owned all employee communications sent through its computers and thus had the authority to access, confiscate and review the content of purely private employee emails at any time did not further any legitimate business interest.

Having rejected Defendant’s position that “because the employer buys the employee’s energies and talents during the workday, anything that the employee does during those hours becomes company property,” the court then turned to the other side of the balance, what it characterized as “the employee’s considerable interest inmaintaining the confidentiality of her communications with her attorney.”  For the court, the result was clear: “In weighing the attorney-client privilege, which attaches to the emails exchanged by plaintiff and her attorney, against the company’s claimed interest in ownership of or access to those communications based on its electronic communications, we conclude that the latter must give way.”  The court ordered return of the privileged emails to Plaintiff, deletion of the emails from Defendant’s hard drives, and a hearing to determine if disqualification of Defendant’s counsel was warranted.        

In one fell swoop, the court had significantly narrowed what many considered an employer’s expansive right to control communications sent over its own computer equipment and systems.  Under the court’s rationale, in general an employer cannot use a policy stating that it owns all communications stored on its computer systems and that such communications arenot private as a basis to trump an employee’s reasonable expectation of privacy in personal emails.  Only where the company wishes to confirm a legitimate belief that “the employee is engaging in business other than the company’s business,” such as to determine whether an employee was violating employment rules (e.g.,sending harassing emails) or was providing proprietary information to a competitor, would such an intrusion into the private sphere be justified.  To many, the court’s conclusion that personal, privileged emails should not be accessed by employers, while somewhat of a surprise, is debatable; but at the same time, of real concern was thecourt’s broad language arguably creating a de facto presumption that an employee’s personal emails in the workplace are “hands-off” for employers.

The second significant case reflecting the sudden shift in the balance of power is Convertino v. U.S. Dept. of Justice, Civ. No. 04-0236, 2009 WL 4716034 (D.D.C. Dec. 10, 2009) (Lamberth, J.).  Former Assistant U.S. Attorney Richard Convertino was terminated after his convictions in a Detroit terrorism trial were overturned in 2004 for prosecutorial misconduct.  Convertino subsequently filed suit against DOJ and against Eastern District of Michigan First Assistant U.S. Attorney Jonathan Tukel.  In the complaint, Convertino alleged that he was retaliated against for exposing alleged incompetence in the Bush Administration’s War on Terror in testimony before Congress and that, in violation of the Privacy Act, DOJ improperly leaked confidential information about an investigation into his possible prosecutorial misconduct to the Detroit Free Press.  The retaliation claim against Tukel was dismissed, but discovery moved forward on Convertino’s Privacy Act claim.

Convertino then moved to compel DOJ’s production of 36 emails sent by Tukel to his attorneys, Cadwalader, Wickersham & Taft.  According to Convertino, the emails could possibly show who had leaked the information in question.  Tukel had previously met with Convertino to discuss his handling of various cases, and had played a role in drafting allegations passed on to DOJ’s Office of Professional Responsibility.  During this process, Tukel had sent the emails to Cadwalader without a cc from his DOJ email address and eventually deleted them.  However, what Tukel didn’t know was that DOJ had been regularly accessing and saving all of his emails sent from his workplace account.  Tukel was granted leave to intervene in the discovery dispute for the purpose of asserting attorney-client privilege.  Convertino argued that Tukel had waived the privilege because the emails were sent using his DOJ email account.

The District Court ruled in Tukel’s favor.  Judge Lamberth initially noted that there is no waiver of attorney-client privilege under Federal Rules of Evidence 502(b) if the disclosure is inadvertent, and the holder of the privilege takes reasonable steps to prevent disclosure.  Tukel had submitted an affidavit that he had no intentions of allowing DOJ to read the emails he was sending to his attorney through his work email account.  Also, the Court pointed out that Tukel had taken steps to delete his emails and had timely intervened in the case when he became aware that DOJ still had access to these emails.   

