Posts tagged ‘Facebook’

Are You Ready To Compete With Facebook?

On April 17, 1978, the Wall Street Journal wrote a seemingly obscure article in its Money Matters column describing a trend in which an increasing number of investors were using “so-called personal computers” to model investments in what the paper described as a movement of professional money managers to utilize quantitative measures when making investment decisions.

Fast forward to today and computers are now basically doing the investing for the money managers and investment banks are investing billions of dollars to ensure that they can feed the latest data to their computers before everyone else does.  Times change. 

Often it is the obscure event that ends up having the biggest consequences, so for me the most intriguing article so far this week was published in the Financial Times on Sunday.  It reported that Facebook will soon be obtaining an e-banking license from the Irish government which will allow it to transfer money on its Facebook platform.  No one knows for sure what precisely Facebook is planning to do, but when you consider that about one out of every six people in the world use the social network, it has the potential to implement a cooperative financial structure on an industrial scale. 

For instance, let’s just say that Facebook simply wants to get a piece of the international remittance system.  The World Bank estimates that in 2011 alone there were $350 billion in remittances to developing countries.  Imagine how much money Facebook could make if it became the platform of choice for making these electronic payments?  The model is already being used.  In a previous blog, I talked about a mobile phone payments network, which is booming in Africa called M-PSA, which allows individuals to create electronic bank accounts on their phone and then transfer these funds.  Its use has exploded in the developing world.  It also enables individuals on the M-PSA network to make micro-loans to fellow network users.  

Let’s speculate a little more.  Your credit union does nothing more than act as a conduit for people who want to save money and people who want to borrow it.  Which brings me to the second most intriguing article I read this week, courtesy of my wife.  The article was about an 18-year-old woman who is starting a line of bras for young tweens and teens.  She obtained the money for her new business not by going to a credit union, or bank for that matter, but by going to a cite called Kickstarter — a crowd funding organization — and with the help of a video she quickly raised $42,000 that she used to launch her line. 

When Europe started the cooperative financial movement in the 19th Century, the idea of poor people leveraging their wealth outside of the traditional financial structure was a radical innovation.  While the cooperative structure still has many benefits, society is now connected in one big network.  Those credit unions that recognize that they are competing against not only banks but businesses, and have the willingness and foressight to organize and leverage that network are going to be around 36 years from now.  In contrast, those of you who stubbornly refuse to recognize just how interconnected finance has become won’t be.  In practical terms, this means the industry needs more cooperative ventures such as shared branching networks, not less.  It also means that since everyone is already in a cooperative, albeit an electronically created one, maintaining the credit union brand is crucial if we are going to get the next generation to borrow money from a credit union instead of a social network platform.

April 17, 2014 at 8:42 am Leave a comment

EEOC Provides Guidance On Social Media, Religious Accommodation

As faithful readers of this blog know, I am not an employment law attorney but I still like to highlight emerging issues that may confront you in the workplace.  One of the issues that most intrigues me is the extent to which employers should delve into an applicant’s social media postings as part of the hiring and promotion process. 

 I’ve come to believe that looking into someone’s Facebook postings, as tempting as it might be, does more harm than good.  A good interview will get you all the information you need about an applicant, while checking someone’s Facebook page could potentially set you up for a claim that you discriminated against an applicant because of their race, religion, and, in states like New York, sexual orientation.

A good friend of mine thinks I am nuts.  He points out that you can learn a lot about a person from what they post on Facebook.  Do you really want a camp counselor, for instance, who brags about how much pot they smoked over the weekend?

Yesterday, the Equal Employment Opportunity Commission hosted a meeting/conference discussing the various workplace issues raised by social media and I love the compromise that one of the attorneys, Renee Jackson of Nixon Peabody, suggested as part of the dialogue.  First, make sure that social media is just one of several sources you access when doing an applicant background check.  Second, have a third-party or employee not involved in the hiring decision review publicly available information about the employee from social media cites.  This employee can report just the facts but omit information such as an employee’s race or religion that should not be part of the hiring decision in the first place.

