Posts tagged ‘Facebook’

Is Your Credit Union Afraid To Call Its Members?

This may seem like a ridiculous question but the ridiculous part is that existing federal law has been so mangled beyond recognition that it is a question that any credit union concerned about complying with the Telephone Consumer Protection Act (TCPA) should be asking itself.

The need to clarify the reach and scope of this statute is underscored in a brief submitted by CUNA on Friday in a case pending before the Supreme Court.  The case, Facebook, Inc. v. Duguid, Noah, involves an appeal by Facebook challenging the scope of the TCPA, an issue which has split courts around the country.  CUNA was one of several prominent organizations which filed briefs to the court explaining how an expansive interpretation of the TCPA does more harm than good to consumers.

As readers of this blog know, the TCPA was well intended legislation passed by Congress in the early 90s to cut down on those obnoxious dinner time conversations you get from telemarketers and those disconcerting pre-recorded pitches that are left on your cell phone in the middle of the most important meeting of your day.  The basic idea is that consumers should not be subject to a deluge of automated marketing pitches without first giving their consent.

Unfortunately, as readers of this blog also know, this well intended concept has transformed into a tripwire of litigation with boundaries that are so unclear that many credit unions simply avoid using any technology which could potentially trigger TCPA compliance concerns.  According to CUNA’s Supreme Court amicus, 76% of credit unions responding to a 2017 survey reported that it is very difficult or somewhat difficult to determine whether or not their communications are TCPA compliant.  The result, according to the survey, is that 75% of responding credit unions have curtailed the use of more efficient technology simply to avoid running afoul of the TCPA and its strict liability for penalties of $500 per violation.  In fact, American Airlines federal credit union has abandoned the use of automatic technology altogether.  This is a remarkable concession from a $5.6 billion credit union with 235,000 members.

The core of the confusion comes down to the answer to that classic School House Rock ditty “Conjunction Junction, what’s your function?”  Under §227 (a) an “automatic telephone dialing system” means equipment which has the capacity (A)to store or produce telephone numbers to be called, using a random or sequential number generator; and (B)to dial such numbers.

As succinctly explained in CUNAs brief, the court is being asked to decide whether the TCPA encompasses any device that can store and automatically dial telephone numbers, even if it does not use a random sequential generator.  If the answer is yes, then virtually any communications device this side of the iPhone triggers TCPA compliance.

September 14, 2020 at 9:32 am Leave a comment

California Dreaming? Why and What You Should Know About CA’s Privacy Law and Regulations

The most important regulation that is out for comment right now is not being promulgated by the federal government or New York State. Instead, they are regulations proposed by California to implement the California Consumer Privacy Act of 2018 (CCPA).

To be clear, assuming you are not a California credit union or dealing with California consumers, you can go about your day happy with the fact that there is actually a state that imposes even more onerous mandates on its businesses than New York. That being said, there isn’t a compliance person, IT professional or lawyer working with businesses or financial institutions today that shouldn’t be aware of the steps California has taken to give consumers greater control of their personal online data. We are all going to have to comply with similar frameworks sometime in the future, and my guess is that future is coming sooner rather than later.

So what is the CCPA? It is a comprehensive statute which gives California residents the right to know what private information of theirs is being collected by businesses, as well as to give consumers the right to forbid businesses from selling this information to third parties. It also gives consumers the right to demand that their information be deleted, although there are exceptions to this requirement. The statute was inspired by the European Union’s GDPR framework and was a reaction to Facebook’s mishandling of account information, and the ease with which it gave this private information to venders including political operatives who helped target voters in the 2016 election.

Why is this such a big deal? From a public policy standpoint, it codifies the principle that peoples’ personal information is theirs to control and use as they see fit. This includes a right to internet privacy. From a technical standpoint, the legislation has necessitated a fundamental shift in how information is collected, stored and organized.