Relying on a prior New York case, Judge Lamberth then recognized that for email documents to be covered by the privilege, there must exist a subjective expectation of confidentiality that is objectively reasonable.  To determine reasonableness, a case-specific analysis of four factors must be conducted: (1) whether an employer maintains a policy banning personal or other objectionable use of email; (2) whether the employer monitors the use of the employee’s computer or email; (3) whether third parties have a right of access to the computer or email; and (4) whether the corporation notified the employee, or whether the employee was aware, of the use and monitoring policies.

Applying thistest to the facts of the case, Judge Lamberth concluded that Tukel’s expectation of privacy in these emails was reasonable: “The DOJ maintains apolicy that does not ban personal use of the company e-mail.  Although the DOJ does have access topersonal e-mails sent through this account, Mr. Tukel was unaware that they would be regularly accessing and saving e-mails sent from his account . . . . Because his expectations were reasonable, Mr. Tukel’s private e-mails will remain protected by the attorney-client privilege.”

The court essentially held that where someone uses their workplace email, intends for the communication to be confidential and takes reasonable steps to try to ensure that they remain confidential, then there is no waiver of the privilege.  Again, like in Stengart, a ruling upholding the confidentiality of privileged communications was not exactly a shocker.  However, what causes concern for employers is that the court seemed to indicate that employees—government and private sector—potentially have an expectation of privacy in all of their personal emails sent from their workplace email account.  All what seems to be required for this protection to kick in is for the employer to permit personal emails in some way, shape or form (practically speaking, virtually all do), and for the employee to say that they had no idea that the employer was regularly accessing and backing up all workplace emails (which, everyone knows, employers do as a matter of course).  To some observers, to reward an employee who remains blissfully ignorant of the realities of email technology, and punish employers for being reasonableby allowing personal use of workplace email accounts, just goes too far.

Finally, there is City of Ontario v. Quon, 529 F.3d892 (9th Cir. 2008), rehearing en banc denied, 554 F.3d 769 (9th Cir. 2009), cert. granted, 130 S.Ct. 1011 (Dec. 14, 2009), a case that will be argued before the U.S. Supreme Court in the spring.  At issue is whether a California city, by reviewing text messages transmitted and received on a pager issued to a police officer, violated the constitutional rights of the officer and three individuals who had sent him the messages.  On its face the case implicates the Fourth Amendment, which is not applicable to private employers, but the Supreme Court’s decision will likely foreshadow their views on employee privacy rights in all workplaces.

In Quon, the Ontario Police Department had a formal policy reserving the right to monitor “network activity including email and Internet use.”  The policy permitted “light personal communications” by employees but warned that“they should have no expectation of privacy.”  Text messages were not expressly addressed.

SWAT team members were given pagers and told that they were responsible for any charges in excess of 25,000 characters a month.  The lieutenant in charge of administering the pagers adopted an informal policy whereby those who paid the excess charges themselves would not have their text messages reviewed.Sergeant Quon exceeded the limit on several occasions, but on each occasion, he repaid the overages.

Eventually, the lieutenant grew tired of reconciling the pager bills and complained to the police chief.  The chief ordered the lieutenant to obtain transcripts for the pagers issued to those officers who were repeatedly exceeding the limits.  The lieutenant was instructed to “determine if the messages were exclusively work related, thereby requiring an increase in the number of characters officers were permitted, . . . . or if they were using the pagers for personal matters.”  The investigation revealed that Quon had sent and received hundreds of purely personal messages.  In one month in 2002, only 57 of 450 messages were work related.  According to the trial court, may of the messages “were, tosay the least, sexually explicit in nature.”  Not good.

Quon and several other officers who had been messaging with Quon sued the city, claiming that their privacy rights under the Fourth Amendment and the California Constitution had been violated.  Applying O’Connor v. Ortega, 480 U.S. 709 (1987) which articulated the Supreme Court’s test for analyzing the privacy rights of public employees, the trial court entered judgment for the City of Ontario.  It found that while the officers had a reasonable expectation of privacy in the messages because of the lieutenant’s informal policy, the search of Quon’s pager was reasonable given the jury’s determination that the police chief was simply trying to determine whether the character limit was adequate, not expose any misconduct. 