Speaking of religion, the EEOC recently issued guidance on accommodation of an employee or applicant’s religious beliefs in the workplace. Title VII of the Civil Rights Act of 1964 bans employers with 15 or more employees from discriminating against an employee based on, among other things, her religious beliefs. This means that employers must accommodate an employee’s sincerely held religious beliefs unless doing so would constitute an undue hardship for the employer.

The recently issued, wide ranging guidance stresses, among other things, that a customer’s unease with an employer’s religious attire doesn’t allow the employer to reassign the employee.  This means, for example, that you can’t shift a teller who is a practicing Sikh to a back office position because members have complained he wears a turban.  Another theme of the guidance is that employers should not delve too deeply into how strongly an employee actually holds his or her religious beliefs.  For example, an employee might wear a religious symbol for only one month out of the year or be a recent convert to an obscure faith but these facts are irrelevant in determining how best to accommodate the employee.  

One other theme worth noting has to do with dress codes.  Employers should make exceptions to dress codes to accommodate sincerely held religious beliefs.  Doing so doesn’t mean that the dress code can’t be enforced against other employees.  The bottom line with all of this is to be reasonable.

March 13, 2014 at 8:19 am Leave a comment

When It Comes To Facebook, What You Know May Hurt You

imagesSuppose you have a supervisor who takes an avuncular interest in one of the up and coming employees he manages for your credit union.  He likes him so much that he tries to set him up with his daughter.  The employee politely refuses the offer, but the daughter ends up friending him on Facebook.  She tells her father that one of the organizations the employee has liked on Facebook is dedicated to advocating for same-sex marriage.

When the supervisor, who is deeply religious, turns hostile against the employee, can the credit union be sued for discrimination, particularly in a state like New York that now bans discrimination based on sexual orientation?  Yes it can be.

This hypothetical is not a hypothetical at all.   A great article in this month’s Inside Counsel magazine highlighting the legal challenges faced by social media in the workplace noted a case in which the Library of Congress is being sued by an employee who claims he was discriminated against after a supervisor surmised he was gay based on his Facebook page.

Now, for the record, I don’t get Facebook and I never will.  Why people want to post the minutia of their lives to scores of casual acquaintances I will never know, but the fact is they do.  As reckless as I think some people are with their Facebook accounts for acting as if this information is private, employers are better off using that as their working assumption as well.

Why?  The simple legal answer is by accessing someone’s Facebook page, you are put on notice regarding information that you have no right taking into consideration when dealing with an employee and the mere act of doing so may create a factual dispute in a future lawsuit.  For instance, let’s say you find out that an applicant belongs to a local mosque and an equally qualified candidate belongs to the Methodist Church.  No good can come from knowing any of this.

I talked about this with a friend of mine recently, who doesn’t ask for passwords but will see what he can find on an applicant’s Facebook page.  His argument is that good employer due diligence includes knowing everything about a potential employee’s judgment and character:  a picture of him taking a hit from a bong in his college dorm speaks volumes about both.  However, a good enough interview process should give you a means to fairly assess an applicant.  We’ve done this for hundreds of years after all, without Facebook.

There’s also a legislative component to this issue.  An increasing number of states have either passed or are considering legislation limiting employer access to employee social media.  Keeping in mind that the views I express are my own and not necessarily those of the Association, it is time for New York and maybe even the federal government to pass such legislation.  As silly as it is for employees to think that they have an expectation of privacy on Facebook, the world is changing and employers need bright line rules to delineate when they cross the line between employer due diligence and voyeurism.

