Many Wisconsinites are aware that Wisconsin Act 10 transformed union-management labor relations in the public sector when it became law in 2011. The enactment produced massive protests, political upheaval and numerous legal challenges.

Act 10 prohibits most public employees from collectively bargaining on issues other than base wages, prohibits municipal employers from deducting labor organization dues from paychecks of general employees, imposes annual recertification requirements, and prohibits fair share agreements.

The legal battle over Act 10 is over for now. The law has been upheld in its entirety by the Wisconsin Supreme Court in a 5-2 decision handed down on July 31, 2014.

The case was brought by Madison Teachers, Inc. and a union representing Milwaukee city employees. They argued that Act 10 violated state and federal constitutional rights to freedom of association and equal protection under the law. Writing for the majority of the Supreme Court, Justice Michael Gabelman stated, “Collective Bargaining remains a creation of legislative grace and not constitutional obligation.” Therefore, he continued, the legislature may change the nature of collective bargaining as it did in Act 10.

Chief Justice Shirley Abrahamson and Justice Ann Walsh Bradley wrote in dissent that the majority opinion diminished multiple constitutional rights. They would have held that Act 10 unconstitutionally infringes on the right of people to organize.

In his concurring opinion, Justice Patrick Crooks acknowledged that for many public workers, “Act 10 effectively ended meaningful union representation carried out through statutory collective bargaining.” He noted that the law reflects various policy determinations and that the judicial branch “must observe and recognize that the court system cannot substitute its judgment on questions of policy.” Those determinations, he wrote, are for the Wisconsin Legislature and Governor.

Wisconsin’s new Social Media Protection Act is significant for employers. There have been several high-profile cases around the nation in the last several years that have challenged the employer practice requiring that their employees provide the employer with password information to the employee’s personal Internet accounts. Such information allows the employer to access the employee’s personal social media accounts, like Facebook. Facebook itself has spoken out against the practice.

Now, Wisconsin has joined a small-but-growing number of states that prohibit an employer from requesting or requiring an employee or job applicant, as a condition of employment, to disclose access information to his or her personal Internet account or to otherwise grant access to or allow observation of that account. The new law, which may be found here, also prohibits an employer from discharging or discriminating against an employee or applicant who refuses to disclose such access information.

“Access information” is defined under the law as a user name and password or any other security information that protects access to a personal Internet account.

There are several important exceptions to the law. The law does not prohibit an employer from:

• Requesting or requiring an employee to disclose access information in order for the employer to gain access to or operate an electronic communications device supplied or paid for in whole or in part by the employer or in order for the employer to gain access to an account provided by the employer, obtained by virtue of the employee’s employment relationship with the employer, or use for the employer’s business purposes. Thus, if an employer sets up a LinkedIn account for the employee, the new law allows the employer to require the disclosure of access information.
• Discharging or disciplining an employee for transferring the employer’s proprietary or confidential information or financial data to the employee’s personal Internet account without the employer’s authorization.
• Subject to some exceptions, conducting an investigation or requiring an employee to cooperate in an investigation of any alleged unauthorized transfer of the employer’s proprietary or confidential information or financial data to the employee’s personal Internet account, if the employer has reasonable cause to believe that such a transfer has occurred. Similarly, the employer is allowed in instances of alleged employment-related misconduct or a violation of the employer’s work rules as specified in an employee handbook to request access information, if the employer has reasonable cause to believe that activity on the employee’s personal Internet account relates to that misconduct or violation of a work rule. In these situations, an employer may require an employee to grant access to the employee’s personal Internet account, but may not require the employee to disclose access information for that account.
• Restricting or prohibiting an employee’s acts as to certain Internet sites while using an electronic communications device supplied or paid for in whole or in part by the employer or while using the employer’s network or other resources.
• Viewing, accessing or using information about an employee or applicant for employment that may be obtained without access information or that is available in the public domain.
• Complying with a duty to screen applicants for employment prior to hiring or a duty to monitor or retain employee communications that is established under state or federal laws, rules, or regulations or the rules of a self-regulatory organization, as defined in 15 USC 78c (a)(26).
• Requesting or requiring an employee to disclose the employee’s personal electronic mail (email) address.

Considerations for Employers:
Although many Wisconsin employers may not have been requiring employees or applicants to disclose access information prior to the enactment of the new law, wise employers should consider how to lawfully regulate its employees’ use of the Internet and social media while on the job. The new law assists the employer in setting enforceable guidelines.

In some instances, it may be necessary for an astute employer to regulate employee communications with respect to the employee’s personal social media sites in matters that pertain to the employer’s business, like protecting the employer’s confidential information. The new law assists an employer in drafting and implementing such policies, although some questions remain. An employer is advised to review its employee handbook, Internet use policies and business practices to make sure that they are consistent with the new Wisconsin law Protection Act Protection Act

If your business hires people to help with the work (whether office tasks or production of goods or services), then you need to properly classify the workers as employees or independent contractors.

Here is one important reason why classification matters: Generally, you must withhold income taxes and withhold and pay Social Security and Medicare taxes and unemployment tax on wages paid to employees. You generally do not have to withhold or pay taxes on payments to independent contractors for the work they do for you.

It may be tempting for a business to misclassify workers as independent contractors and not as employees. Independent contractors are not subject to the minimum wage and overtime provisions of the Fair Labor Standards Act, nor are they generally eligible for unemployment or worker’s compensation benefits or employer-provided fringe benefits.