The Ninth Circuit reversed.  First, the panel agreed with the trial court that the officers had a reasonable expectation of privacy in the messages, concluding that the City’s formal dictates concerning electronic communications had been overridden by the “operational reality” ofthe lieutenant’s informal practice regarding oversight of the pagers.  However, it held that the trial court was wrong in characterizing the search as reasonable because there were other, less intrusive methods that the City could have employed to verify whether the character limit was adequate.

A majority of the full Ninth Circuit denied a rehearing en banc, but six judges signed on to a dissent by Judge Sandra Ikuta who stated that the panel’s decision “improperly hobbles government employers from managing their workforces” and adopts a less intrusive means test that “conflicts not only with Supreme Court case law, but also with the decisions of seven of our sister circuits.  ”What is problematic from an employer standpoint is not the particular result in this case.  Instead, it is again the broad language that seems to expand prior settled law on employee privacy rights, and may be interpreted as creating a rule that a company-wide, formal electronic communications policy can always be rendered null and void by a single manager who decides not to enforce it."   

III.            What Can Employers Do? 

Again, maybe I’m being a bit premature in sounding a death knell for employer discretionary authority to review email.  It’s possible that the decisions above get reversed, and the facts of these decisions create some room for being distinguished.  But there are some things you should do to make sure that you don’t get caught flatfooted, but at the same time, retain some of the power to engage in a justifiable review of emails.  Again, like with most other business undertakings, it is always better to be proactive. 

A. Have one, comprehensive electronic communications policy

Your company should have a single, formal, and written electronic communications policy.  Every employee, on their first day of employment when they are sitting at their desk reading over the human resources manual, should execute an acknowledgement of receipt and understanding of the policy.

To prevent your formal policy from being waived or compromised by a manager’s inconsistent practices, you should keep a close watch on your supervisors’ activities in this area.  In addition, your written policy should expressly identify the individuals authorized to modify the policy.

B. Identify the electronic resources to be covered by the policy

Your policy should clearly set forth that it covers all company-issued equipment comprising the employer’s communications network.  The equipment should include desktop computers, laptops, Blackberries, PDAs, pagers, cell phones, printers and fax machines.  The policy should also make clear that it encompasses all forms of electronic communications and files such as emails, IMs and text messages that are stored on, transmitted by or transmitted through any of the company’s equipment or its network, even if the employee uses a third-party provider (AOL, Yahoo, Google, etc.) to send out the message.

C. Minimize employees’ expectation of privacy

Your employees must be informed, in writing, that they should not have any expectation of privacy in any business or personal communication made through the company’s electronic resources, including any messages sent or received from a personal attorney or for any purpose adverse to the company’s interests, both during after the termination of the employment relationship.

The employer should advise employees, to eliminate any ambiguity, that electronic communications (both business and personal) create business records that require appropriate storage and archiving procedures pursuant to law and policy.  And emphasize that in its discretion, the company will review any of these communication or files stored in its electronic resources.

Besides this written notice that the company may read the employee’s electronic communications at its sole discretion, you should put a notice on the computer login screen that the system is the employer’s property, and that by logging on, the employee is consenting to employer monitoring of his or her email communications and use of the Internet.

Warnings are great, but your actions with respect to privacy are important as well.  Do not give your employees any reason to believe that their communications sent from the workplace are private—do not make informal promises not to review personal and business-related emails, don’t let them label certain messages as “private,” and avoid using phrases in your materials like “private email system” and “personal password.”   

D. Engage in Follow-up Activities

It will be helpful if you have some periodic follow-up to ensure that employees are complying with proper procedures, to troubleshoot for any holes in your policy and to communicate any important changes in the policy or practice.  More specifically, you should provide annual training to employees in the appropriate use of email, IMing, andInternet use, and take attendance with sign-in sheets.

Company-wide notices via email are also useful.  On a monthly basis you should remind your employees that the computer equipment they use is company property, is intended for business use and that any transmissions, including personal communications, may be monitored.   

