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Nasir and Matt talk about Panera Bread's decision to start recording video of its employeesand whether that decision is legal.

Full Podcast Transcript

NASIR: All right. Welcome to our podcast where we cover business in the news and add our legal twist. My name is Nasir Pasha.

MATT: And I’m Matt Staub.

NASIR: And welcome to another day of podcasting of business law and business news. You know, actually, I’m pretty excited about the stock market today because Yelp is crashing like crazy – not like crazy, it’s down 6 percent. But, if you look, when our episode about Yelp came out last Wednesday, I’m pretty sure we caused its collapse and its downfall.

MATT: Most likely.

NASIR: At least the beginning of it, most likely. That episode did pretty well. So, if you haven’t caught that, yeah, we had a guest from a company that actually was being sued by Yelp for trying to help out business owners so check that out.

MATT: Revleap.

NASIR: Yeah, Revleap, exactly.

MATT: Yeah, I want to stay posted on that one. Interested to see what happens. A good guy, too. So, hopefully they win. Maybe they’ll win and the judgment will be that they own Yelp. That’d be cool.

NASIR: And they’ll be like, “We hate Yelp!” and they’ll just close the business. Actually, yeah, Yelp is down 4 percent. It was yesterday I think another 6 percent – I think I read. But there’s also this other campaign or some documentary that’s going on that’s called the Billion Dollar Bully trailer and it’s just basically there’s a trailer about Yelp and their CEO and so forth that’s being produced, and they have a Kickstarter campaign.

MATT: Actually, I had a conversation with somebody this week and, for people that don’t own a business or don’t work with businesses, they probably don’t know but we’ve talked about this many times before how Yelp’s kind of can basically control exactly what they do and then they call you if you advertise with them and you pull the advertising. They can manipulate. They can just manipulate everything and I don’t think the general public knows about this. Why would you know unless you own a business or work closely with businesses or if someone, you know, one of those people tell you about it? If you’re just in the general public like my wife is, she has no idea. She uses Yelp all the time because she doesn’t know that they completely can manipulate something and make one business look a lot better than it is or a lot more worse than it is.

NASIR: Oh, yeah, and you’re absolutely correct. I mean, most people don’t know. Also, in a way, I can understand why they don’t really care because, at the end, all they care about it, okay, not just can I trust the ratings but is a good place that have five stars actually good? Because they don’t really care about the one or two stars because that’s fine. All they want is a good place to go, right? And a trusted source. So, so long as that part is trustworthy, and the likelihood is that it is, because it’s very easy to get a lower rating, difficult to get a higher rating – even with Yelp’s standards – so I could understand why, you know, the general public doesn’t care. But, I think, because it’s hitting small businesses so hard, I mean, I predicted, I mean, I think Yelp is on a bad course and I think investors are going to see that on the long-term that they’re going to have to make some adjustments pretty quickly and all this information of the practices of businesses are going to get out and general public is going to start understanding it and the impact it’s having.

MATT: Yeah. Hopefully, is the documentary already out or is it coming out?

NASIR: No. In fact, we should probably link the campaign. There’s a Kickstarter campaign. They’ve raised a small amount of money. It’s 50 percent done and they need the rest to so-called “finish” the other 50 percent which is understanding, I mean, there’s a lot of post-production costs that are pretty expensive. Just little things like color correction to audio. So, you know, hopefully that gets done. Also, by the way, there’s been a lot of funding for that Revleap campaign, too, on GoFundMe – a lot of anonymous donors.

MATT: Do you also want to take credit for that?

NASIR: Of course. Well, yeah. I mean, no one’s even heard of the lawsuit until we came around.

MATT: Oh, very presumptuous.

NASIR: Well, there’s some truth to that. So, anyway, should we just talk about Yelp again this week or should we get to our story?

MATT: It’s usually when it ends up being. A couple of your hot-button topics.

NASIR: Legally Sound Smart Business and Yelp.

MATT: Yeah. So, anyways, we’re going to talk about Panera Bread. They’re doing this new thing where they’re going to record their employees making the food at the restaurant which, obviously, I would think they probably have to employ their employees of – I guess it depends on the state, maybe. But, in California, you’re going to have to probably get some sort of consent.

NASIR: Well, that’s what we’re going to talk about, of course, today.

MATT: I get the reasoning behind it. According to this article, one in seven orders is wrong – and not just at Panera.

