Preventive Law Tactics for Dealing With Angry Employees, Boycotts, and Bad Publicity
The Wet Seal Fiasco
On January 5, 2015, Leeann Duggan of Refinery29 wrote, “according to a post that appeared on Reddit … employees at a going-out-of-business Wet Seal in Seattle posted the sign below in their store window.”
“The sign calls for shoppers to boycott the chain and accuses management of failing to pay employees for unused vacation time, giving laid-off employees only one day’s notice of their store closing (leaving little time to find new jobs), and not offering employees transfers to other stores.
Wet Seal has fallen on hard financial times lately; the California-based retailer has faced dramatically declining profits for the past two years, plus tumbling stock prices. It recently received a default notice from its creditors to the tune of nearly $30 million. In December, the company announced that it may file for bankruptcy soon if its fortunes don’t improve.
This Seattle store’s employees are clearly aware of the brand’s recent troubles: Their sign states that, despite the brand’s ‘financial hardship,’ Wet Seal’s CFO received a $95,000 raise this year, while an employee of five years received their first raise ever (16 cents above minimum wage).” (Refinery29)
I’m not going to speak to the issue of the $95,000 raise Wet Seal’s CFO allegedly received in 2014, because (1) it is irrelevant to whether or not continuing to employ these particular workers at this particular retail location was cost-effective, and (2) the issue of executive compensation is a topic for a different article. What is at issue in this article is what happened at Wet Seal, why it happened, and how to prevent it from happening to your company.
Preventing Cyberterrorism and Defamation
Wet Seal’s former employees should not have posted a sign in the Seattle Wet Seal store window alleging various “wrongs” suffered by the employees, calling for a boycott. Even if doing so was not, strictly speaking, defamation (libel), the employees who hung the sign received no benefit aside from the personal satisfaction attending an act of revenge for a perceived wrong. Posting the sign on Reddit is tantamount to a cyberterrorist attack against Wet Seal. Cyberterrorism can be defined as the intentional use of a computer, networks, or public internet infrastructure to cause destruction and harm for personal objectives. Matusitz, Jonathan (April 2005). Cyberterrorism: American Foreign Policy Interests 2: 137–147. I strongly believe, whoever used Reddit to attempt to cause harm to Wet Seal for personal objectives–whether ideological, in solidarity with Wet Seal’s former employees, or personal, if the post was made by one of the former employees, themselves–committed an act of cyberterrorism.
“Cyberterrorism is defined by the Technolytics Institute as ‘The premeditated use of disruptive activities, or the threat thereof, against computers and/or networks, with the intention to cause harm or further social, ideological, religious, political or similar objectives. Or to intimidate any person in furtherance of such objectives.’ The term was coined by Barry C. Collin.” Cyberterrorism. (n.d.). Retrieved January 7, 2015, from http://en.wikipedia.org/wiki/Cyberterrorism. See also http://oai.dtic.mil/oai/oai?&verb=getRecord&metadataPrefix=html&identifier=ADA439217; see also Afroz, Soobia (June 16, 2002). “Cyber terrorism — fact or fiction?“. Dawn. Retrieved 2008-08-30.
Retaliatory cyberterrorist attacks against companies by disgruntled current or future employees are a very real threat to employers in the Information Age. Indeed, such attacks, in the aggregate, represent a very real threat to the American economy. What can employers do to prevent cyberterrorist attacks by disgruntled current or future employees? I believe the answer is surprisingly simple, and it is twofold: (1) use written employment contracts, and (2) as part of new hiring orientation, educate employees about their rights and responsibilities under the terms of their employment contract.
Employment contracts such as I recommend using would incorporate by reference the company’s Employee Handbook, which should have a section devoted to Internet and Public Information Policies. The company’s goal should be to reasonably restrict an employee’s right to post to the Internet information about the company, its finances, employee compensation, etc. in order to protect the company’s brand. Such employment contracts should also define cyberterrorism in the contract as it has been defined above, and, as a condition of employment, require each employee to agree to accept liability for damages resulting from cyberterrorist attacks perpetrated or instigated by the employee, as well as liability for other breaches of confidentiality or violations of the company’s relevant policies and procedures.
In summary, employers would be well-served by using employment contracts that give them more control over the information an employee can disseminate online by giving the company the contractual right to seek damages for breach of contract when an employee commits a cyberterrorist act, defames the employer, or breaches confidentiality. Confidentiality Agreements are not just for executives anymore. If you think this is overkill, ask Wet Seal how this boycott and the bad press resulting from this incident is affecting or is likely to affect their already-suffering bottom line.