The issue of worker classification has captured the attention of the IRS. The head of employment tax policy for the IRS recently told the American Bar Association about plans to increase enforcement of worker classification regulations. This means that businesses should anticipate increasing review over their classification of workers as independent contractors instead of as employees.

Employers who misclassify employees face an array of possible penalties. The IRS may seek to recover unpaid employment taxes from employers who misclassify an employee as an independent contractor. Employers also face potential overtime compensation, FICA, worker’s compensation, ERISA issues and other tax liabilities on the federal and state levels.

Proper classification is based on various criteria, but the most basic criterion is the “right of control.” Generally speaking, an employer-employee relationship exists when the person for whom the services are performed has the right to control and direct the individual performing the service regarding the results of the work and the measures used to accomplish those goals.

Common Law Rules
Factors that affect the degree of control fall into three categories:

1. Behavioral: Does the business control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (These include things like how a worker is paid, whether expenses are reimbursed, and who provides tools or supplies, for example.)
3. Type of Relationship: Are there written contracts or employee-type benefits (i.e. pension plan, insurance and vacation pay)? Will the relationship continue, and is the work performed a key aspect of the business?

A business must weigh all such factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors may suggest that the worker is an independent contractor. There is no “magic” or set number of factors that “make” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors that are relevant in one situation may not be relevant in another.

The key is to look at the entire relationship, consider the degree or extent of the right to direct and control, and then document each of the factors used in arriving at the determinations.

There is a long-standing misconception among employers that anyone paid less than $600 a year may be classified as an independent contractor. In fact, there is no minimum limit on amount of remuneration or number of hours worked that is relevant to classification determination.

Solutions
What should a business do to prevent or reduce misclassification risks?

One effective approach is a self-audit where the business evaluates its hired help with the assistance of a professional to determine the level of misclassification-related risk.

Businesses that self-identify potential risks are able to initiate appropriate corrective measures. The ability and willingness to self-correct comes with real economic benefits – the costs associated with a self-audit and self-correction plan are likely less than the fines and fees that might result from a single IRS audit or a worker lawsuit for overtime wages, among other claims.

In addition, Section 530 of the Internal Revenue Act of 1978 provides a safe harbor. It states in part that an individual will not be considered an employee if a taxpayer treated him or her and other workers performing similar tasks as non-employees for all periods, had a reasonable basis for doing so and filed required information and other returns consistently with that status. See your legal or tax professional for additional assistance.

A business’s success strategy should include ways to protect its confidential, proprietary and trade secret information from its competitors. One way to guard such information is to establish policies that limit what the company’s employees may communicate to others. Recently, however, the National Labor Relations Board’s Acting General Counsel (AGC) has taken aim against numerous so-called social media policies. The AGC has determined that many such policies run afoul of the National Labor Relations Act (NLRA).

The NLRA grants employees the right to engage in protected, concerted activities for “mutual aid or protection” and freedom of association. These rights apply whether or not the workplace is unionized. An employer’s interference with such rights may constitute an unfair labor practice.

With the growing number of people using social media like Facebook, Twitter and LinkedIn, the astute business should consider policies that address its employees’ use of social media resources without violating the NLRA. Drafting social media policies that pass muster with the AGC has been and is a challenging task, however. In a memorandum issued on May 30, 2012, the AGC highlights the importance of a well-drafted social media policy, while concluding that many current policies that the AGC has revised are unlawful because they violate, or potentially violate, the NLRA.

For example, the AGC concluded that the social media policy of a nationwide retailer that encouraged employees to “use technology appropriately” by requiring that the employees not release confidential customer, co-employee or company information violated the NLRA. He found that the policy would “reasonably be interpreted as prohibiting employees from discussing and disclosing information regarding their own conditions of employment,” a right protected under the NLRA.

Another social media policy was found to be unlawful where employees were instructed to be sure that their electronic posts are “completely accurate and not misleading and that they do not reveal non-public information on any public site.” The AGC concluded that the term “completely accurate and not misleading” is overbroad because it would reasonably be interpreted to apply to discussions about the employer’s labor policies and its treatment of employees. Such interaction among employees is protected under the NLRA.

Another policy that was reviewed, one that cautioned employees that they should first consult with their employer when they have any doubt about the appropriateness of posting company information, was determined to violate the NLRA. The AGC concluded that “any rule that requires employees to secure permission from the employer as a precondition” to engaging in protected activity violates the NLRA.

What can an employer do to protect its confidential, proprietary and trade secret information? An employer should not avoid developing a social media policy that appropriately limits employees’ e-expression, but should be careful to draft a policy that does not run afoul of the NLRA, at least in the opinion of the NLRB’s legal counsel. The AGC provided an example regarding an acceptable social media policy. Here are guideposts to developing an acceptable social media policy:

• Employers need to review their desired policies to clearly express legitimate business interests of the employer.

• The employer should consider and list specific examples of confidential, proprietary, and trade secret information that are off limits from disclosure.

• The policy should set forth why the restrictions are necessary.

• The policy should set forth that it is not intended to restrict the rights that employees have under the NLRA. However, simply setting forth that the social media policy is not intended to violate the NLRA will not save the policy from being unlawful if it otherwise chills protected rights of employees.

The AGC Memorandum raises more questions than it answers, but this much is clear: The astute business will not put its head in the sand and simply ignore the risks of employees’ use of social media. It will develop a fair and balanced policy that does not overreach into the arena of employees’ protected activities.