PayPal, Dog Food and California’s Anti-Forced Patronage Law: Did PayPal Chief David Marcus cross a line by threatening the jobs of employees who don’t use PayPal products?

PayPal, Dog Food and California’s Anti-Forced Patronage Law: Did PayPal Chief David Marcus cross a line by threatening the jobs of employees who don’t use PayPal products?

28 Feb 2014 by Curt Surls

In what passes for celebrity gossip in Silicon Valley, the technology press is abuzz and atwitter over a leaked e-mail from PayPal President David Marcus to the company’s San Jose employees.  In the memo, Marcus bemoans the San Jose staff’s allegedly tepid personal enthusiasm for PayPal products.  At other offices, Marcus noted, the staff is willing to “hack into Coke machines to make them accept PayPal because they feel passionately about using PayPal everywhere.”  Marcus also expressed irritation with employees who can’t “even remember their PayPal password.”

As if password amnesia and a preference for using coins in Coke machines weren’t bad enough, Marcus was especially incensed by those San Jose employees who did not personally use PayPal products.  “Some of you,” Marcus lamented, “refused to install the PayPal app,” a point he underscored in the memo with flamboyant punctuation (“!!?!?!!”).

After urging the “San Jose PayPals” to use the company’s products, he closed with a vague threat, recommending that employees who refuse to install the PayPal app can go find another job.

In the tech word, the internal use of a company’s own software to demonstrate the quality and capabilities of the product is known informally as “eating your own dog food” or “dog-fooding.”  For example, Hewlett-Packard staff once referred to a project using only HP’s own products as “Project Alpo.”  But did Marcus take the “dog food” concept too far by threatening the jobs of employees who refuse to patronize PayPal?

The answer lies in California’s Depression-era Forced Patronage Law.  What is forced patronage, you may ask?  Let me illustrate the concept with a tale from my youth.

Long ago, in a downscale mall in a mid-sized Midwestern city, I got my first and only retail job at a now-defunct rural-themed clothing chain called the “County Seat.”

It is difficult for young people today to appreciate the sartorial horror that was the County Seat.  The clothing seemed targeted at rodeo clowns or the more fashion-forward Amish.  Nevertheless, County Seat staff were forced to buy County Seat clothing at a small discount and wear it on the job – in public!! – as a condition of employment.  The delusional thinking was that turning the sales clerks into human mannequins would stimulate sales. This was classic “forced patronage.”

But that was the Midwest.  Here in California, Labor Code section 450 prohibits an employer from compelling or coercing an employee to purchase goods or services from his or her employer or any other person.  The law was originally aimed at the proverbial “company store” of the coal mine of the remote farm labor camp.  But in modern times, it has been used in class action litigation against employers such as Abercrombie & Fitch (the County Seat of our time) and other clothing chains which require employees to purchase and wear the company’s fashions on the job.

So back to David Marcus and the PayPal e-mail.  Was there a violation of Labor Code section 450?  No one at PayPal, as far as I know, has been fired for refusing to use PayPal products.  And, because the statute prohibits the “purchase of anything of value,” Pay Pal could argue that requiring the download of a free PayPal app is not a violation of section 450.  On the other hand, if PayPal employees are terminated for refusing to purchase PayPal products, that would be a different bowl of dog food.

The evolution of the application of Labor Code section 450 from the coal mine to Silicon Valley shows how old statues are reinterpreted and updated for the cyber age. There is, alas, no specific statute that protects an employee from termination for forgetting a password.  Therefore, we are all very, very vulnerable.

“Donning and doffing”: The Supreme Court will decide an issue of great importance to employees required to wear gorilla suits to work (and to other employees with workplace uniform requirements as well)

“Donning and doffing”: The Supreme Court will decide an issue of great importance to employees required to wear gorilla suits to work (and to other employees with workplace uniform requirements as well)

6 Nov 2013 by Curt Surls

You recently graduated from a private, liberal arts college in a leafy Midwestern town with a B.A. in Medieval Albanian Poetry.  Nevertheless, you found a job straight out of college.  The good news is that your new job pays a living hourly wage, and you are represented by a strong union.  The bad news is that you have to wear a gorilla suit to work.  Further, the collective bargaining agreement between your union and your employer denies you compensation for the time spent changing into and out of your gorilla suit.  Are you out of luck?

Maybe not.  The US Supreme Court is hearing arguments this week in a “donning” and “doffing” case.  “Donning” and “doffing” are archaic verbs used only by labor lawyers and minor Dickens characters.  In legal parlance, you do not “take off” your gorilla suit after work; you “doff” your gorilla suit.

Ideally, you shouldn’t have to do any doffing on your own time.  Under state and federal law, if you are required to change into a uniform or protective gear at the workplace, you are generally entitled to be compensated for that time.  Your gorilla-suit-donning time should be compensable.

But there’s a wrinkle to this rule in the context of a unionized workplace.  Section 203(o) of the Fair Labor Standards Act (“FLSA”) permits a union to bargain away an employee’s right to compensation for time spent “changing clothes” at the beginning or end of the workday.

Since the late 1940’s, the United Steelworkers union has traded its members’ right to be compensated for “donning and doffing” for other benefits.  And that agreement is at issue before the U.S. Supreme Court now in Sandifer v. United States Steel Corporation.

The steelworker plaintiffs in Sandifer have to outfit themselves in a variety of flame-retardant safety-gear before commencing their shifts.  They argue that the union has no right to bargain away their right to compensation for time spent “donning and doffing” the protective gear because they are not “changing clothes” within the meaning of the FLSA.  The term “changing clothes,” they assert, refers to “substituting certain clothes for others, not merely putting on something else” over them.  The union, therefore, cannot bargain away their right to be compensated for time spent wrestling with the Kevlar.  They want to be paid for this time.

The company, with support from the Obama Administration, is arguing for an expansive definition of “clothes,” that would include protective gear, and other accoutrements such as safety goggles and ear plugs.  In other words, US Steel and the government want union and management to have the ability to bargain away the employees’ right to be compensated for the time they spend “donning” their protective gear.

Nonsense, claim the steelworkers, who argue that an expansive definition of “clothes” and “changing clothes” could lead to absurd results.  In an analogy that makes my gorilla suit example seem temperate, the steelworkers question whether an overly-broad definition of “clothes” would include make-up for a KISS cover band or Captain Kangaroos’ wig (that was a wig?!).

In the end, most observers think the US Supreme Court will duck the issue of gorilla suits, KISS make-up and children’s show host hairpieces and adopt the definition of “clothes” proffered by the Department of Labor:  Items like hoods, jackets, gloves, pants, leggings, helmets and boots will be considered “clothes” whether or not they are protective in nature.  Therefore, a union can bargain away the right to compensation for “donning and doffing” those items.

And gorilla suits?  If you’re in a union, and you’re required to wear a gorilla suit to work (admittedly, this may not be a substantial demographic), the Sandifer decision probably won’t affect you; “donning” a gorilla suit would still likely be considered “changing clothes.”  However, workers in dangerous jobs that require extensive safety gear will be watching this case with greater interest.