Of course, without proper employee education, even a well-drafted contract is not an effective deterrent to the kinds of behavior companies would like to discourage. Employers should take the time and make the effort to educate newly hired employees about their rights and responsibilities, especially when using employment contracts. Employers should expressly tell their employees: We have an Employee Handbook, and your contract incorporates the Employee Handbook; this means if you violate the policies and procedures in the Employee Handbook, you have materially breached your employment contract. Not only may you be fired for breaching your employment contract, but you may also be liable to pay the company damages for breach of contract.
Employees need to understand their actions may have serious financial consequences even beyond termination–especially when they are considering using cyberterrorism as a retaliation for the termination of their employment. Incentives matter, and an employee who reasonably believes they may be sued by the company for breaching a contract with their former employer may think twice before posting a tacky sign in a store window and / or posting negative information about the employer on the Internet.
Contractual At-Will Employment
Washington State, where the Wet Seal store involved in the above story is located, is an at-will employment state. “Most employment [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][in Washington] is ‘at will.’ You can be fired at will — for any reason or no reason at all,” as long as it is not an illegal reason such as unlawful discrimination. (Northwest Justice Project) “‘At will’ employment also means you can quit your job at will — for any reason, at any time.” I’ve written, before, about the benefits of using employment contracts, even in at-will employment states; I encourage you to read what I’ve written on that topic.
If Wet Seal had used employment contracts, the company could have expressly included an at-will employment provision in the contract, thereby maintaining each employee’s at-will status. By using a contract, instead of simply assuming its employees understood they were at-will employees who had no property interest in or any right whatsoever to their jobs, Wet Seal could have made it clear that both the employee and the employer could terminate the employment relationship at any time, for any reason or no reason. Evidently, that wasn’t clear to the employees.
As I have written elsewhere, written contracts perform several key functions, one of which is the Channeling Function. The Channeling Function of a written contract is best understood as forcing “the raw material of meaning into defined and recognizable channels” and reducing “the fleeting entities of wordless thought to the patterns of conventional speech.” Fuller, Consideration and Form, 41 Colum. L. Rev. 799, 800-802, 806 (1941). Employers who make the terms of employment crystal clear in the wording of written employment contracts confer upon their employees the benefit of having a document that leaves little doubt as to the employee’s rights and responsibilities with respect to their employment.
Wet Seal’s former employees appear to believe they were wronged by Wet Seal when they were let go. If they were, I don’t see how. Washington companies, generally speaking, do not legally have to give employees benefits such as a pension, health insurance (unless they must under federal law, such as Obamacare), vacation, or sick leave. If an employee has built up paid vacation time or sick time available under the policies and programs Wet Seal offers its employees, they must compensate their employees for such time as the employee could have taken within a reasonable period of time. This period of time has not had time to elapse, and Wet Seal, therefore, still has ample time to compensate their former employees as the law requires.
The wage & hour laws in the state of Washington are enforced by the Washington State Department of Labor & Industries. Now or in the future, if the employees sincerely believe they have a legitimate legal right to compensation they have not received, such as “missing paychecks” or unpaid vacation or sick time, they should file a Workplace Rights Complaint with the Washington State Department of Labor & Industries. If the Washington State Department of Labor & Industries determines Wet Seal has violated their former employee’s workplace rights, the state will enforce the law and seek a remedy on behalf of the workers whose rights were violated. The process is similar in many states.
Contracts + Education vs.
Boycotts, Cyberterrorist Attacks, and Bad Publicity
Employers might object to using employment contracts because they wrongly believe employment contracts are not cost-effective. Which would you rather deal with, though: a slight increase in the amount of up-front investment in each new hire or the ever-looming, constant risk that any web-savvy employee could, at any time, damage your brand by generating negative publicity about your business online? What if such an employee committed a cyberterrorist attack against your company, successfully organized a boycott of your company, and disseminated your confidential information online? Do you trust the laws currently on the books and the courts to effectively protect your interests, to make you whole?
Wouldn’t it be better to prevent these kinds of legal crises before they ever occur? Wouldn’t you like the security of knowing you have legal recourse if one of your employees goes online, and starts hurting your bottom line, damaging the brand in which you have invested so many resources? It might be too late for Wet Seal, but it’s not too late for you. Contact Executive Legal Professionals, today, and we can get started right away helping you protect your business from the negative effects of defamation, bad publicity, and cyberterrorist attacks.
This article may be freely reprinted or distributed in its entirety in any e-zine, newsletter, blog or website. The author’s name, bio and website links must remain intact and be included with every reproduction. View general information about this license; or view detailed legal information about this license.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]