FCC Commissioner Michael O’Reilly released the following statement late today about the proposed Critical Information Needs study.  The study has drawn ire and national attention during the past week, particularly that portion that would have had researchers interviewing newsroom personnel.

“House and Senate Republicans, along with Commissioner Ajit Pai, have voiced their serious concerns about the Commission’s Critical Information Needs (CIN) study. While I was not at the Commission when the study was authorized, I share those concerns. I appreciate the Chairman’s willingness to make revisions, but I am afraid that tweaking it is just not enough. If any value was ever to come from this particular exercise, that ship has sailed. It is probably time to cancel the CIN study for good.”
– FCC –

The Department of Justice has recently thrown its support behind an FCC plan to impose new restrictions on Shared Services Agreements (SSA), also called Joint Services Agreements (JSA), between multiple stations in a given broadcast market.  Such agreements have become increasingly common, where budgets have tightened and resources have dwindled.

Under these arrangements, stations agree to share resources, like helicopters or news crews.  Each of these SSA’s appears to play out differently.  In one hypothetical, a single station might cover an important press conference and then share the tape with the other news organizations.  Other agreements, like those referenced in a great New York Times piece on SSA‘s by Brian Stelter from 2012 suggest that competing news organizations might even split up and jointly cover events throughout the course of a given news day.

From the New York Times:

SAN ANGELO, Tex. — Call a reporter at the CBS television station here, and it might be an anchor for the NBC station who calls back. Or it might be the news director who runs both stations’ news operations.

The stations here compete for viewers, but they cooperate in gathering the news — maintaining technically separate ownership, but sharing office space, news video and even the scripts written for their nightly news anchors. That is why viewers see the same segments on car accidents, the same interviews with local politicians, the same high school sports highlights.

The Times piece cites a University of Delaware study finding such agreements extant in 83 television markets.  The opposition to these agreements comes from those who feel that such agreements undermine the competition that should exist in a news market where stations aggressively compete to do a better job of unearthing important public news.

Public interest groups have criticized the cutbacks at local newsrooms because they reduce the number of editorial voices in a given market. They assert that because TV stations hold licenses to the public airwaves, they have a responsibility to serve local communities. “The same cookie-cutter content above a different graphic doesn’t cut it,” said Craig Aaron, the head of Free Press, a nonprofit media reform group that has gathered case studies of sharing by stations.

Notwithstanding that concern, the FCC is apparently worried that these SSA’s may be subverting the federal rules on station ownership, which currently prohibit ownership of two stations unless the market has at least eight stations held by different owners.

The U.S. Justice Department has recently expressed its support for a new FCC proposal that would require that “any station owner that sells 15% or more of the advertising time in another owner’s station through a JSA would have to count that station toward its tally of properties in that market.”  Evidently the proposal would also require existing non-compliant SSA’s and JSA’s to be terminated after two years.  According to thestreet.com, public comment will be solicited.

In 2003, then State Senator Steve Cohen and then State Representative Rob Briley introduced the Tennessee Broadcast Industry Free Market Act of 2003.  The proposed legislation, which was ultimately defeated in committee, would have modified Tennessee’s version of the Uniform Commercial Code (in particular, the title dealing with restraint of trade, Tenn. Code Ann. §47-25-1), to prohibit non-compete agreements in Tennessee among non-managerial staff at television, radio and cable stations.  The specific language of the bill (SB0147/HR0280) provided as follows:

AN ACT to enact the Tennessee Broadcast Industry Free Market Act of 2003 and to amend Tennessee Code Annotated, Title 47, Chapter 25 and Title 50.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 47, Chapter 25, Part 1, is amended by adding the following new appropriately designated section:
Section 47-25-1___.
(a) This act shall be known and may be cited as the “Tennessee Broadcast Industry Free Market Act of 2003”.
(b) As used in this act, unless the context otherwise requires:

(1) “Broadcasting industry” means television, radio and cable stations; and
(2) “Broadcast employee” means any employee of a broadcasting industry employer, other than a sales or management employee.

(c) No broadcasting industry employer may require in an employment contract that an employee or prospective employee refrain from obtaining employment in a specific geographic area for a specific period of time after termination of employment with that broadcasting industry employer.
(d) This section does not prevent the enforcement of a covenant not to compete during the term of an employment contract or against an employee who breaches an employment contract.

SECTION 2. This act shall take effect upon becoming a law, the public welfare requiring it.

According to Briley, a practicing attorney in Nashville, who was kind enough to respond to my email this morning, “the bill never really got off the ground on the House side, so its hard for me to say what forces may have opposed it.  Although, the broadcast lobby would be the most likely suspect.”  Certainly, while the American Federation of Television and Radio Artists (“AFTRA”) supported it, the Tennessee Association of Broadcasters was outspoken in its opposition.  No comparable legislation has since surfaced.

