BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1844| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1844 Author: Campos (D), et al. Amended: 8/22/12 in Senate Vote: 21 SENATE LABOR & INDUSTRIAL RELATIONS COMM. : 5-0, 6/27/12 AYES: Lieu, DeSaulnier, Leno, Padilla, Yee NO VOTE RECORDED: Wyland, Runner SENATE FLOOR : 37-0, 8/20/12 AYES: Alquist, Anderson, Berryhill, Blakeslee, Cannella, Corbett, Correa, De León, DeSaulnier, Dutton, Emmerson, Evans, Fuller, Gaines, Hancock, Harman, Hernandez, Huff, Kehoe, La Malfa, Leno, Liu, Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio, Runner, Steinberg, Strickland, Vargas, Walters, Wolk, Wright, Wyland, Yee NO VOTE RECORDED: Calderon, Lieu, Simitian ASSEMBLY FLOOR : 73-0, 5/10/12 - See last page for vote SUBJECT : Employer use of social media SOURCE : Author DIGEST : This bill prohibits an employer from requiring or requesting an employee or applicant for employment to disclose a user name or password for the purpose of accessing personal social media, to access personal social media in the presence of the employer, or to divulge any personal social media. This bill also prohibits an CONTINUED AB 1844 Page 2 employer from discharging, disciplining, threatening to discharge or discipline, or otherwise retaliating against an employee or applicant for not complying with a request or demand by the employer that violates these provisions. Senate Floor Amendments of 8/22/12 specify that, notwithstanding any other provision of law, the Labor Commissioner, who is Chief of the Division of Labor Standards Enforcement, is not required to investigate or determine any violation of the provisions of this bill. Senate Floor Amendments of 8/20/12 provide further clarity specifying that the employer may request an employee to divulge personal social media reasonably believed to be relevant to an investigation, provided that the social media is used solely for purposes of that investigation or a related proceeding. These amendments are technical and clarifying in nature. ANALYSIS : Existing federal and state law protects employees, both prospective and current, against employment discrimination when it involves unfair treatment because of a person's race, color, religion, sex (including pregnancy), national origin, age, disability or genetic information. Existing law also protects employees against harassment by managers, co-workers, or others in the workplace and against retaliation for complaining about discrimination, filing a charge of discrimination, or participating in an employment discrimination investigation or lawsuit. (Government Code Section 12940, 12945, and 12945.2) Existing law prohibits employers from discriminating, discharging or refusing to hire an employee based on an employee's lawful conduct during nonworking hours away from the employer's premises. (Labor Code Section 96 and 98.6) Both federal and state law, through the federal Fair Credit Reporting Act (FCRA) and the California Consumer Credit Reporting Agencies Act (CCRAA), regulates the collection, dissemination and use of personal and credit information gathered by consumer credit reporting agencies. Existing law restricts the use, with some exceptions, of credit information for employment purposes. (Labor Code Section 1024.5) CONTINUED AB 1844 Page 3 Existing law further regulates anyone who collects, assembles, evaluates, compiles, reports, transmits, transfers, communicates information on a consumer's character, general reputation, personnel characteristics, or mode of living, for employment purposes, which are matters of public record. (Civil Code Section 1786.53) This bill establishes prohibitions on the ability of an employer to require the disclosure of information on personal social media accounts. Specifically, this bill: 1. Defines "social media" as an electronic service or account, or electronic content, including, but not limited to, videos, still photography, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, or Internet Web site profiles or locations. 2. Prohibits an employer from requiring or requesting an employee or applicant for employment to do either of the following: A. Disclose a user name or password for accessing personal social media. B. Access personal social media, in the presence of the employer. C. Divulge any personal social media. 3. Specifies that nothing in the bill is intended to affect an employer's existing rights and obligations to investigate alleged workplace misconduct or violation of applicable laws and regulations. 4. Specifies that nothing in this bill precludes an employer from requiring or requesting an employee to disclose a username, password, or other method for the purpose of accessing an employer-issued electronic device. 