10 commandments for tech employers

The young workforces that characterize tech companies bring special challenges

A new and innovative technology company may be an employee’s dream destination, but the youth that fuels these companies also makes them vulnerable to unique challenges. While the average age of American workers is 42, most tech employees are 30 or younger. This younger workforce is politically aware, active on social media and unafraid to jump ship should a better opportunity come along. Few of them have worked in traditional corporate environments, and their managers often have little if any training on how to supervise employees, much less handle stickier human relations matters. Tech companies should therefore focus on these 10 tech commandments:

1. Provide basic training to employees. Employers should assume that their employees are new to an office environment. All employees need training concerning office etiquette, appropriate attire and workplace policies regarding respect for others, anti-harassment, anti-retaliation, and anti-discrimination. With a young workforce, employers risk facing claims of age discrimination in particular, so special attention must be paid to training management and employees on this topic. Similarly, employees and managers must be educated on creating an environment free of sexual harassment and discrimination in light of the high-profile gender claims against companies such as Uber. Additionally, given the tech world’s culture of transparency, tech employees must be trained on company policies concerning political expression both inside and outside the workplace, whether such policies apply to social media use, water cooler conversation or interactions with clients.

2. Train your managers regarding human resources policies. Much employment-related litigation could be prevented if the relevant manager were aware of the employer’s policies or trained on how to handle employee issues. Employers should hold mandatory trainings and refresher courses for managers to address policies, applicable laws and managers’ obligations under the laws, use of the HR function, and performance appraisals. (See #9). Such trainings can help avoid or mitigate claims of retaliation, harassment or discrimination and create a more positive and productive work environment.

3. Determine what social media policy is right for you. While social media policies are all the rage among employers who seek to prevent leaks of confidential information and reputational damage, employers must ensure that, given the tense political climate and the millennial activist mentality of many young tech employees, their social media policies are carefully crafted. The Equal Employment Opportunity Commission and the National Labor Relations Board are scrutinizing such policies and employment actions taken under such policies. Employers should ensure that any actions taken also comply with state laws concerning political speech.

4. Revise your policies and ensure compliance with new and changing laws. Many tech companies begin as startups and thus never put together a thorough handbook containing necessary policies. A robust handbook is important because employees consult the handbook, and in litigation it is assumed that the policies are correct reflections of an employer’s practices. It is especially important that your handbook fully complies with any local paid sick leave laws. In New York City, the enforcement agency has aggressively pursued penalties against small employers for noncompliant handbooks, even when employees received the full benefits of the law.

5. Update your confidentiality agreements to obtain the full benefit of the new law. It is always advisable to revisit confidentiality agreements to ensure coverage of recent company innovations. The passage of the Defend Trade Secrets Act (DTSA) in 2016 also gave employers a new reason to revise these agreements. The DTSA addressed a long-felt need for uniformity in trade-secret law by establishing a national trade-secret protection standard. Recognized by many as the largest expansion in federal law in intellectual property since the Lanham Act in 1946, the DTSA creates a new federal civil cause of action for trade-secret misappropriation. In addition to remedies for compensatory damages, pursuant to the DTSA employers may seek exemplary damages (double damages) and attorneys’ fees. However, such damages are only available when the confidentiality agreement with the employee provides an “immunity notice” in accordance with the statute. This notice must appear in confidentiality agreements executed on or after May 12, 2016.

6. Analyze whether restrictive covenants are right for you. Many tech employers have never considered requiring employees to sign agreements not to compete or not to solicit clients or employees, while others have never considered going without. Employers should assess whether (a) they should have a restrictive covenant agreement, (b) their current restrictive covenant agreement is enforceable, (c) their practices are within industry norms, and (d) all or some of their employees should be bound by a restrictive covenant. The ability to restrict employees’ future competitive activities depends on applicable state law and jurisprudence.

7. Review your pre-hire forms and processes. Tech companies often grow rapidly, which necessitates the constant updating of on-boarding forms and processes. Laws and jurisprudence concerning background checks and confidentiality of personnel data are also continuously changing. Review these forms and processes and ensure that they comply with local and federal law.

8. Ensure that your employees are properly classified. As companies grow, the shortcuts of hiring independent contractors or classifying everyone as exempt become problematic. Federal and state laws provide more limited bases upon which an independent contractor may be utilized than most employers realize. And while an employer may have intended that a role be exempt (and not eligible for overtime pay), in practice the role may lack the characteristics that confer exempt status. Conducting an audit of employees and contractors can be a time-consuming process, but it is worth the investment to avoid the significant expense associated with misclassification, particularly given the long statutes of limitations and the availability of punitive damages in some states.

9. Assess your employee performance assessments. Although tech companies tend to be more informal, a formal review process is still essential to employee development and protecting employers from potential claims. Train your managers to write specific, constructive and honest reviews of employees, which help to both ensure employees receive feedback and document poor performance, and to deliver these reviews in a timely, thoughtful and clear manner.

10. Determine the advisability of compelling arbitration of employment matters and review your standard arbitration provision. Arbitration is attractive to tech employers, as it is often a faster and less expensive method for litigating an employment claim. Additionally, arbitration is a confidential proceeding, which can protect tech companies from unwanted publicity. The forum you select for arbitration is important in determining the expense and speed with which a matter will be arbitrated. If an employer has an existing arbitration provision, it should be reviewed to ensure the inclusion of statutory discrimination claims, and a class action waiver should be considered.

Katrina Baker and Eliza Kaiser are New York-based employment lawyers at law firm Kramer Levin Naftalis & Frankel LLP.


Copyright © 2017 IDG Communications, Inc.

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