NASIR: What?

MATT: In the food industry. I mean, I don’t have an incorrect order that often.

NASIR: Actually, now that I think about it, I’d be surprised if one out of seven is at a Panera Bread. But, in general, I would say one out of seven is probably correct. I guess I’m always specifically ordering something here or there and then they mess it up somehow.

MATT: Yeah. Well, I mean, that’s the whole reasoning behind this. They’re trying to figure out why these mistakes are happening. And so, if they record the employees doing things, they can compare it to sports, I guess. You know, if your swing’s messed up in golf or baseball, you know, you record it and find out what you’re doing wrong and then, you know, you can correct that even though I don’t think someone is moving their arm the wrong way to make a sandwich and that’s the thing that needs to be corrected. But I would assume it would open up – actually, you know what I just thought of, it’s probably going to correct things, self-correct it, because now that the employees know they’re being recorded, they’re going to – I would think – pay more attention to what they’re doing and I would think that’s probably the reason that most errors occur. It’s just people not paying attention, especially at these fast-paced places like this where it’s all about turnover.

NASIR: Well, I think it also depends upon how much are they going to be monitoring it. By the way, the CEO says that Panera Bread is they’re one in ten – a little bit better than the average for accuracy of orders. But, going back to the issue, the problem is that, when you do have any kind of surveillance, employees tend to just be complacent and they kind of forget that it’s there. I mean, take a look at computer monitoring which is pretty popular in small businesses. Despite even being told that they’re being monitored, there’s still quite a number – I was reading the statistics this morning and I don’t remember the exact numbers but it was startling. A number of employers that, despite letting them know a certain percentage of their employees have been disciplined or even terminated for misuse of the internet and, you know, even trade secrets, confidential information releases through email and things like that, even when they’re being monitored. Video surveillance has been around for a while so I think it’s going to end up being, after they’re being videoed, are they actually watching it afterwards? How are they correcting it and actually following up with that?

MATT: Yeah, and, like most things, I mean, in order to do this, there has to be a legitimate business reason that they’re going to be recording them or having this surveillance. So, you know, obviously, the reason they’re doing it is because they want to correct the errors that are happening. But they can’t just, if you own a business, you can’t just throw a camera up, you know, in the back without any reason at all. Surveillance in the store – if you have a retail store – is different if you’re worried about theft. But, you know, in the back room or in the break room, there’s no reason to put a camera up unless people are stealing stuff in the break room.

NASIR: Yeah, and that would be harder to create a legitimate purpose but, at the same time, it’s a pretty low standard in that respect. You can usually find a legitimate business purpose with that and you can probably do that in the break room – maybe, maybe not. It’s actually a very subtle issue and it’s very, very state-specific and very fact-specific because you have to go past that legitimate business purpose which is very fact-specific. But then, you also have to navigate the particular state laws, too. The state laws vary. I mean, there’s about less than a dozen states in the country that actually have laws on point with this. Most specific, I think, is California. They have a provision where no employer can audio or video record anyone in the restroom, locker room, you know, anything changing clothes, et cetera, and that’s specific. But, of course, that is going to be in pretty much every other state as well. But California has issued a specific ruling on that. And so, in general, video surveillance is allowed. I’m of the opinion that, even if you have the option – and it’s not always there – even if you have the option to video surveillance your employees, you should tell them anyway because what’s the point? And, frankly, if you don’t tell them, even if you are allowed to do that, you have a lot of people that will have problems with that – you know, everyone from the civil liberties union to just employees in general – and it kind of defeats the purpose of actually having that surveillance, I think.

MATT: Yeah, I’ll agree with that. What about the California company who is saying they need to put cameras in the restrooms because they want to monitor the water in the sink because of the drought issue in California?

NASIR: Well, they don’t even need videos for that. They can use some other sensors and so forth.

MATT: Yeah.

NASIR: There’s alternatives. But, yeah, that’s a good one.

MATT: I just made that up. Hopefully that’s not a real thing.

NASIR: But, for Panera Bread, I think most small businesses that put up surveillance, I think it has to do with, yes, theft, but also legal liability and I think that that has a lot to do with harassment issues, especially when you’re surveilling computer monitoring issues and we’ve talked about in the past how, again, despite the surveillance, how many computers are used in the work place during work hours in the middle of the day for completely inappropriate content? Usually, dealing with porn and sex. I mean, if you look at the statistics for these searches, a lot of it’s going on in the middle of the day from business addresses, and that’s just fact. And so, these kinds of liabilities are real and so employees do have to protect themselves in that respect.

