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LinkedIn: Busted for U.S. wage law violations, sued for “injury” to users

LinkedIn busted by U.S. Department of Labor

It’s no big deal, suggests LinkedIn.

linkedin-hackAccording to a Computerworld report (LinkedIn pays almost $6M for U.S. wage law violations), LinkedIn was busted by the U.S. Department of Labor (DOL) when it “violated overtime and record-keeping provisions under the federal Fair Labor Standards Act.”

DOL investigators found that the online networking and job-board company “did not record, account and pay for all hours worked in a work-week.”

359 current and former employees were affected at LinkedIn’s branches in California, Illinois, Nebraska and New York. LinkedIn agreed to make restitution to those employees. “The payment to the workers under the accord includes over $3.3 million in overtime back wages and about $2.5 million in damages,” says Computerworld.

The high-tech database company, which tracks the online profiles and behavior of over 300 million members, many of whom pay for the service, told Computerworld that the violations were “a function of not having the right tools in place for a small subset of our sales force to track hours properly.”

Judge says consumer class action against LinkedIn can proceed

A judge in the U.S. District Court for the Northern District of California has ruled that a case against LinkedIn can proceed. Computerworld reported that “LinkedIn will have to face a lawsuit that alleges it damaged the image of users by repeatedly sending emails to their contacts inviting them to join the social network.”

At issue is whether LinkedIn derives “economic benefit” by using its existing members’ names to solicit other people to join the service. This is illegal in the State of California.

According to Computerworld’s report, Judge Lucy Koh ruled that, “The Court notes that this type of injury, using an individual’s name for personalized marketing purposes, is precisely the type of harm that California’s common law right of publicity is geared toward preventing.”

LinkedIn has taken a lot of heat from its users for its practice of cleverly scraping addresses from their private e-mail directories, and then spamming their contacts repeatedly with solicitations to “connect” on LinkedIn. LinkedIn has also been accused of conflict of interest because it charges employers to search its database for the best job candidates — while LinkedIn also charges members for “premium” positioning in those search results. (See LinkedIn Payola: Selling out employers and job hunters.)

Against LinkedIn’s protests, the court ruled that the case may proceed.

Is LinkedIn a network marketing scheme?

LinkedIn holds itself up as the standard bearer of ethical networking — yet more than half its revenues come from selling access to members’ information to third parties. In a Fortune article (LinkedIn’s Networker in Chief), LinkedIn CEO Jeff Weiner says:

  • “values are the first principles we use to make day-to-day decisions”
  • “Compassion has essentially become my first principle of management”

But based on these news stories, this quote says a lot about Weiner’s motivation and priorities:

“I didn’t realize until I got to LinkedIn that without access to economic opportunity, nothing else matters.”

It seems LinkedIn may have become too focused on its own “economic opportunity” and that the cost is being borne by its employees and members. Has the leading professional network turned into a sort of network marketing scheme?

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6 Comments
  1. Hi Nick –

    Two quick questions

    1) is there information about how to properly use LinkedIn (what sort of info to provide/ not provide, etc) in any of your books or kits? If so, which ones?

    2) You’ve posted in the past about not giving into demands for 1 or 2 months notice when leaving. What if your employer requires 1 months notice as a policy in the employee handbook – does that change anything?

  2. Is LinkedIn even relevant these days?

    Many of my technically minded friends/acquaintances seem to just view it as just another spam platform?

  3. @David Kettering:

    1. Check this column I wrote for Adobe’s CMO.com:
    http://www.cmo.com/articles/2013/7/24/linkedins_and_outs_f.html
    Note Jason Alba’s final comments toward the end. I think he’s right. “Set it and forget it.”

    2. If it’s in the policy manual you may have technically already agreed to it when you signed on for the job. This would be one for an attorney, if you’re looking for an out. I think a month is way over the top because a new employer is not likely to wait that long for you. If this is a problem for you, you should also check with your state’s Dept. of Labor and Employment — I’m not sure a company can enforce that kind of thing. They might yoke it to whether they’ll give you other exit benefits.

  4. @Dave: LinkedIn is relevant because it’s the world’s best phonebook. But as the “professional network” it purported to be? It’s not a network. It’s a list. I think Weiner and Hoffman blew it when they turned it into a job board. Just look at where the revenue comes from, and at the quality of the “content” they publish. The Baffler published a scathing commentary on LinkedIn last year, well worth reading: http://www.thebaffler.com/past/all_linkedin_with_nowhere_to_go

    Ann Friedman summed it up pretty well. I think LinkedIn lacks a credible mission (other than making as much money as possible, which it’s very good at, for the time being.)