For example, in New York, effected businesses worked themselves into a low-level frenzy when the Department of Financial Services established baseline requirements for the encryption of personally identifiable information. In contrast, effective January 1, 2020, California consumers will have the right to know about the specific pieces of personal information that a business has collected about them; a breakdown by category of the personal information that it has collected or sold; the purpose for which they collected or sold this information; and the categories of third parties to whom this information has been sold.

The definition of personal information is broader than what we’ve gotten used to. Specifically, this “means information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.” The key to understanding the definition is that it captures big data uses by including information which can be used to identify a specific individual, such as an individual’s ”browsing history, search history, and information regarding a consumer’s interaction with an Internet Web site, application, or advertisement.”

In recognition of the difficulty and cost of implementing this radical mandate, the law does not apply to all businesses. Instead, it applies to businesses that have at least 25 million dollars in gross revenues; that buy, receive or sell personal information of 50,000 or more consumers or households; or derive 50% or more of their annual income from selling personal information.

There is much more I could talk about, but there’s only so much I can test your patience when it comes to describing California law. Nevertheless, what California is doing will catch on. I would be asking my IT person or department what resources they would need to comply with this kind of requirement, and to start moving in the direction of being able to segregate personal information by member. The more time you give yourself to integrate this approach into your IT and compliance framework, the more cost-effective it will be.

October 16, 2019 at 9:24 am Leave a comment

Washington Tees Off On Facebook; Senate to Hear from CU’s on Pot Banking and Main Street is where the $ is

Today is the last day of the blog until I return from a week’s vacation on July 29th. Here is some info I wanted to make sure you knew before I head to Cape Cod this weekend.

Facebook cemented its status as the latest company everybody loves to hate. The US Senate Banking Committee held a hearing yesterday Scrutinizing Facebook’s plans to introduce a block chain cryptocurrency for Consumers sometime next year. As expected. reactions to the plan ranged  from polite skeptical to hysterical.

In the polite skepticism category is this quote in the American Banker from committee chairman Mike Crapo “Despite the uncertainties, Facebook’s stated goals for the payments systems are commendable,” Crapo said. “If done right, Facebook’s efforts to leverage existing and evolving technology and make innovative improvements to traditional and nontraditional payments systems could deliver material benefits, such as expanding access to the financial system for the underbanked, and providing cheaper and faster payments.”

In the hysterical category is this quote from the committee’s ranking senator, Democrat Sherwood Brown: “Facebook is asking people to trust them with their hard-earned paychecks,” said Brown. “It takes a breathtaking amount of arrogance to look at that track record and think, you know what we really ought to do next? Let’s run our own bank and our own for-profit version of the Federal Reserve for the world.”

With all due respect to the senator, a company started in 2004 as a dorm room platform to categorize coeds that grew into the world’s dominant communication platform is entitled to a little breathtaking arrogance. Besides, this country has been breathtakingly slow and arrogant to adopt payment system Innovations. It’s time to give the private sector a turn. The sky is not going to fall. It isn’t time to start the campfire with dollar bills

Upcoming hearing on Cannabis Banking

Speaking of the Senate Banking Committee, it will be holding a cannabis banking hearing on July 23rd and the concerns of credit unions will be front-and-center.

Rachel Pross, the chief risk officer of Maps Credit Union in Oregon,  is scheduled to be the lead speaker on the committee’s second panel following comments by senators Gardner and Merkley, both of whom represent States that have legalized cannabis.

The Credit Union has been on the cutting edge of providing banking services to marijuana businesses. In testimony before a House committee earlier this year Pross explained that the credit union has been providing these services since 2014 when Oregon voted in a referendum to legalize cannabis.

The conventional wisdom is that the House has the votes to pass legislation permitting  states which have legalized marijuana, to continue to do so without violating federal law but it will take a much bigger lift to get this done  in the Senate.

 Consumer Banking Heats up as Investment Banking Cools

The all-important earnings season, when publically traded company’s announce and put their best spin on their quarterly earnings is here. If current trends continue expect the big guys to continue to move aggressively to expand their consumer banking presence.