MATT: Employers monitoring employees’ computer usage, email, et cetera, that’s going to make sense. That’s been around for a while. Monitoring employees while they’re doing their work, I mean, it’s been around I guess too but it’s just becoming a bigger topic.

NASIR: I think what I would be concerned by from an employee perspective or if I was a privacy advocate is that cameras, they’re so small now, they can be placed anywhere without it being seen. Before, it’s like, if you wanted to have a hidden camera, it’d have to be behind a see-through mirror or something to that effect or it would have to be behind something, hidden in an object. Now, it could be like a dot on the wall, and not only that, now, because of the software, the video technology can also help determine not only what’s going on but determine what’s actually happening in the sense that someone doesn’t actually need to watch the video to determine whether you’re slacking off or not in the sense that it can use its computer software to determine that automatically, through its algorithms.

MATT: It’d be interesting to see if this is a trend, you know, because I can’t see… I don’t think employees are, well, I don’t know. I’m undecided. I can see them not being happy with it but then just getting used to it over time and forgetting it’s even there. I think that’s how reality shows work. They forget cameras exist after, like, day one.

NASIR: I think that’s easy, too. It’s hard to not act naturally and it’s not like, I mean, most employees aren’t going to act up and I think you’re right. I mean, video camera surveillance has been around for a while. You walk into any store and you’ll see a little camera pointing to the cashier, right? Pointing down. Casinos, of course, have been using that quite a bit for both watching both the employees and the customers and so forth. So, there’s well-established law with this. I mean, there’s nothing new with Panera but it’s probably pretty new to putting cameras to make sure that the order is right. I really wonder if that’s the real reason, frankly. But that seems strange to me.

MATT: It could be just, you know, employees taking food, too.

NASIR: It’s not like people don’t go to Panera Bread because, “Oh, they get my order wrong, one out of ten times,” you know?

MATT: Yeah.

NASIR: I guess that makes sense. If you have a bad experience at Panera Bread or any restaurant, you’re unlikely to go back.

MATT: Yeah.

NASIR: It seems disingenuous to me – something more than that. But that’s okay. They have the right.

MATT: I haven’t been to Panera Bread in a really long time.

NASIR: They have free WiFi so it’s an alternative to Starbucks if you want to grab a meal.

MATT: Do you eat at Starbucks? Do they have meals?

NASIR: They have meals, yeah, if you’re hungry.

MATT: You dislike Uber and Yelp but you like Starbucks. I don’t really…

NASIR: Actually, no, it’s true. I don’t particularly like Starbucks. The problem with Starbucks – unlike Uber and Yelp – is that there’s not a lot of alternatives, depending upon where you are, specifically Houston, Texas – not a big coffee town.

MATT: I just don’t like their coffee.

NASIR: Yeah, I don’t particularly like their coffee either. By the way, I was in Austin last week – or I should say this week – and went to an awesome espresso place. I already forgot the name. It was downtown where everything was going. It was awesome.

MATT: Good plug! Downtown Austin coffee spot.

NASIR: Oh, okay.

MATT: You should check it out.

NASIR: Let me look it up, fine.

MATT: Did you go to South by Southwest?

NASIR: Yes and no. I was there while South by Southwest was going on, but I was there for business. but I did get the little experience. It’s called Houndstooth Coffee, yeah, pretty good.

MATT: Let’s leave some bad Yelp reviews on their page.

NASIR: That’s a good one. All right, guys. Well, thanks for joining us and don’t forget to check out our new website – Lots of stuff going on there. Also, don’t forget to leave some positive reviews on iTunes… and Yelp.

MATT: Yeah. Do we have a Yelp page?


MATT: Okay. Good.

NASIR: All right. All right. Thanks for joining us, everyone.

MATT: Yep, keep it sound and keep it smart.

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A podcast covering business in the news with a legal twist by Pasha Law PC
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Legally Sound | Smart Business covers the top business stories with a legal twist. Hosted by attorneys Nasir N. Pasha and Matt Staub of Pasha Law, Legally Sound | Smart Business is a podcast geared towards small business owners.

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