Labor Logic

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John D. Finerty, Jr.

The NCAA college basketball tournament starts this week. Tournament time also means that someone in the office will organize a basketball pool. Most business owners and managers look the other way as employees circulate tournament brackets, collect money and update colleagues on scores and standings via company e-mail. There are ways, however, to maintain some modicum of control over the workplace without interfering with modest employee entertainment.

Background — An Ironic Anecdote to This Year’s Story

Each year we remind employers that allowing employees to spend work time running gambling pools has employment law implications. The Society of Human Resources Manager released a survey in 2001 that found 58 percent of workplaces had Super Bowl pools and 33 percent had college basketball tournament pools.

The Chicago-based outplacement firm of Challenger, Gray & Christmas estimated that employers lose about $1.4 billion each year in employee productivity during the tournament. Despite the potential for employee downtime, employers need not take drastic measures. In fact, one recent case demonstrates that terminating employees comes with significant risk.

Rick Neuheisel was the football coach at the University of Washington who was fired for running a high-stakes college basketball tournament pool. He sued the school and the NCAA for wrongful termination. During the case, Neuheisel admitted that he gambled on college sports.

Last week, however, he settled his case for $4.5 million — making him one of the biggest winners in the history of college basketball tournament pools. Not every employee is a Division I college football coach, however, so the following discusses a few practical concerns and offers a solution that may be more suitable for the typical employer.

No Solicitation/Distribution Rules

Most employers have rules that prohibit employees and third-party vendors from selling various items to employees during work time and in work areas. Those types of policies are referred to as "no solicitation and distribution" policies. As a general rule, employers can prohibit employee solicitations during work-time and distribution of literature during work-time and in work areas.

Health care employers can have broader policies that prohibit employee solicitations in "patient care" areas. Policies may also exclude non-employee solicitors from company premises entirely — in most cases. The following is an example of a typical policy:

"It is Company policy that there shall be no solicitation during working time. No employee may engage in solicitation, nor may any employee willingly accept solicitation on behalf of any club, society, religious organization, political party, or other association, or for any other purpose, during actual working time of either the solicitor or the person being solicited.

"Employees may not, at any time, distribute literature of any sort during work times or in working areas. ‘Working areas’ include all areas of the premises except the lunch room and parking lot, and ‘actual working time’ means the time during which an employee is required to be performing work duties. Non-employee solicitors are not permitted on company property at any time."

The purpose of that type of policy is to prohibit employee distractions during work time and to keep litter out of work areas. Promotional brochures, fliers and even union authorization cards often clutter work areas. Employers, understandably, want employees to focus on their jobs while at work.

Allowing employees to solicit participation in sports betting pools during work time and in work areas, however, undercuts legitimate solicitation and distribution policies. In an analogous case, the National Labor Relations Board has held that employers cannot prohibit employee union organizing but, at the same time, allow employees to solicit participation in sports pools or charitable organizations.

In one case, the National Labor Relations Board held a company could not prohibit distribution of union literature through e-mail because it permitted employee communications on topics such as philosophy and television shows.

The Solution

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Allowing unrestricted employee solicitations for sports betting could be seen as the organization’s stamp of approval on illegal sports betting; it may undercut important solicitation and distribution rules; and, it may condone violations of company e-mail policies. So what is the responsible employer to do — without appearing tyrannical and quashing even modest employee entertainment? The solution is to simply enforce a reasonable solicitation policy and ask that employees organize sports betting pools during break time, the lunch hour or after work.

Another reasonable precaution would be to inform employees that the company does not encourage anyone to participate in any illegal activity. It is also important to ensure employees are not using company e-mail or the company computer system to track betting results. Employees may be allowed to participate in any legal activities they choose on
non-work time and in non-work areas.

For more information on solicitation and distribution rules and for advice on any other employment issue,, contact John D. Finerty, Jr. at Michael Best & Friedrich at (414) 225-8269 or by email.