Hello. I’ve been busy for many months and have not made any new blog entries. Recently, however, there have been several signficant developments in the non-compete world. To begin the discussion again, I want to take a step back and look at some of the developments during the past year.
Last Spring, Colorado joined an increasing number of states and adopted legislation limiting access to employees’ social media passwords. Effective May 11, 2013, employers “may not suggest, request, or require” an employee or job applicant to disclose any password for social media accounts. Nor may employers compel an employee or applicant to add anyone to the employee’s list of contacts associated with the account. This is Colorado’s “Facebook Law”.
For the time being, “social media accounts” probably was intended to mean Facebook or Linked-In. Linked-In particularly is used by many employees, who create a network of the contacts developed during their career. For a salesman, the relationship with these “contacts” is invaluable.
Colorado’s new law does not prevent an employer from conducting an investigation to ensure compliance with securities laws. Nor does the new law prevent an employer from investigating an employee’s electronic communications if the employer has information that there has been “unauthorized downloading” of an “employer’s proprietary information”.
An employee’s remedy for any violation of the new law is limited. When the law was proposed, it included a private right of action that allowed an employee to sue for any violation of the law. The court had the discretion to grant injunctive relief and award compensatory damages and attorneys fees. These remedies were lost during the legislative process. Under the law as adopted, an employee may only file a complaint with the Colorado Department of Labor and Employment. The Department is charged with investigating the complaint and may impose a penalty of $1,000 for a first offense and not more than $5,000 for subsequent offenses. Such a penalty would be small consolation for an employee who was a victim of an overzealous employer.
Since the adoption of the new law, the Department of Labor has initiated a ruling proceeding to adopt regulations. It has also published a website (www.colorado.gov/cdle/socialmedia) where you can find a “Fact Sheet” and a form for making a complaint to the Department. The Department has said that its approach to the law may evolve as new developments occur.
The Department’s draft regulations provide additional guidance for employees and employers. These regulations clarify that an employer may not discharge or discipline an employee for refusing to disclose passwords for social media accounts. Or for refusing to add the employer to the list of an employee’s contacts. Under these regulations, anonymous complaints may not be filed with the Department.
Social media accounts have the potential to play an increasingly important role in non-compete or non-solicit cases. With a social media account, a former employee has the opportunity to tell all of his contacts about his new job by pushing a button and changing his profile. Additional posts will examine these issues.