E. Limit Non-Business Communications 

I would not suggest that employers prohibit employees from engaging in non-business communications or from accessing accounts at personal, third-party service providers using company’s electronic resources.  You may have a mutiny on your hands, if you have anybody willing to work for you at all.

Employers should advise employees that incidental personal use of company computer equipment is permitted, so long as it does not, inter alia: (i) interfere with their work responsibilities; (ii) violate applicable laws; (iii) adversely affect the company’s interest; (iv) breach confidentiality or nondisclosure agreements; or (v) contravene the company’s internal policies regarding anti-discrimination and the like.  In the end, employees should be instructed that when engaging in personal communications over the company’s electronic system, they must exercise good judgment and common sense, and provide some examples of “appropriate” and “inappropriate” messages for guidance.

F. Monitor for sound, business-related reasons

You really have to establish a delicate balance between a need for information about what your employees are doing, and an employee’s tolerance for a “Big Brother” work environment.  The best way to achieve such a balance (and to avoid breaking Federal laws with respect to wiretapping, permissible union communications and whistleblowing as well as state laws such as those in Delaware and Connecticut regarding notice), is to make sure you monitor for a legitimate business reason, you specifically outline for your employees what you will be monitoring and under what circumstances, obtain their written consent to your monitoring policy and set forth the penalties for non-compliance.

As an initial matter, be aware that sometimes employers have an affirmative duty to monitor an employee’s electronic communications.  Doev. XYC Corp., 887 A.2d 1156 (N.J. Super. Ct. App. Div. 2005) (employer with notice of possible unlawful activity harmful to others through employee’s use of the employer’s computer network had duty to monitor in order to protect third parties.).  Also, under Federal Trade Commission guidelines, an employer may be held liable if it fails to develop and enforce policies that restrict employees from promoting or endorsing the employer’s products through blogs or social networking sites without disclosing the employees’ relationship with the employer.

I don’t recommend that you routinely monitor your employees’ email.   However, there are some justifiable grounds for doing so.  For example, measuring employee productivity is an OK reason.  Monitoring for the purpose of investigating possible leaks of proprietary, confidential or damaging information is definitely OK, even necessary.  Employers are also on solid footing if they monitor email to check on the quality of customer service or to minimize liability from employee commentary being disseminated both internally and externally.  But monitoring simply because you’re curious or just “because I can” is not going to pass muster.

Although email monitoring should be subject to controls, you should still keep track of incoming and outgoing email addresses so that you can recreate the employee’s online activities in the event that a reasonable email check raises some serious concerns about the employee’s conduct (e.g., sending email attachments to a competitor).

IV.            Conclusion

Again, as youcan easily discern from the discussion above, the law is less than settled with respect to defining the boundaries of employers’ rights to monitor employeee mails.  So, all the precautions you may take may still not be enough to uphold your policy and actions.  Nevertheless, an approach that is comprehensive in coverage, vigilant in providing employees with notice, and narrow in scope with respect to actual monitoring, will minimize risk and go a long way inproviding a strong justification if your electronic communications policy is ever challenged.

Originally Published January 26, 2010

Having just gotten off the phone with another Federal employee alleging discrimination in the workplace, it’s remarkable to me how misguided and misinformed Federal employees can be about the basic legal requirements of bringing such an action, the potential risks involved in doing so, and the actual merits of their case.  I’m not going to spend time giving a primer on Federal discrimination law (e.g., age, sex, disability, race, national origin, religion, etc.) but as a former senior executive for a Federal agency tasked with defending managers these against these complaints, I think I can impart some useful anecdotal tips for those with legitimate cases, as wellas those who think a complaint is quicker way to get a bonus than actually doing your job.     

New Administration: “New” Attitude?

What’s interesting, but not surprising, is that often when a new President comes in, discrimination complaints by Federal employees often dip in the first year.  Employees have a hopeful attitude that their seemingly intolerable employment conditions will get better, and employees are willing to give new political management the benefit of the doubt as new employment policies and practices take shape.  It also helps when a President makes labor-management relations, and revamping of the Federal hiring process to emphasize fairness and efficiency, a centerpiece of his agenda. 