    I pretty much agree with your friend – it’s the newest spam machine. The crap I get from them every day is ridiculous, under the guise of “endorsements” and people’s “anniversaries.” Gimme a break.

  5. @Dave Kettering: Nick is correct to suggest that only a lawyer could best answer your question about whether requiring a month’s notice (to leave) is legitimate.

    It really depends–did you sign an employment contract with one of the terms of said contract being that if/when you decide to quit, you will give no less than one month’s notice? If your employer is waving the employee handbook at you and you don’t have a formal contract, I would take a good look at the handbook. With some employers, a handbook is merely a guideline plus information about benefits, holidays, dress codes (if any), codes of conduct, etc. An employer can put pretty much anything he wants into a handbook, but if it is illegal (not a contract), then it isn’t enforceable and won’t have any weight. I would also look very closely at the language; not only can employees be sloppy, but so can employers. Legally, there’s a HUGE difference between the words “may” and “shall”, although ordinary people often use them interchangeably. Legally, they are not the same thing: “may” is optional; “shall” is obligatory. If the section of the handbook that requires you to give a month’s notice is written using a word like “may”, then your employer cannot force you to give a month’s notice. If it reads “shall”, then I would still take a copy of the handbook (and your employment contract, if you signed one) to an attorney who specializes in employment law.

    In most states, employment is at-will, which means that an employer can fire you for any reason or no reason unless you are a member of a protected class and that is the reason he gives for firing you (for protected classes, think race, religion, ethnicity, sometimes sex because women don’t get the same level of legal protection that race does). At-will employment also means that YOU the employee can quit for any reason or no reason, and neither the employer nor the employee is required to give any notice. Big caveat: employment contracts, because your contract might stipulate how you can be fired (e.g., for cause, plus provide how much notice you must be given, how much compensation to which you are entitled, plus stocks, etc.) and how you can quit (including how much notice you must give).

    I don’t know where you live, but your local state bar association can provide you with the names and contact info for local employment law attorneys; if there is a law school near you, they, too, might be able to make recommendations re good employment law attorneys, or perhaps there is a member of the faculty who teaches employment law and who might be willing to provide you with some answers. Ask around, get recommendations from those you trust. It would be worth the attorney’s fee to have him/her look over your documents, get the facts as they apply to you, and to get advice on this matter. If you guess and you’re wrong, your employer could make life (and your job) very ugly for you. Attorneys usually don’t come cheap, but in this case, I think it would be wise to consult with one.

    RE: LinkedIn. I’ve always viewed and used LI as primarily an electronic rolodex. I don’t like the creature into which they’ve morphed, and between becoming a jobs board (we all know how useful those are) and double dipping their users (charging job hunters a monthly fee to push their name to the top of the list and employers a monthly fee for “top talent”), I can’t say I’m surprised. I get that they’re first a business, and as I learned years ago in my business law class, the sole purpose of a business is to make money for its owners. LI is focusing on its quarterly profits and bottom line no differently than any other employer. And like other employers who haven’t paid their employees and who engage in shady practices, their bad practices are now coming back to bite them on the ass.

    I don’t mind writing an endorsement for someone, provided I know him well enough. I’ve been asked to do this for people I don’t know that well (e.g., someone I know from an LI group, so the connection is more tenuous), and I just don’t do it. The anniversaries, etc., meh….although I do like to hear when one of my connections gets a new job or a promotion.

    I liked LI much better when they weren’t trying to make as much profits as possible, and when they didn’t try to be all things to all people.

    Ways to fix this: treat your employees fairly–they’re a good part of the reason for your success, and that means pay them what you owe them and pay them fairly for the work they do for you. Drop the whole jobs board aspect of it. Stop the anniversary announcements. Stop marketing and trying to get tweens to join (they’re trying to reach the pre-junior high and high school crowd, marketing it as a way to plan their careers). It is one thing to offer programs at schools where students learn what a doctor does, what a lawyer does, what kind of education and training are needed, costs, what they like and hate about their jobs, but quite another to have 11 year olds on LI, which is supposed to be a site for professionals. LI isn’t supposed to be facebook or myspace or instagram or twitter.

    Thanks for this intel, Nick. There are too many companies like this. First I learn about the Ladders (glad I signed up for your newsletter before I did anything stupid like pay the Ladders a fee), and now LI. Keep up the good work!

  6. All I should say about LinkedIn is I am glad it’s there. It’s a great tool (only from the perspective of Nick’s definition). I will be sad when they get smart and stop letting google index all of it. I looked ar The Ladders maybe once ever.
    For now… It’s my favorite supply store.

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