5. Prohibits an employer from discharging, disciplining, threatening to discharge or discipline, or otherwise CONTINUED AB 1844 Page 4 retaliate against an employee or applicant for exercising their right to refuse access to their personal social media information. However, this bill does not prohibit an employer from terminating or otherwise taking an adverse action against an employee or applicant if otherwise permitted by law. 6. Provide further clarity specifying that the employer may request an employee to divulge personal social media reasonably believed to be relevant to an investigation, provided that the social media is used solely for purposes of that investigation or a related proceeding. Background Social media in the workplace . The use of technology for personal and business purposes has exploded in recent years, and with that explosion comes challenges. The use of social media for communication through programs such as Facebook, Twitter, LinkedIn and MySpace, has become a phenomenon for people of all ages. Information that was once broadcast by word or written media is now instantly broadcast around the world, unfortunately, to the detriment of some employers and employees. The use of social media in the workplace can present several problematic situations around issues of free speech, discrimination of current and potential employees, harassment, and even termination. Although existing law protects current and potential employees against discrimination and/or retaliation in the workplace, nothing specifically addresses the issues that arise with the use of information obtained through social media sites. For pre-employment purposes, an employer must make hiring decisions without regard to race, age, gender or familial status, however, a quick search on Facebook could give the employer this information making the employer liable for potential hiring discrimination. For an individual that is already employed, the National Labor Relations Act (NLRA) prohibits employers from restricting the rights of employees to engage in concerted activities, such as discussions about wages, work conditions or terms of CONTINUED AB 1844 Page 5 employment. Employers may create and adopt a policy regarding the use of social media as it relates to their employment site(s); however, existing law prevents employers from intruding into an employee's legal off duty conduct. Such policies can restrict the use of social media at work with company equipment but cannot prevent employees from discussing the terms and conditions of their employment with other employees using their own personal devices on non-working time. Social media in the news and the courts . Recent articles have reported on cases at the national level showing a trend of educational institutions and employers that require current and potential students and employees to divulge their social media user names and passwords. According to an msnbc article, "In Maryland, job seekers applying to the state's Department of Corrections have been asked during interviews to log into their accounts and let an interviewer watch while the potential employee clicks through wall posts, friends, photos and anything else that might be found behind the privacy wall." (Govt. agencies, colleges demand applicants' Facebook passwords, April 20, 2012.) In this 2010 incident, the Maryland Department of Public Safety and Correctional Services requested that Robert Collins disclose his Facebook username and password during a reinstatement interview following his leave of absence for a death in the family. A complaint was filed by the American Civil Liberties Union which stopped the practice and instead made it voluntary. Pietrylo v. Hillstone Restaurant Group . The issue of an employee's right to privacy with regard to his or her social media account password was discussed in the case of Pietrylo v. Hillstone Restaurant Group. According to court documents, the lawsuit was filed by two employees, Pietrylo and Marino, after they were fired from their restaurant employer for creating a private MySpace page that allowed employees to vent about their workplace. Since the page was private and could only be joined by invitation, one of the restaurant managers asked a third employee (St. Jean) for her MySpace password in order to access the private page. While the employee admitted that she was not threatened, she did state that she felt that she had to give her password to her manager when asked. The jury ultimately CONTINUED AB 1844 Page 6 found that St. Jean's consent was coerced and ruled in favor of the former employees (Pietrylo and Marino) in June 2009. The United States Court of Appeals for the Third Circuit affirmed this decision in September 2009. ÝPietrylo v. Hillstone Restaurant Group, 2009 WL 3128420 (D.N.J. 2009)] Comments Need for this bill . It is illegal for an employer to discriminate against an employee or applicant on the basis of lawful conduct they engage in during nonworking hours away from the employment site. Examples of protected lawful conduct include exercising free speech rights or engaging in political activities while off-duty. Although existing law affords current and potential employees with various protections against discrimination and/or retaliation in the workplace, nothing specifically prohibits the use of information obtained through social media sites. This bill prohibits an employer from requiring or requesting an employee or applicant to disclose information to access a personal social media account, whether in or outside the presence of the employer. Similar efforts at the federal level and in other states . In response to incidents such as the ones previously mentioned, legislation was recently introduced (April 27, 2012) at the federal level which would ban such practices. H.R. 5050: Social Networking Online Protection Act similarly seeks to ban employers from requiring or requesting access to the private email accounts or private social media accounts of employees