May 8, 2013 at 8:21 am 1 comment

News Flash: Social Media Presents Compliance Issues

social-mediaGarrison Keillor has a great theory about neighborhood barbeques:  when you have five or six people deciding when the burgers are done, many of whom aren’t quite sure how to barbecue, you inevitably end up with a grossly overcooked burger.  That’s the way I feel about guidances issued by the FFIEC, the council representing all the major federal bank regulators and state banking departments.  It’s not that the guidances aren’t useful.  It’s just that when you have to reach consensus among that many people the resulting document is often so general as to be void of any practical value except for that relative handful of institutions that didn’t realize there were regulatory issues in the first place.

I am bringing this up because yesterday the Grand Council released a proposed guidance on regulatory issues related to the use of social media by financial institutions.  Remember that just because it is called a guidance doesn’t mean it is any less binding on your credit union than a traditional regulation.  It provides the framework for examiners reviewing your credit union practices and as such should not be ignored.

First, what is social media?  Social media refers to the interactive use of electronic communication such as through Facebook, Instagram and Twitter.  What does the proposed guidance mandate?  In a nutshell, the use of social media presents compliance, legal, operational and reputational risks to your financial institution.  Therefore, you should have a risk management program in place to regulate the use of social media that is commensurate with your credit union’s use of this medium.  Importantly, almost every single banking law and regulation you could think of applies to representations you make online to the same extent that they would if you were making them with traditional forums such as newspaper ads or account opening disclosures.  This means that the whole alphabet soup of regulations ranging from the Truth in Lending Act to the Equal Credit Opportunity Act applies to your online activities.

In addition to the regulatory issues, there are unique legal issues as well.  For instance, the guidance notes that financial institutions should be aware that employees’ communications via social media, even through an employee’s own personal social media accounts, may be viewed by the public as reflecting the institution’s views (for the record, as any faithful reader of this blog will know, my views do not always reflect the views of the Association, much to the relief of our President).  However, despite the important employment issues involved, the regulators take a pass on addressing them.

In a very general way, this is all good advice.  But, it’s not the type of thing you can rely on in developing sound day-to-day practices.  My personal advice is that any credit union with any type of online presence, whether or not it uses social media, should do a compliance audit designed specifically to assess whether its electronic representations are consistent not only with existing law and regulation but with the credit union’s own representations.  The last point is important since I have seen cases involving lots of money where attorneys have tried to argue that language on a bank’s website binds them to a greater legal obligation (for instance, regarding funds availability) than does the bank’s account agreement.

A second bit of advice is to reach out to an employment law expert to understand the unique employment issues involved with employee use of social media.  If you think the issues are clear cut, then you don’t understand them.  I’ve done a couple of posts on the issue for those of you want to start some basic research.

CFPB delays remittance regulations

As expected, the CFPB announced yesterday that it was delaying the effective date of the international remittance regulations scheduled to take effect on February 7, 2013.  The delay will give regulators time to incorporate proposed amendments to the regulations that are currently out for public comment.  A new compliance date has not been released.

January 23, 2013 at 7:53 am 1 comment

What Can You Do About Big-Mouth Bob?

Assuming you weren’t able to get in on Facebook’s Initial Public Offering (IPO), and will therefore have to show up for work on Monday, now seems like a good time to remind credit unions that regardless of your size, social media raises questions for your HR staff at each stage of the appointment process.  Consider this your social media audit. 

1.  Do you go on the Facebook page of prospective employees?  If so, why?  If not, why not?  Credit unions seem somewhat split on this one.  There’s a very good argument to be made that doing Facebook checks are more trouble than they’re worth because they could open the door to arguments that you discriminated against applicants (for example, let’s say you only interview White applicants).  Conversely, if you’re hiring a Chief Executive Officer, do you really want to hire someone who has posted a picture of himself walking around with a lampshade on his head at last year’s Christmas party?  My personal view is that the higher up the position, the more prudent it is to view the public pages of Facebook and other social media, but I would only do this as part of my due diligence when considering my top candidates for a given position.  If the person doesn’t have a public page, then I would say here’s a discrete person who knows the importance of keeping her private life private, an increasingly rare commodity in the Facebook age.