There is no better bellwether for the state of U.S. banking than JPMorgan Chase so here is a link to information about it second quarter earnings report. Page 3 of the press release demonstrates that  the behemoths are growing by capitalizing on consumer banking. The WSJ points out this morning that while the American consumer is generally in a good mood businesses which generate money for investment are much less sanguine about the economic outlook. Expect to face even more competition.



July 17, 2019 at 10:06 am Leave a comment

Five Things You Need To Know As You Start Your Credit Union Day

Usually gleaming anything useful from the congressional testimony of Fed Chairman is about as easy as interpreting hieroglyphics without the use of the Rosetta Stone but yesterday was a glaring exception. Most importantly for credit unions all the major news outlets that I read this morning agreed that Jerome Powell was all but announcing that the Fed will be cutting short-term interest rates soon.

In his testimony he deemphasized the latest encouraging jobs report and made it abundantly clear that the uncertain times we live in are impacting the economy. Specifically, he noted that “crosscurrents have reemerged. These concerns may have contributed to the drop in business confidence in some recent surveys and may have started to show through to incoming data. In our June meeting statement, we indicated that, in light of increased uncertainties about the economic outlook and muted inflation pressures, we would closely monitor the implications of incoming information for the economic outlook and would act as appropriate to sustain the expansion. Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted.”

Translation: inflation is in check and while the economy is growing it could use the boost offered by a rate cut which will be particularly beneficial to workers on the lower end of the economic pay scale.

Powell to Trump: Hell no I won’t go

Another incredibly blunt moment of the Chairman’s testimony came in response to a question from House Financial Services Chairman, Maxine Watters who asked him how he would respond if the President was to ask him to resign. Powell has of course been a prime target of the President’s tweet tantrums lately. “My answer would be no,” Powell responded, making it quite clear that any effort to remove him would result in a messy, messy legal dispute.

Powell to Facebook: Not so fast

Powell was also in a targeted mood when it came to throwing cold water on the plans of Facebook and other companies to introduce a crypto currency (See Monday’s blog). According to the American Banker, Powell responded to lawmaker questions on the issue by bluntly opining that the project can’t go forward until regulators are satisfied that the companies have a better feel for the full range of issues ranging from potential money laundering to the creation of a systemically important currency which conceivably could have the potential of dealing a body blow to the entire world’s economy.

Reg CC Update

The NCUA recently provided this notice reminding credit unions, among other things, that the monetary thresholds promulgated under Reg CC have been updated. You might want to make sure that your cooperating system got the message.

A Good Read

Finally, although it’s not directly related to credit union land, here is a great article by Greg Ip of the WSJ delving into one of my favorite issues: is there a skills gap in the American economy?

July 11, 2019 at 9:27 am Leave a comment

Why Facebook’s Currency Is a Good Idea

The most interesting and potentially consequential thing that happened over the holiday week was that the House Financial Services Committee sent a letter to Facebook’s CEO formally requesting that he put the brakes on their plans to introduce libra, a cyber currency which Facebook plans to administer along with 24 other companies including PayPal and MasterCard.

According to the Luddites, I mean Congressmen, the proposed new currency and digital wallet which Facebook plans to start offering the middle of next year. Facebook’s proposal involves massive “risks” on an unprecedented scale. In addition, the crypto currency could provide an “under regulated platform for elicited activity and money laundering.” Hearings will follow shortly.

It’s time for everyone to take a deep breath and come back down to Earth. The plans of Facebook and its partners are the logical inevitable evolution of currency. In addition, in the short to medium term this has very little to do with creating a revolutionary new currency and almost everything to do with capturing a larger portion of payment transactions. This is a big deal but hardly revolutionary.

First, the only reason we use paper currency today is because crypto currency wasn’t around thousands of years ago when we started seeing a large scale need for the secure exchange of credit that businesses and consumers could rely on. Currency is nothing more or less than a contract, albeit one backed by the full faith and credit of governments, that the paper you have in your pocket will be accepted and honored by the total stranger down the street.

