Business Counselor November 16, 2017 Michael J. Huff

Millennials: What to Do With the Next Generation

In a familiar refrain, business owners often question which practices they should engage in when managing members of the millennial generation (roughly those individuals born between the early 1980’s and the year 2000). For the past fifteen years, millennials have been entering the workforce in droves and, to the extent they are willing to become part of traditional corporate structures, are beginning to move into middle-management roles. Millennials are positively credited with being civic-minded, team-oriented, and high achieving. However, companies, especially companies whose practices are rooted in long-standing traditions and processes, contend that millennials can be difficult to manage as they demand work-life balance, are quick to criticize existing structures, and often display what employers view as a sense of entitlement.

Because of the work preferences and social consciousness of the millennial generation, many companies are examining and changing processes and procedures to accommodate a growing portion of their workforce. Naturally, the legal considerations relevant to accommodating a new generation of employees are plentiful. A brief survey of such considerations is presented herein:

1. Flexible Working Arrangements

A global survey conducted by PriceWaterhouse Coopers earlier this decade found that after training and development, the most desired benefit sought by millennial workers was flexible working hours. The generation’s desire for this benefit exceeds its desire for cash bonuses or higher wages.

Offering flexible working arrangements potentially offers a significant benefit for an employer by expanding the pool of employees available to perform services for the employer. However, challenges abound when flexible work arrangements are permitted.

A. Protection of Confidential Information

First, for industries in which services can be provided from an off-site location, companies need to navigate the challenges of assuring confidential and sensitive data is properly protected. A well-meaning employee could unwittingly expose confidential information of the employer or a client by working at a local coffee shop or other public location. Additionally, confidential files could be removed from the workplace so an employee can engage in work at an off-site location that is not secure. It is important that companies create sufficient policies and practices for managing confidential and sensitive information when employees are permitted to work off-site.

B. Tracking Time Worked

Second, for employees who are compensated on an hourly basis but are permitted to work off-site, developing processes and procedures for monitoring time worked by off-site employees is important. Developing such processes and procedures can help to avoid employment claims from employees who allege they worked more hours than they were compensated for and can help employers avoid compensating employees for hours which were not actually worked. Further, a sufficient process can help employers assure that nonexempt employees receive required breaks and meal periods.

C. Choice of Law

Employers with locations in multiple states are already aware that employment issues are often governed by the state where the employee is located. This creates a potential risk for employers who permit flexible working arrangements with employees who may perform services out-of-state as litigation in other states may get expensive and an employee may be able to shop for more favorable laws in a litigation matter in the event he or she has regularly provided services in another state. Employers can include choice of law provisions within contracts, but their enforceability may be minimized by applicable state laws.

2. Social Media

Millennials are generally robust users of social media with Pew Research reporting in 2016 that 88% of individuals aged 18-29 were users of Facebook. Social media is so prominent and pervasive that it is necessary for companies in almost every industry. While there are numerous reasons a social media policy is beneficial, two are primary: productivity and representation of the company.

A. Productivity & Safety

While research statistics vary, many surveys suggest that employees spend at least one hour per day using social media websites for non-work related purposes. Even in jobs where employees do not typically have access to a computer, almost every employee now brings a cell phone to work, most of which have Internet capabilities.

Most employees desire to access social media websites during the hours when they are away from home. However, employers may be concerned about social media usage which reduces productivity, diverts bandwidth away from business purposes, and which creates distractions which may pose safety risks within the workplace. Thus, creating a clear policy which recognizes the interests of employees while protecting the employer’s right to receive the working efforts of employees for the time for which employees are being compensated is important for managing millennial employees.

B. Representation of the Company

There are numerous concerns related to the manner in which employees use social media. First, many employees identify their employer on their various social media profiles. In the event an employee is posting offensive or controversial content to a social media page, this may reflect poorly upon the company.

Secondly, many employees post about their job to their social media pages. Sometimes, an employee may be well intentioned but may create a post which represents information which the company considers to be sensitive or inappropriate.

Third, companies want to avoid the inadvertent disclosure of confidential and sensitive information through social media posts, such as those which may include photos of an office meeting.

Fourth, some employees may use social media for work related purposes. When this is the case, it is important to assure it is clearly demarked when the employee is speaking on behalf of the company and when the employee is speaking on behalf of himself or herself.

3. Future Ownership & Business Partners

At some point in time, the owners of closely held corporations begin to examine transition plans. In many circumstances, a transition plan will include selling a portion or all of the ownership interest in a corporate entity to current employee or manager. While closely-held companies have always had the flexibility to prioritize multiple interests, economic considerations have often been a primary driver of the terms of a transfer of economic interests. While economic interests will always be an incredibly important consideration in the sale and purchase of a business, other considerations are increasingly driving purchase decisions.

A recent paper presented by Harvard economist Oliver Hart and Chicago economist Luigi Zingales, argues that “shareholder welfare” should be maximized over market value of a shareholder’s holdings. They cite to numerous contemporary developments in corporate law and practices, including the recent trend in “Benefit Corporations,” which are corporations which are for-profit but include legally defined obligations in their charter to have a positive impact on matters such as the environment or other social issues. Additionally, Professors Hart and Zingales cite to the case of Martin Shkreli who memorably raised the price of his company’s primary drug by a substantial amount to the outrage of many, arguing that such price increase was necessary to maximize profits. Presumably, the value of his company suffered at least a short-term decrease in value as a result of all of the negative media attention it received.

As millennials bring more social consciousness into the marketplace, business owners who are preparing to sell are going to want to consider what benefits a company may offer a potential millennial buyer beyond the pure economic value of the company. Of course, exercising proper attentiveness as to non-economic factors in the management of a company may ultimately increase the company’s economic value.

There are numerous other considerations which are relevant to incorporating millennial interests into the workplace and other corporate interests, including policies concerning socially progressive matters, assuring policies which are designed to entice Millennials do not discriminate against older employees, and assuring companies are not engaged in practices considered to be “sinful” by millennial employees or investors.

Contact your business attorney at Mika Meyers to discuss the issues you need to address related to the millennials involved in your business.