However, I do think that history will repeat itself once again, and discrimination actions by Federal employees will spike in 2010. Why?  Yes, the EEOC proposed new rules in December that would expedite and streamline the Federal complaint process.  Making it easier to file, with speedier results, leads to more complaints—pretty obvious.  However, getting to the heart of the matter, it’s the same old story—Reality Bites. Underrepresented groups such as Hispanics (only 8% of Federal workforce) and women (44% of Federal workforce, 27.7% of senior executives) will quickly conclude that if workplace diversity is actually happening, it’s not happening quick enough.  Employees will come to the realization that while there might be a new political crew in charge at their agency, the career managers making their life miserable are still around, and not going anywhere anytime soon.  And, no matter how you repackage it, the Federal Government’s human resources approach is broken, rewarding mediocrity, insulating improper favoritism and discriminatory practices, and eliminating any incentive to work hard and improve, which ultimately breeds discontent and litigation.

Point 1: Don’t Bring Frivolous Lawsuits

But just because there maybe more discrimination complaints doesn’t mean that they all should be brought in the first place.  Don’t file baseless complaints.  I know it seems pretty obvious, and the long-term effects and collateral damage of such action is often the last thing someone is thinking about when emotion and $$$ takes hold, but based on my experiences it is a point that cannot be ignored.

If you file a ridiculous complaint against an agency manager, you irreparably harm the fortunes of all meritorious discrimination actions subsequently filed by agency employees (including yourself).  It is difficult to shake the reputation that a particular Agency’s employees file unfounded claims at the drop of a hat.  This stigma cannot help but negatively affect the views of key players and decision-makers such as EEO counselors, investigators, as well as EEOC judges when they are confronted with yet another “waste-of-time” employment matter involving that Agency.  They are only human; case-by-case determinations become harder and harder to make when the generalizations start to ring true.

Similarly, bad complaints and a lot of them cause Agency management to get defensive, and treat all of the discrimination claims of its employees as total garbage and/or a shakedown for a quick payout.  This hunker down posture on the part of management, a mix of growing anger and arrogance (not entirely unjustified), can destroy any chance of a quick and amicable settlement when such a result would be in the best interests of all involved, and can stifle dialogue that can prevent a simple misunderstanding from morphing into a personnel explosion. Employees, do your part and please don’t start the slippery slope. 

Point 2: Don’t Miss Deadlines

There are a lot of timing issues you need to familiarize yourself with when thinking about filing a discrimination claim.  You are required to contact the agency’s EEO counselor within 45 days of the alleged discriminatory act.  There is a 15-day window for you to decide whether to file a formal EEO complaint after receiving a Notice of Final Interview.  Upon receipt of the Report of Investigation, you must request an EEOC hearing within 30 days or the agency will issue a final decision based on the record alone.  The list goes on and on.

As soon as you think you have the basis for a case, talk to your agency’s EEO office, the EEO counselors and an attorney to confirm these essential deadlines.  This is not like being late to dinner with a friend, or even sending in a payment one day late on a credit card bill—there are no “I’ll just pay the fee” arguments or second chances in the land of EEOC.  We’re talking about a system that is overburdened and swamped with cases and is thus all too happy to dismiss a case on procedural and technical grounds without undergoing a time-consuming investigation of the facts.  In short--you miss a deadline, your case may be over before it even started.   

Point 3: Don’t file an EEOC Complaint When You Really Should Be Filing An MSPB Appeal

An employee gets reassigned from his current position to another position without a loss of grade.  He disagrees with the decision, and doesn’t believe that the agency has a legitimate management reason (e.g., budget, skills needed elsewhere, etc.) for the action.  He also has no good-faith basis for alleging discrimination.  Fine.  But instead of challenging the adverse personnel action by filing an appeal in MSPB, really the proper venue in these situations, the employee files an EEO case against the agency and the decision-maker.

Why would a person do that?  Well, there are a number of reasons, all motivated by strategy.  As an initial matter, everyone knows that filing an EEO complaint is more “juicy” than going the MSPB route.  If you are trying to scare an agency into a settlement, labeling its managers as people who routinely discriminate against minorities is 100 times more disturbing (though both are pretty bad) than saying that the agency engages in prohibited personnel practices.  Second, and related to the above, establishing a prima facie case of discrimination is nothing more than a pro forma exercise.  Employees don’t have to do more than go through a rudimentary checklist: “Am I over 40 years old.  Age discrimination, check.  I am white, my manager is Asian-American.  Race discrimination, check.  My manager is a woman, so I have a sex discrimination case as well.”  What this means is that an EEO complaint will rarely be thrown out without first creating some prolonged, embarrassing pain.  Third, it is one of the worst-kept secrets in employment law that MSPB is generally not a favorable forum for employees.  By contrast, EEOC’s track record is decidedly more pro-employee, from the agency EEO offices up to the EEOC itself.  It is a conscious forum-shopping decision, pure and simple.

Don’t do this unless you really believe in your heart of hearts that you are a victim of discrimination.  Most importantly, it is wrong.  Also, managers will not react well to these accusations, and will, as discussed earlier, likely react by treating all future complaints, including claims with merit that should be quickly resolved, as a fight to the death.  Finally, the agency might call your bluff and when the EEOC pulls back the curtain on your case and finds out there is nothing there, your complaint will get dismissed and you will then be foreclosed from filing in the more appropriate forum, MSPB.  Gamble and you might just lose.  

Point 4: Don’t Jump Right Into Adversarial Mode and Become Toxic

A lot of Federal employees, when they disagree with an employment decision by their supervisor, stake out an overconfident and inflexible position right out of the starting gate.  They start using a flame-thrower and threaten to bring an action before really understanding the motivation behindthe manager’s decision or before trying to use mediation or some other informal means to resolve a simple problem with a low-key, simple solution.  Big mistake.

It is a big step to file an EEO complaint against a manager.  Although complaints are supposed to be confidential, more often than not the details of the matter eventually become public knowledge.  When it does, colleagues, other Agency employees and managers begin to take sides, which can destroy your chances of maintaining positive working relationships.  In addition, although it is quite possible that the manager will retaliate against the employee by taking away responsibilities, giving bad ratings, etc., it is more likely that the now gun-shy manager will just clam upand avoid the employee in fear that he or she will be subjected to additional discrimination claims for anything they say and do.  Lines of communication with the manager will be extinguished, as will any degree of workplace normalcy and satisfaction for the foreseeable future.  But remember—if you feel strongly about what has been done to you and have weighed the pros and cons, do what you need to do and never look back.

Point 5: Don’t File For The Wrong Reasons

File an EEO complaint because you want to right a serious wrong, not because you think you can get a quick payout at the expense of taxpayers or a nice, cushy GS-15 without paying your dues.  Of course, you are more likely to get a favorable settlement when you present a good case, but also if you present remedies that the agency can live with, are reasonable, and won’t set a crazy precedent for other employees chomping at the bit waiting to see ifthey cash in as well.  I can’t tell you the number of times we asked a complainant what they were looking for to settle their case, and their response: “$300,000 (the statutory limit)”; or “an SES would be nice” (like they grow on trees).  Huh?  If you want to acquire some real bargaining power, ask for some money, but also consider requesting a higher rating, a QSI, a lateral reassignment to a more high-profile job that you are qualified for, and/or management training opportunities.  Credibility, by not overplaying your hand, will get you what you want and deserve in the short-term, and preserve your reputation in the long-term. 

The Takeaway

I know some people will read this and say that I am trying to discourage Federal employees from filing discrimination claims.  However, that is certainly not my intention; I’m not in the business of trying to put myself out of business.

However, what I’m trying tosay is that for some, litigation not your only option, and for others.  Bad managers who discriminate are doing their part to paralyze the Federal workplace.  But so are bad lawsuits.  Both have to stop so we can add some add some sanity, and civility, back into the system.