In many ways it has become grossly inefficient. In his book “The Curse of Cash” Professor Kenneth S. Rogoff points out that contrary to popular belief “demand for most advanced country currency paper notes has been rising steadily for more than two decades” precisely during the time period you would expect debit cards to be making money obsolete. According to Kenneth S. Rogoff, by the end of 2015 1.34 Trillion worth of US currency was being held outside US banks. Furthermore, the bulk of this cash is in denominations of $100 or more. This is not an abstract problem. India’s Prime Minister was so concerned by the use of high denomination currencies to facilitate illegal activity that he literally took large denominations out of circulation.

And let’s all stay calm. Facebook’s “currency” is only going to be valued to the extent that it can be converted into common currency. What is so telling to me about Facebook’s announcement isn’t that Facebook wants to create a crypto currency but that its founding members include MasterCard, PayPal and Visa, companies that specialize in facilitating transactions. What really is going on here is not some idealistic quest to create a world without cash but rather an aggressive and smart business move to take a larger chunk of the money to be made off facilitating business transactions. This isn’t something to be feared, it is the free market at its best. If they succeed we will have a better, safer system and if they don’t, all the armchair reactionaries can say I told you so.

Does this represent a threat to your credit union? Yes it does. But the threat is no different than any other multitude of other challenges confronted by the industry as technology once again revolutionizes the way banking is done.

Which brings me back to the Luddites. I would have a lot more sympathy for regulators and our elected representatives if they didn’t insist on moving so slowly in updating our payment system. What Facebook is doing is commonsensical to anyone with a smartphone. I can now go weeks without going to an ATM secure in the knowledge that so long as my smartphone is charged up I can just about pay for anything I need. In fact, Sweden   has already gone a long way towards  phasing out cash. If anything, Facebook’s innovation is, if anything, long overdue.

July 8, 2019 at 9:04 am Leave a comment

Facebook Has A New Pen Pal: The Senate Banks Committee

On Friday, the Chairman and Ranking Member of the Senate Banks Committee sent a politely worded letter to Facebook inquiring about its plans to move aggressively into the payments market by offering its users the opportunity to buy products directly from merchants using a Facebook backed coin or cryptocurrency depending on how nefarious you want to make its plans sound.

Why is this a big deal? Well how much money do you make off credit and debit card transactions issued by your credit union? If Facebook successfully integrates the coin payment platform into its infrastructure this would mean that 1/3 of the world’s population could start using Facebook to facilitate purchases, making Facebook an overnight threat to Visa and MasterCard.

In their letter to Facebook, following an article describing Facebook’s plans in the Wall Street Journal, the Senators explain that in addition to Facebook’s cryptocurrency ambitions, “privacy experts have raised questions about Facebook’s extensive data collection practices and whether any of the data collected by Facebook is being used for purposes that do or should subject Facebook to the Fair Credit Reporting Act.”

As with so many other aspects of its growth Facebook is somewhat clumsily taking aim at the financial sector. In addition to questions about its cyber currency ambitions, it is currently being sued by HUD over claims that it violates its advertising platform allows lenders to effectively engage in digital redlining by choosing such finely tuned demographic target audiences in such a way that lenders can avoid offering financial products and services to minorities.

Assembly To Hold Municipal Deposit Hearing Next Monday

In case you haven’t heard, the Assembly Banks and Local Governments committee will be holding a hearing on municipal deposits next Monday. An assortment of credit union, bank and local government organizations have been invited to testify. This is a key opportunity for credit unions to respond to banker municipal deposit myths and finally allow public tax dollars to be placed in those financial institutions where they will most benefit taxpayers.

Department of Treasury Issues OFAC Guidance

I’ve been analyzing this guidance for a couple weeks now trying to figure out how significant it is and why it was issued in the first place. It seems to me that nothing in this release should be a surprise to anyone who has tried to comply with OFAC which I’m assuming almost all of my faithful readers have. Nevertheless, any time the Department of Treasury comes out with guidance on this issue you should read it and compare your practices with those expected by the regulator.