and similarly seeks to bar higher education institutions and schools from requiring or requesting access to the private email accounts or private social media accounts of students. Lawmakers in Maryland passed a bill (SB 433/HB 964) this year which prohibits employers from requiring that applicants or employees disclose personal user names or passwords for any personal account or service. The bill also prohibits an employer from taking or threatening to take certain discipline actions for an employee's refusal to disclose certain password and related information. The CONTINUED AB 1844 Page 7 bill was signed by the Governor of Maryland and the new law takes effect October 1, 2012. While the Maryland legislation was the first of its kind, lawmakers in several other states have introduced similar legislation. The State of Illinois is also considering legislation to address the issue of password privacy. HB 3782 amends the Right to Privacy in the Workplace Act to provide that it is unlawful for any employer to ask any prospective employee to provide any username, password, or other related account information in order to gain access to a social networking website where that prospective employee maintains an account or profile. HB 3782 passed both houses and is now awaiting the Governor's signature of approval. Similar legislation has been introduced in New Jersey, Massachusetts, New York, and other states. Senate Labor and Industrial Relations Committee staff comment: carve-out request . The primary purpose of the Financial Industry Regulatory Authority, as a "self-regulatory organization," is to establish rules and guidelines that help members comply with federal laws, especially those promulgated by the Federal Securities and Exchange Commission. In order to detect potential fraud, or simply to ensure that financial services representatives do not make misleading or improper statements to clients, FINRA requires member firms to adopt "supervisory procedures" that permit review of an employee's communications with clients, including electronic communications. FINRA requires that these procedures be "reasonably designed to ensure that their associated persons Ýi.e. employees, financial advisers, sales representatives, etc.] who participate in social media sites for business purposes are appropriately supervised." (FINRA Regulatory Notice #10-06, pg. 7) The Securities Industry and Financial Markets Association is seeking an amendment that would exempt it from the provisions of this bill. SIFMA claims that under rules promulgated by FINRA, their members are required to monitor communications which are increasingly conducted through social media accounts such as Facebook, Twitter, or LinkedIn. SIFMA claims that this bill would put them in a position of violating either state law (with this bill) or CONTINUED AB 1844 Page 8 their FINRA obligations. However, upon review of the federal rules it does not appear that a special exemption is needed for this industry. At the outset, it should be noted that FINRA is not a governmental entity but a private "self-regulatory organization." Its rules are neither federal statutes nor federal regulations. Therefore, this bill would not appear to place California law in conflict with federal rules. FINRA rules do, however, have some consequences since violators are subject to FINRA-imposed fines and disciplinary actions. Moreover, preemption would appear not at issue, since the provisions of this bill do not appear to be in any conflict with FINRA rules. FINRA clearly recognizes that if they permit employees to use personal accounts for business purposes, then that member has an obligation to "supervise and retain those communications." (Regulatory Notices #07-59, pg.8 and #10-06, pg. 7.) FINRA states that: "Firms must adopt policies and procedures reasonably designed to ensure that their associated persons who participate in social media sites for business purposes are appropriately supervised, have the necessary training and background to engage in such activities?.Firms must have a general policy prohibiting any associated person from engaging in business communications in a social media site that is not subject to the firm's supervision." (FINRA Regulatory Notice #10-06, pg. 7) This bill prohibits an employer from requiring or requesting an employee or applicant to disclose information to access a personal social media account. Thus, importantly for the industry's request to be carved out, FINRA does not require members to demand access to those personal accounts. Instead, FINRA recommends that employers avoid this problem altogether by expressly prohibiting employees from using personal accounts for business purposes. It seems that in order to avoid these types of situations, these companies could establish policies requiring employees to only use company accounts for business purposes. CONTINUED AB 1844 Page 9 FINRA guidelines even recommend the use of blocking technology to reinforce the policy against employee use of personal accounts for business purposes. (Regulatory Notice #07-59, pages 8-9.) It appears that FINRA assumes that employers cannot simply demand access to personal accounts; otherwise theses blocking mechanisms would be unnecessary. Related Legislation AB 22 (Mendoza, Chapter 724, Statutes of 2011) established prohibitions, with some exceptions, on an employer's ability to utilize consumer credit reports for employment purposes. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 8/23/12) American Federation of State, County and Municipal Employees, AFL-CIO California Association for Health Services at Home California Chamber of Commerce California Conference Board of the Amalgamated Transit Union California Conference of Machinists California Labor Federation California Society of Association Executives California Teachers Association California Teamsters Public Affairs Council California Workforce Association Consumer Action Engineers and Scientists of California, IFPTE Local 20 International Longshore and Warehouse Union Jockey's Guild Privacy Rights Clearinghouse Professional & Technical Engineers, IFPTE Local 21 South Bay AFL-CIO Labor Council State Building and Construction Trades Council of California TechNet UNITE HERE - AFL-CIO United Food & Commercial Workers Western States Council CONTINUED AB 1844 Page 10 Utility Workers Union of America Local 132 OPPOSITION : (Verified 8/23/12) Financial Industry Regulatory Authority Securities Industry and Financial Markets Association ARGUMENTS IN SUPPORT : According to proponents, in this age of electronic correspondence and social media, more and more of a person's personal life is online. However, they argue, when it comes to an employer - employee relationship, it has never been an acceptable request for an employer to ask to see personal correspondence or personal photos of current or prospective employees. They argue that just because these items are now appearing and being stored online does not make it any more germane to determining an employee or prospective employee's work ethic than it was in the past. Proponents further argue that asking for access to a worker's social media account is a major intrusion into a person's personal life by an employer. According to proponents, this is a common sense measure that ensures a level of privacy for employees and prospective employee's social media accounts, especially as the law around social media access is evolving. They believe this bill also provides clarity for California employers in this area of unsettled law. Proponent believe that collective efforts must be aimed at getting people into jobs and keeping them in jobs and that business practices that impede those efforts, making it more difficult for workers to get jobs and retain them, should be discouraged. ARGUMENTS IN OPPOSITION : According to the Securities Industry and Financial Markets Association (SIFMA), while this bill is well-intended, it conflicts with the duty of securities firms to supervise, record, and maintain business-related communications as required by the Financial Industry Regulatory Authority (FINRA). They argue that if this bill passes in its current form, firms will be in the untenable position of having to violate either state law or their FINRA obligations. SIFMA argues that while they have no interest in accessing employee CONTINUED AB 1844 Page 11 accounts that are used exclusively for personal use, the problem is that many people use the same account for both personal and business activity. SIFMA contends that in order to protect investors, FINRA requires, among other things, that securities firms supervise, record and maintain their employees' business communications - including those disseminated on social media sites. They argue that these requirements are spelled out in several different FINRA rules and regulatory notices and denying securities firms access to social media accounts where business is being conducted directly conflicts with FINRA regulations. Additionally, they argue that it also puts customers at risk, as it will be much harder for firms to detect serious problems, including (1) misleading claims by an employee, such as the promise of an unrealistically high rate of return on investment; (2) insider trading, Ponzi schemes and other fraudulent activity; and (3) inappropriate conduct such as the selling of investment products that are not approved by the firm. Furthermore, SIFMA argues that the bill does not address the increasingly common scenario where a financial services employee seeks and obtains firm approval to use his or her personal site for business use. In these instances, firms must have the ability to monitor, record, and retain these employee communications. Therefore, the opponents are requesting an amendment to carve-out financial service firms from the requirements of the bill which would allow them to access a personal social media accounts or devices of a financial services employee. They believe that this carve-out would allow them to comply with both this bill and FINRA regulations. ASSEMBLY FLOOR : 73-0, 05/10/12 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Campos, Carter, Cedillo, Chesbro, Conway, Davis, Dickinson, Donnelly, Eng, Feuer, Fong, Fuentes, Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Jones, Knight, Lara, Logue, Bonnie Lowenthal, Ma, CONTINUED AB 1844 Page 12 Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, Norby, Pan, Perea, Portantino, Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao, Wagner, Wieckowski, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Charles Calderon, Cook, Fletcher, Furutani, Jeffries, Olsen, V. Manuel Pérez PQ:m 8/23/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED