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Viewpoint: The Legal Risks of Digital Workplace Apps

Want to get sued for millions over off-the-clock claims? There's an app for that!

A woman sitting on a couch looking at her phone at night.

Over the past year, the popularity of digital workplace apps (that is, mobile applications used by companies to facilitate interactions with, and between, employees) has grown exponentially. These apps promise to streamline the entire world of employee relations into a single portal that's easily accessible, paper-free and easily managed.

Imagine a single app that could manage scheduling, timekeeping, shift swapping, task management, and new policy rollouts. Imagine that same app could provide links to training videos, push out company-wide communications, monitor productivity, and distribute satisfaction surveys. Now imagine if that app could also facilitate communications with remote or travelling workers, track expenses, administer benefits, manage accommodation requests, and even make work more fun by enabling employee social networks and "gamifying" performance goals.

Considering all that this new technology promises to deliver, digital workplace apps are quickly becoming the next big thing in employee management.

Unfortunately, they're also the next big thing in employment class action litigation.

What's the Risk?

In 2017, only a few of my class action cases involved allegations relating to cellular phone use for work purposes—and none of them involved allegations relating to the use of workplace apps. Only two years later, all of my cases involve cell phone reimbursement allegations—and over half of them involve claims specifically related to workplace apps. Worse, I'm starting to see social media solicitations that, instead of targeting specific companies, are targeting users of particular apps. ("Are you a user of this workplace app? If so, we are investigating if your employer may owe you money as part of a class action!")

Although this is a rapidly developing area of law, lawsuits relating to digital workplace apps tend to fall into four categories.

1. Expense reimbursement. Many states have employee reimbursement laws that require indemnification for business-related expenses. On this basis, employees are not just suing for reimbursement relating to the acquisition or use of a mobile device. They are also seeking payment for a portion of the cost of their cellular data and home Internet plans.

2. Off-the-clock work. In some situations, employers may expect or even require their employees to access mobile apps while off duty. In other situations, digital workplace apps may provide the opportunity for employees to use their phones to perform work off the clock, even if that was never the employer's intention. All of these situations can lead to claims for unpaid wages.

3. Interruption of meal or rest periods. In order to avoid off-the-clock claims, employees may be directed to check digital workplace apps only during working hours. This can lead to a claim that meal and rest breaks are interrupted because these are the only times during the workday when employees have a realistic opportunity to access their phones.

4. Content-based claims. Digital workplace apps allow quick and frequent communication, which makes content-screening difficult. Lack of screening increases the possibility of disputes arising out of improper communications (e.g., defamation, harassment, discrimination, employee privacy, workplace bullying, and even violations of HIPAA, the Health Insurance Portability and Accountability Act of 1996). The situation becomes even riskier when nonexempt employees are allowed to post social content, which is often considered one of the most attractive features of a digital workplace app.

Unfortunately, all of these claims lend themselves to class or collective action allegations. This means that the litigation risk associated with employee apps can be in the millions of dollars.

[SHRM members-only toolkit: Complying With U.S. Wage and Hour Laws and Wage Payment Laws]

What Can Employers Do?

Despite the legal risks, adoption of employee-facing apps is on the rise. To balance the competing risks and rewards, employers may want to start developing compliance strategies that anticipate the categories of legal challenges described above. In this process, it often helps to work backwards from an organization's business justification for using an app and then decide on compliance measures that address the anticipated use. As a starting point, employers may want to consider some of the following strategies:

  • Evaluate whether use of the app (and each of its functions) is voluntary or required. As part of this process, consider whether employees will have reasonable alternative means for accessing the information and processes available in the app.
  • If use is intended to be voluntary, employers may want to memorialize that expectation. Consider distributing employee-facing policies that explain permissible / impermissible use, if time spent on the app is compensable, and what alternative means employees have for accessing information available through the app. If you are not compensating employees for time spent on the app, consider creating a paper trail that memorializes the good faith basis for your conclusion that use of the app is not compensable.
  • If use of the app will be a required activity, or could otherwise constitute compensable work (an analysis that may vary from state to state), employers will want to consider how to account for time spent on the app and how to quantify any expenses incurred relating to use of the app. In this process, evaluate whether it is preferable to track actual time and expenses or, alternatively, provide a reasonable stipend.
  • If providing a stipend, consider using benchmarking data that may help justify the amount and frequency of your payments. If possible, consider running pre-rollout tests that measure anticipated usage in terms of both time and megabytes of data.
  • Consider building a "terms and conditions" disclaimer into the app that must be acknowledged before an employee is able to register for use.
  • Consider a "mandatory reporting" rule that requires employees to immediately notify management if they are required to use the app in a way inconsistent with the employer's policies.
  • Consider requiring employees to sign periodic, retrospective attestations stating that, over a defined period of time, they complied with the employer's policies and do not believe they are entitled to reimbursement or wages associated with the app.
  • Evaluate if it is feasible to limit off-duty use. For example, consider the possibility of "geo-fencing" the app so it is only accessible on your premises, via your wireless connection.
  • Consider conducting a post-rollout audit or survey to determine if a given app is being used as expected.
  • Clearly communicate your expectations regarding impermissible uses of any communications or social networking functions built into the app (e.g., no harassment, no disclosure of private employee information, etc.).

Key Takeaway:
Start Managing Risk Before You Roll Out an App

The whole point of a mobile workplace app is to create an environment where engagement with your employees is quick, easy, and informal. But it's these same characteristics that make it difficult to predict how and when your employees will engage with the app. Creating and documenting a compliance plan before you roll out an app will help you enjoy the benefits of this powerful new tool while minimizing potential legal risks.

Evan R. Moses is an attorney in the Los Angeles office of law firm Ogletree Deakins. © 2019 Ogletree Deakins. All rights reserved. Republished with permission.


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