May 13, 2019 at 8:45 am Leave a comment

Five Issues That Will Shape Your Credit Union Week

I haven’t done  one of these in a while but I saw so many important issues to bring to your attention that here is a quick rundown. As longtime readers of the blog know any one of these issues could be the basis for an expanded blog in the future.

How Do You Protect Your At Rest Data?

I’m more than a little surprised that there isn’t more outrage out there stemming from the disclosure that hundreds of millions of Facebook users had their account passwords stored “in plain text and searchable” format  as far back as 2012. This information could be accessed by thousands of Facebook employees.

When New York implemented its cybersecurity regulations, one of the most hotly debated issues was what measures  institutions holding personally identifiable information had to take to make sure it was protected.  While there was broad agreement that information in transit – such as an attachment to an email – should be encrypted,  many institutions argued that it wasn’t necessary or cost-effective to mandate the encryption of data “at rest” provided it was protected by a firewall.

NY 23 NYCRR 500.15 effectively splits the difference. It provides that personal information should be encrypted even at rest unless doing so isn’t feasible and an  institution uses alternative controls yo protect the data. This determination should be based on an individual risk assessment which makes sense since what is feasible for a state chartered credit union isn’t the same as what is feasible   for an entity of the size and sophistication of Facebook.

According to Facebook, there’s no evidence that the information has been misused but in reality  we won’t know that for sure for several years. Besides, even if not a single password was misused, Facebook’s inexcusably incompetent handling of member data is yet another textbook example of why Congress has to act to establish national baseline cybersecurity standard.

Prepaid Card Regulations Effective April 1st

This is just a quick reminder that on April 1st regulations providing consumer protections and imposing disclosure requirements on the issuers of prepaid reloadable cards take effect on April 1st. you can be forgiven for not realizing that these regulations shortly take effect as their effective date has been changed on more than one occasion. Even if your credit union doesn’t offer prepaid cards today, I would certainly familiarize yourself with these requirements. My guess is more and more institutions will start offering prepaid cards in the coming years.

Credit Union Employee Complains of Harassment at GAC

In one of the highest profile criticisms of the credit union industry since the #metoo movement gained steam, Rachel Pross, Chief Risk Officer at MAPS Credit Union in Oregon, has posted a blog detailing inappropriate conduct by attendees at CUNA’s recently ended Governmental Affairs Conference and calling on the industry to do a better job of confronting  harassing behavior: “I would argue that our industry needs to be even more aware and react more swiftly when bad behavior is demonstrated, because we can’t tout our family oriented, not-for-profit, feel-good, opposite-of-Wall-Street, altruistic, people-oriented nature and then behave just like everyone else.”

New York State Budget

The New York State budget is due April 1st and according to Governor Cuomo the parties remain far apart on key issues even though the Senate and Assembly are both controlled by democrats now. Just how far apart? Well, Budget Director Robert Mujica told reporters a couple of weeks ago that an on time budget was virtually impossible and another top aide to the Governor has called an on time budget fantasy.

Why does this matter to credit unions? With marijuana legalization reportedly out of budget negotiations at this point, there aren’t too many issues that will have a direct impact on credit unions when the budget is finalized. But the sooner the budget is resolved, the sooner the focus of the legislative activity will shift to legislative issues including those that are so important to credit unions. Let’s hope that the legislature and Governor put the budget to bed.

What Direction is the Economy Going in?

In truth, no one knows the answer to that question. One sure sign of danger though is that the dreaded inverted yield curve occurred on Friday, scaring the bejeebees out of Wall Street in helping to trigger a sharp decline in stock prices. The yield curve made its appearance just two days after the Fed announced that it does not plan on raising interest rates any time soon. In fact, the Wall Street Journal is reporting this morning that investors increasingly feel that a rate cut is more likely than a rate rise later in the year.

March 25, 2019 at 10:00 am Leave a comment

What Big Banks Giveth Can they Taketh Away?

As fans of the blog know, I have been highly complementary of NCUA’s efforts to get back money from the banking behemoths who peddled the securities which brought down the corporate system and cost credit unions billions of dollars. NCUA’s efforts have been a model for other regulators and saved all credit unions money. BUT, and you knew a but was coming didn’t you, it appears that we aren’t quite out of the woods yet when it comes to this litigation. Many of the banks with which NCUA reached settlements with are now suing NCUA claiming that it has breached its obligations under the settlement agreements. Specifically, these lawsuits claim that NCUA has not done enough to protect or deter third-parties from bringing lawsuits against these banks.

What makes the case even more interesting from a New York State perspective is that they hinge on the application of New York State contract law. Why is this intriguing to me? Because there isn’t a credit union or company in the state that hasn’t agreed to boiler plate language at some point “requiring them to act in good faith.” What exactly does that mean? When is this language violated? It’s one of those things you ultimately can’t describe because it is so fact sensitive but you know it when you see it. Or so the banks are going to argue.

Another question that remains to be seen is how much money is at stake in this litigation. The banks are basically arguing that they should get some of their money back from NCUA because it hasn’t kept up its side of the settlement bargain.

Latest Facebook Troubles Embody Data Privacy Debate

Earlier this week Governor Cuomo directed the Department of Financial Services and other state agencies to “immediately investigate” allegations that Facebook is accessing people’s personal data off their cell phones. The allegations over Facebook and the Governor’s understandable reaction to it underscores why I think we are so close but yet maybe so far from an acting federal data privacy protections. We are close because people have finally woken up to the fact that some of their most personal data is being collected and sold to third parties and that this might actually be a bad thing.

Another reason we are so close is because if you are a company like Facebook, would you rather have a single set of federal regulations to deal with or 50 state regulations? This is particularly true when you consider that California and New York are arguably much more aggressive in seeking to police data privacy and security than the federal government has been.

Why do you I think we are so far? Because the grand bargain here has to be a national standard which preempts state law. It will be interesting to see if such a bargain will ever be able to make it through the house.

February 27, 2019 at 8:36 am Leave a comment

Will Facebook make your members more secure?

fbThis article in today’s American Banker tipped me off to an announcement by Facebook that it is offering members the ability to use and register physical tokens as an added feature to guard against account hacking. Although I am proudly not one of the estimated 1 billion users out there who delude themselves into thinking that they have scores of friends who want updates on little Johnny’s latest achievements and a picture of the gourmet meal that they are making for dinner, I have to concede that the American Banker has a point, when it quotes banking officials who suggest that Facebook’s announcement will probably have members asking their financial institutions to offer them the same type of protection.

A press release posted on Facebook yesterday explains that “Starting today, you can register a physical security key to your account so that the next time you log in after enabling login approvals, you’ll simply tap a small hardware device that goes in the USB drive of your computer. Security keys can be purchased through companies like Yubico, and the keys support the open Universal 2nd Factor (U2F) standard hosted by the FIDO Alliance.”

What confuses me a tad about the announcement is that it is only going to be beneficial for us old-timers who still do our banking online with a laptop or desktop that has a USB port. Even though Facebook started as a means for kids at Harvard to know where the next party was going to be, fifty percent of Facebook users are over the age of 40, which explains why I know so much more about my friends and neighbors than I really need to. My wife is a Facebook fan.

McWatters Named Acting NCUA Chairman

 The inimitable J. Mark McWatters completed his unlikely lies from board gadfly to leader of the NCUA yesterday when he was named Acting Chairman of the NCUA Board, by President Donald Trump. Here are a few quick thoughts.

This is good news for credit unions, leaving aside his seemingly compulsive need to reference the fact that he is a lawyer at least once every five minutes, McWatters’ legal acumen has been a welcomed change for the industry.

  • He has advocated for taking a fresh look at issues ranging from MBL’s to Field of Membership flexibility.
  • It may have been totally by accident, but NCUA has actually positioned itself well ahead of the Trump wave by already having McWatters on the Board. McWatters joined by Metzger, have been advocating for substantial regulatory relief for almost two years now. As a spokesman for the Board McWatters can only help build bridges to Congressional Republicans.
  • Under NCUA’s enabling statue lets the President pick the Chairman of the NCUA Board: What a concept. This commonsense measure provides another example of why CFPB supporters are so wrong in their dogmatic instance that the bureau can only function with a single benign dictator.