Originally Published August 23, 2009

When negotiating a separation agreement on behalf of an employer or employee, one of the sticking points often centers around the issueof “non-disparagement.”  Employers want departing employees to keep their opinions to themselves to stave off viral adverse publicity that hurts existing business, scares off investors and impedes the recruitment of new talent.  Employees respond in kind by demanding a reciprocal provision, to guard against employers bad-mouthing them to prospective employers that can destroy their chances of getting re-employed or get them fired from a new job.

Given the number of questions I get every week about this topic, as well as the high-profile debate over these provisions generated by the Yankees possibly adding these clauses to managers’ and coaches’ contracts after Joe Torre’s tell-all book The Yankee Years and a searing Above the Law posting by a laid-off Paul Hastings associate who refused to sign a severance containing a gag clause, I thought I would spend a few moments trying to answer a few of these inquiries. 

Question: What is a non-disparagement clause?

Non-disparagement clauses, typically found in severance/separation agreements and less so in employment agreements, bar employees from saying anything, orally or in writing, that is negative or demeaning about the company, its reputation, products and management.  Likewise, these clauses can be used to block employers from denigrating the employee and damaging his or her reputation in the marketplace. 

Question: What does a non-disparagement clause look like?

Focusing for now on what the employer often demands, these often-perpetual clauses can be simple: “You [employee] agree that you will not disparage or comment negatively about the Company, its officers and management, and/or current or former employees.” 

It can also be more complex and comprehensive: “You agree that you will not, in any communication with any person or entity, including any actual or potential customer, client, investor, vendor, or business partner of Company, or any third-party media outlet, make any derogatory, disparagingor critical negative statements, orally, written or otherwise, against Company or any of Company’s managers, directors, officers and employees.  Nothing herein shall prevent you from testifying truthfully in connection with any litigation, arbitration or administrative proceeding when compelled by subpoena, regulation or court order to do so.”  

The language in the above two examples is often followed by a liquidated damages clause that relieves the aggrieved party of the burden of demonstrating that it was damaged by the remark—the plaintiff is automatically awarded a cash amount (e.g., $1,000, $2,500) for each proven disparaging statement. 

Note that in some situations (example 2 above), employees are successful in negotiating exceptions to the non-disparagement, such as permitting negative testimony in response to a subpoena or court order and creating a “safe harbor” for statements made during job interviews. 

Question: Is there any legal significance to the term “disparagement”?

Well, unlike defamation, there really is no established body of law as to what constitutes “disparagement.”  However, what is somewhat clear under the law of many states is that for a statement to be actionable as a breach of a non-disparagement clause, the negative statement must be untrue. 

Question: Are non-defamation provisions enforceable? 

The answer is yes.  See GRK Fasteners, Ltd. V. Bennet, No. 03-6363, 2004 U.S. Dist. LEXIS20603, at *14 (D. Or. Oct. 5, 2004) (ordering specific performance of non-disparagement provision in settlement agreement to prevent party to agreement from filing subsequent litigation).  However, most lawyers agree that, depending on the circumstances, such a provision will not be enforced if it conflicts with workers’ rights (e.g., right to organize under the National Labor Relations Act) or contravenes public policy (e.g., exposing discrimination or danger to the public).   

Some argue that these provisions violate an employee’s First Amendment rights to free speech.  We just love to say “They violated my constitutional rights,” don’t we?  Non-disparagement clauses do not implicate the First Amendment; instead, they involve simple contract law—a bargained for agreement between two parties. 

Question: Why are employers so reluctant to enter into a mutual non-disparagement arrangement?

If you have represented employees you know the feeling.  You are going back and forth and then you suggest that the employer be bound by the same non-disparagement obligation as the employee.  Suddenly, you are on the receiving end of their usual knee-jerk response:  “No way!” 