2.  Let’s say you hire Bob and find out that he’s complaining about the workplace.  This is actually one of my favorite HR issues.  The National Labor Relations Board (NLRB) has issued a guidance pointing out that even non-unionized employees  have a right to engage in concerted activities discussing workplace conditions.  So, if you find out that Bob is complaining that the credit union’s marketing plan isn’t getting new members in the door and that ten people have joined his discussion on Facebook, tread carefully before disciplining him.  With or without a policy about speaking out publicly against the company, the NLRB has signaled that it will protect such discussions.  Conversely, you don’t have to put up with insubordination.  So if you find out that Bob routinely badmouths his bosses and these rants have nothing to do with work place conditions, then you are on firmer ground to discipline him.  As you can see, this is an extremely fact-sensitive issue, so consult with an expert before taking steps against an employee in this context.

3.  Let’s say you legally fire big-mouth Bob.  Now he has lots of time on his hands and he’s using it to spread the word over Facebook that XYZ Credit Union is the worst place to work in the world and that he’d feel safer depositing his money into a Greek bank account.  What can you do to shut him up?  Not much.  The few cases on this issue have pointed out that the former employee enjoys first amendment protections against any attempt by a company to get a court ordered injunction.  You could try to make this a contract issue by including language in employment contracts prohibiting public comments against the company.  However, this presupposes that you have a contract with the employee and that it is binding once he leaves.  My personal view is that you’re just going to have to ignore big-mouth Bob and make sure you have your own, robust social media presence so you can effectively and quickly combat any bad information that is out there.

May 18, 2012 at 7:35 am Leave a comment

When bad-mouthing the boss is legally protected

Suppose after reading this blog, you take one more look at your Facebook and find that an employee of the credit union got home from work last night and posted a sarcastic critique of the credit union’s latest marketing advertisements.  Can the employee be fired?  This is the type of question for which the National Labor Relations Board (NLRB) provided guidance in a memorandum released by its Office of General Counsel summarizing fourteen administrative decisions in which employees were terminated after posting comments on social media.

As explained by attorney Michael Schmidt in a column yesterday in the New York Law Journal (subscription required), the analysis provides a useful advice for any one involved with your credit union’s HR and management functions.  Most importantly, even if your credit union is not unionized, the National Labor Relations Act gives employees the right to engage in “concerted activities” for either the purpose of collective bargaining or to provide mutual aid and protection.  This means that before firing that employee who bad-mouthed the credit union’s marketing efforts, there are several things to keep in mind:

  • Whether the posting on Facebook was with or on the authority of other employees and not solely the opinion of the poster.   In other words, was the employee just griping about a bad day or are other employees encouraging him to speak out about a bad idea.
  • Assuming a group of employees are acting together (i.e. concerted activity), is such a posting protected?  As explained by Schmidt, employee speech is protected when it implicates the terms and conditions of employment.  For example, a car salesman was deemed to be engaging in protected speech when he sarcastically posted pictures and comments about a recent sales event hosted by the dealership because such management decisions impacted commissions.
  • Whether the posting is so reckless or malicious as to provide grounds for dismissal notwithstanding the fact that its subject matter would otherwise be legally protected (i.e. the Charlie Sheen rule).  On the one hand this stands for the principle that you can’t bad mouth the boss with impunity, but in reviewing the memo you might be surprised to find that the NRLB found it was ok to poke fun at the auto sales event because the employee was merely expressing frustration.
  • Finally, even if you are 0-3, the NLRB may still let you get away with firing the employee if you can show that you would have fired him notwithstanding the comments.  However, as criminal defense lawyers sometimes say to their clients, don’t start packing your toothbrush based on that argument.

Clearly, these are extremely fact sensitive inquiries.  Given the fluidity of the field, you would be well advised to contact your HR professional before firing an employee based their opinions expressed in social networking media.  Your reactions may be totally legitimate, but there are legal issues as new as the technology.

October 25, 2011 at 7:00 am Leave a comment

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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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