The Collision of Techno-Babble and Work Comp

There's a slide presentation circulating around the Internet about the marvelous culture of NetFlix, the video rent-by-mail company that has transformed itself into the largest video-on-demand delivery service in the world.

The presentation is pure Silicon Valley stuff - 126 slides of amorphous descriptions using lots of techno-babble about unique un-rules that promote the overriding theme: Freedom and Responsibility.

For instance, there is no vacation time recording - everyone is supposed to be self regulating and realize when they are supposed to work and when they are supposed to be leisurely and rest.

Of course nothing is said about the fact that in California vacation time is the same as wages and must be accounted for at the time of employee termination and paid. So somewhere along the way the "culture" of NetFlix collides violently with the law.

I don't know how NetFlix deals with that situation - not sure I really care frankly - the reason I bring this up is because Silicon Valley is often heralded as the originator of Big Ideas that are promoted by Smart People out to Change the World.

Because of this reputation things that happen in the Valley tend to be emulated in other parts of the country because, it seems, everyone feels that if you're going to develop software and compatible hardware you need to behave like those successful people that come out of Stanford and Berkeley, including far-fetched human resource management ideas.

Of course it's all Valley techno-babble - at a certain point in organizational scaling the ability to treat individuals individually becomes logistically impossible and expensive. Thus over the growth of a company, despite its "culture," regimentation is necessary to maintain order in processes.

I did a quick search on WorkCompCentral for "NetFlix" to see if there were any Appeals Board Panel opinions or higher court decisions concerning the company. I wanted to see how the NetFlix culture fit within the confines of workers' compensation law.

I didn't find any cases where NetFlix was the party defendant.

That doesn't mean there aren't any, just that WorkCompCentral's archive didn't contain any such cases.

There was one case where "NetFlix" did come up in the search, and that is an unpublished case out of the 5th Appellate District entitled American Home Assurance v. WCAB (Wuertz) dated 9/11/09.

Donald Wuertz worked as a machine operator for RR Donnelley in its printing business in Visalia. Wuertz commuted to work about 50 miles each way on a motorcycle from his home.

A mandatory 7:30 a.m. meeting at the worksite to address specific complaints from one of the company s customers, Netflix, was called. These meetings occur rarely but they are mandatory - everyone must attend.

Wuertz was on his way to the meeting and got into a serious motorcycle accident. Though he didn't attend the meeting he was still paid for the two hours that the meeting would have taken because his former supervisor considered that he would not have been in the motorcycle accident but for the meeting.

The workers' compensation judge, the Appeals Board and the 5th District all found compensability.

In Kansas, the state Supreme Court sent a case back to the fact finding courts to determine if an employee who was injured in a go-kart accident was in the course and scope of employment at the time.

In Douglas v. Ad Astra Information Systems, No. 101,445, Douglas had worked for Ad Astra Information Systems, an academic scheduling software program developer and administrator, in Overland, Kan. His normal duties required him to answer questions and solve customers' problems regarding Ad Astra's software between the hours of 8 a.m. and 5 p.m., Monday through Friday.

In November 2006, Ad Astra's owners sent out an email inviting Douglas and his coworkers to spend the afternoon at Sadlers Indoor Go-kart Racing. The company had reserved exclusive use of the go-kart track and covered all of the event expenses, including food.

Ad Astra deducted the cost of the event as a necessary business expense and paid the employees their normal wages for the time they spent at the event.

The company's owners said they had arranged the event primarily to show its appreciation to its employees for their recent work at a client conference, but Douglas and some of his coworkers testified that they felt pressured to attend.

Ad Astra employees were given the option of either attending the event or remaining at work. Those who attended divided themselves into teams and competed for prizes.

Sounds a bit Valley-like, doesn't it?

Douglas stated that he would normally not race a go-kart but that he agreed to race because he wanted to be a part of his team.

While Douglas was racing, he encountered another go-kart stopped on the track. He turned sharply to avoid a collision while traveling at an estimated 20 to 30 mph and crashed into a tire wall. Douglas was thrown from the cart and landed on his right side.

After the wreck, Douglas experienced pain and did not race again, although he remained at the event for the rest of the workday.

Douglas sought medical treatment that night and doctors diagnosed him with a rib fracture, pulmonary contusions, reduced pulmonary function and a lung injury that required surgery.

He sought workers' compensation benefits and obtained a 15% permanent impairment rating for his injuries. Douglas' attorney said his claim was worth about $32,000.

Up the appellate chain Douglas won each round with the majority of those opining on the situation that Kansas law held that if the employee felt participation was mandatory then a recreational activity was within the course and scope of employment.

The Kansas Supreme Court sent the case back down for further evidentiary hearings to ensure that the correct legal standard, K.S.A. 2006 Supp. 44-508(f), is used in the analysis rather than the lower court's reliance on Larson's treatise on the topic.

Whether or not Douglas' case is found compensable in Kansas is debatable. Kansas has a different culture than California.

So does Florida, and Oregon, and New York and every other state.

The NetFlix culture is laudable, if not inspirational. But at some point human resource management fails to align with the "culture" of the law. Organizations are free to do what they want to do with their employees within the bounds of the law, but at some point in time there is an intersection where proceeding before stopping and looking both ways is bound to involve a collision with how the rest of society works.

Culture is refined by a greater theme - the Rule of Law. That's when the control of a company's culture is removed from the executive suite and laid bare for societal review.

The lesson for business is, emulate but be prepared for the consequences.