On that note, enjoy your weekend without football. I will have to remember what I used to do on Sunday afternoons.

January 27, 2017 at 8:40 am Leave a comment

When Does An Employee’s Post Go Too Far?

How much can you, or should you, discipline employees for comments they make on their own social media accounts, like Facebook?  That is the question I have been asking myself since reading this article in the CU Times reporting that MTC Federal Credit Union based in Greenville, South Carolina fired one of its loan officers for using a racial slur on Facebook. 

The CU Times reports that Gerri Cannon admitted to posting the slur, but also contended that she is not a racist and has retained a lawyer.  As I like to point out, retaining a lawyer doesn’t mean you have a case.  Ms. Cannon’s dilemma provides an important teaching moment for credit union employers and employees alike. 

The first thing I always hear in these cases is that the employee’s free speech rights are being violated.  But they aren’t.  The First Amendment restricts government conduct, not the conduct of private citizens. Hudgens v. N. L. R. B., 424 U.S. 507, 513, 96 S. Ct. 1029, 1033, 47 L. Ed. 2d 196 (1976).  This means that Ms. Cannon has a right to post just about anything she wants on Facebook and MTC FCU has every right to fire her for it. 

The second question that always gets raised in these situations is that the Employee Handbook didn’t ban the specific conduct.  But to answer this question, we need to take a little detour.  As most of you know, New York, like most other states, is an at-will employment state.  This means that unless otherwise specified, employment is for an indefinite period of time and may be “freely terminated by either party at any time for any reason or even for no reason.”  Lobosco v. New York Tel. Co., 96 N.Y.2d 312, 316, 727 N.Y.S.2d 383, 751 N.E.2d 462 (2001).  There is a misconception on the parts of employees and employers that a handbook creates a contract which modifies at-will employment.  And, in fact, there have been cases in which a poorly drafted handbook restricted the ability of employers to get rid of an employee.  Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 465-66, 443 N.E.2d 441, 445 (1982). 

But this is very much the exception to the rule.  As a federal court noted earlier this year New York’s Court of Appeals has pointed out, “[r]outinely issued employee manuals, handbooks, and policy statements should not be lightly converted into binding employment agreements.  This is especially true where the handbook contains an express disclaimer.”  Rumsey v. Ne. Health, Inc., 89 F. Supp. 3d 316, 340-41 (N.D.N.Y. 2015), aff’d, No. 15-833, 2016 WL 336196 (2d Cir. Jan. 28, 2016), as corrected (Jan. 29, 2016). 

Does this mean that a credit union can just ignore its handbook?  Not at all.  A more typical case than the one involving MTC FCU involves a discharged employee who argues that she was unfairly disciplined by her employer because of her race.  For instance, let’s say that a credit union routinely looks the other way when it hears about inappropriate comments on employee Facebook pages.  If that same credit union turns around and fires a pregnant or minority employee who makes such a comment, the unequal treatment can be used as evidence of discrimination on the part of the employer.  Redford v. KTBS, LLC, No. 5:13-CV-3156, 2015 WL 5708218 (W.D. La. Sept. 28, 2015), on reconsideration in part, No. CV 13-3156, 2016 WL 552960 (W.D. La. Feb. 10, 2016).

One more thing to keep in mind when monitoring employee social media conduct is to make sure you are not violating federal labor laws.  As I’ve mentioned in previous blogs, the NLRB is aggressively protecting the right of employees to engage in “concerted activity” using social media.  This means that an employee’s complaints about his workplace may in fact be protected.  It also means that you must be sure that your social media policies are not so poorly written that they can be read as prohibiting employees from taking to Facebook to talk about workplace concerns.

Needless to say this is one of those fast evolving areas that creates confusion and legal actions.   This is one of those areas where a review of your handbook and a call to your attorney make a lot of sense.

On that note, enjoy your day.




April 6, 2016 at 9:04 am 4 comments

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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