From the perspective of the employer, a non-disparagement clause is one fraught with peril.  For them, it is virtually impossible to comply with.  The “Company” is a broadly defined term that can encompass hundreds if not thousands of people, and the clause could be interpreted as its promise that every current and future officer, director, manager and employee will refrain from saying anything bad about the employee.  You can see why at first blush, this provision is considered an unacceptably risky option by employers.  See Love v. University of Cincinnati Hospital, 694 N.E.2d 1005, 1006 (Ohio 1997) (employer breached separation agreement bygiving negative reference about plaintiff to prospective employer). 

Question: What do you do if the employer refuses to accept a broad non-disparagement clause? 

Employees can counter in two ways.  First, you can agree to have the non-disparagement clause apply to a narrower group of the company’s employees (e.g., all senior officers and managers) or to specific named individuals.  Employers, if you agree to this, remember to keep documentation that you actually informed these individuals of their obligation not to disparage the employee in question. 

Second, you can try to focus on getting the employer to agree on providing a positive reference when prospective employers do their checks.  The positive reference can take a number of forms, such as having an agreed-upon reference letter that is drafted by both sides, and/or a script for any oral references to be given.

But employers are wary about potential legal liability when dishing out positive references. See Randi W. v. Muroc Joint Unified School District, 929 P.2d 582 (Cal. 1997) (employer who gives unjustified positive reference subject to claim of negligent misrepresentation when one who relied on the reference later learned it was inaccurate); Fluid Technology, Inc. v. CVJ Axles, Inc., 964 P.2d 614 (Colo. Ct.App. 1998) (same).  And, of course, it goes without saying that negativereferences always pose potential troubles for an employer.  See Aspero v. Shearson American Express, Inc., 768 F.2d 106 (6th Cir. 1995) (employer who provided negative information and opinions about a former employee subject to defamation lawsuit from former employee); Thompson v. Orange Lake Country Club, 224 F. Supp. 2d 1368, 1382 (M.D. Fl. 2002) (same). 

Although not the best result from the employee’s perspective, the best they may be able to get out of the employer is, when faced with an inquiry, a neutral reference confirming the employee’s dates of employment, title and salary and a statement that this is standard policy for the company and for all former employees.

All of this begs the question: what if the employee refuses to accept such a clause?  If you really want to get this severance agreement consummated, you can drop your demand and you will still have a number of common law remedies for enforcement, including tortuous interference with contractual relations.    

Question: The employee breaches the non-disparagement clause by criticizing the company’s competence and ethics on blogs, Facebook and Twitter.  What can the employer do?

The key issue in these situations is not the legal remedy—yes, you can obviously go to court and sue the employee for breach.  Really, what controls is practicality—is it worth it from a business perspective it to pursue litigation? For many companies, the answer is no. 

First, the liquidated damages in the hypothetical might amount to no more than $5,000-$10,000.  A law firm associate drafting a complaint will blow through that in a single day. 

Second, enforcing the provision carries with it public relations downsides.  Perception always matters.  It will look as if the big bad corporation is trying to squash the speech of the weaker party, and being seen as an entity that trolls chatrooms and websites looking for violations is simply not the business image you want to project. 

Third, litigation becomes self-defeating; the suit brings attention and scrutiny to the very claims the non-disparagement clause was intended to suppress. 

Question: How does an employer add some more teeth to a non-disparagement agreement to deter breach by the employee? 

One common strategy used by employers is to provide that the severance payment will be made in the form of salary continuation or periodic installments over time.  This gives employers needed leverage for enforcement—if the employee breaches, you hold back on paying the rest of their severance.   On the other hand, if you are the employee, you want a lump sum payment of your severance to make a clean breakand get out from under the thumb of the employer as soon as possible. 

In the end, I don’t want to convey the impression that non-disparagement clauses are a waste of time and not worth the effort.  Those who claim that these provisions are simply a way for lawyers to throw a bunch of useless stuff into an agreement for CYA are being overly cynical.  They serve as a needed psychological deterrent in a tension-filled environment, and induce parties, as some have called it, to “play nice in the sandbox.”

Although it’s not always possible, having both parties part company, move on but continue to act in a dignified and civilized fashion should be the end goal for everyone.