I remember that the local broadcast industry, at least those front-line folks who would have been affected, were deeply interested in the progress of the bill at the time.  After all, for a television reporter, producer, or photographer in Memphis, there are really only four potential employers.  Frequently, new employees, grateful to find work in a highly competitive industry, are faced with these contract provisions which limit their ability to work for a competitor for a pre-determined period of time after separation, no matter the reason for the separation.  Because the language is part of the contract and because, in total candor, these new employees simply do not have the same bargaining strength as their potential employers, the new employees agree to restrict their mobility prospectively (I will discuss unconscionability and contracts of adhesion in a later post).  Sometimes, stations will get current (existing) employees to sign addendums to their employment agreements, creating these restrictions, without offering new consideration.  Egads!  Employees agree, of course, because they believe they have no choice.

The practical effects and implications of non-competes in the broadcast industry are many.  Even though a particular non-compete provision may not be enforceable, competing employers seem to have “unspoken agreements” not to hire away an employee terminated by a competitor during the restricted period.  They do this both to validly protect themselves from liability for tortious interference, but also, and more practically, because all of these competing employers have a shared interest in the “value” of these provisions (translation:  if we hire their guy during the non-compete period, they might do that to us).

For the front-line folks (reporters, producers, photographers) who are arguably bound by these provisions, there are, at least, two very important implications:  1) if they are not happy, they believe they cannot go across town to work for the competitor, even after their contract is up (or even if they are terminated); and 2) they have zero bargaining power at contract renewal time (unless they are prepared to leave the market) to, for example, substantially increase their salaries.

I have created a short “primer” page on the issue of non-competes elsewhere on this site. Absent legislation to the contrary, here is the state of the law on non-competes in Tennessee direct from the state Supreme Court in 2005:

1. As a starting point, covenants not to compete are disfavored in Tennessee.
2. Because they are considered to be a restraint on trade, a court interpreting a non-compete should construe it strictly in favor of the employee.
3. A Tennessee Court may find a non-compete enforceable if “there is a legitimate business interest to be protected” and the “time and terroritorial limitations are reasonable.”
4. To determine whether the limitations are reasonable, a Tennessee Court will look at (1) the consideration supporting the covenant; (2) the threatened danger to the employer in the absence of the covenant; (3) the economic hardship imposed on the employee by the covenant; and (4) whether the covenant is inimical to the public interest.

As I note on my primer page, other states have codified prohibitions on broadcast non-competes.

In Tennessee, I think it is fair to say that there is substantial uncertainty on the employee level about the enforceability of contractual non-compete provisions.  Candidly, I think there is probably also some uncertainty on the employer side as well.  The bottom line though, is that employers have been savvy enough in negotiating separations to keep this out of the courts and, as a result, there is no court-made law on the enforceability of broadcast non-competes, in particular, in Tennessee.

In light of the rubric adopted by the Tennessee Supreme Court, paraphrased above, here are some open questions:

1. Against whom specifically should a non-compete be enforceable?  Should a photographer be bound by one of these provisions?
2. What about an on-air personality who has not been marketed by the station and in whom the station cannot show a “legitimate business interest to be protected”?
3. What about behind-the-scenes line producers, who are responsible for building each newscast, but are neither marketed by the station nor privy to the station’s proprietary research or strategic planning?
4. Finally, how long is too long to restrain someone from going to the competition?

Certainly, these restrictive covenants are important for news decision-makers and management, franchise talent, etc.  Good arguments could certainly be made for their enforceability in those contexts.  Until they are truly litigated (or legislated) for the many other classes of broadcast employees however, they remain powerful forces of restraint because both the employers and employees believe they are enforceable.

You can read more here.

During the last week of January 2014, a former television reporter at a station in Portland, Oregon filed a complaint in the Portland Division of the U.S. District Court for the District of Oregon, alleging that he was never paid overtime to which he was entitled under the Fair Labor Standards Act (“FLSA”).  His complaint also alleges FLSA retaliation as a distinct cause of action.  (Note: the Plaintiff additionally alleges a number of other state causes of action and what appears to be an individual ADA claim, which I will not discuss here).  At its root, this suit, and others like it (our firm has raised similar claims on behalf of former media personnel) address the arguable ambiguity in the FLSA over whether a journalist should be “exempt” or “non-exempt”.  In the former case, he is not subject to the overtime requirements and may be paid a salary; in the latter case, he must be paid for every hour worked over forty in a given work-week.

You may read the complaint here.

To thumbnail this, the FLSA creates a number of classes of employees who are exempt from the requirements that they be paid overtime.  These include commissioned sales employees, computer professionals, drivers, driver’s helpers, loaders and mechanics, farmworkers employed on small farms, salesmen, partsmen and mechanics employed by automobile dealerships, employees at seasonal and recreational establishments, and executive, administrative, professional and outside sales employees.  The relevant exemption for the purposes of this case is probably the “professional” exemption which can be practically split into the “learned professional” exemption and the “creative professional” exemption.

As you can see in the Department of Labor’s white sheet on exemptions for journalists, which I have provided elsewhere on my site, they are typically considered under the “creative professional” exemption.  If you look at the requirements for that exemption, you will see that, notwithstanding the salary minimums, a journalist is exempt from the overtime requirements if “the employee’s primary duty is work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor (e.g., the fields of music, acting, writing and the graphic arts), as opposed to routine mental, manual, mechanical or physical work.”  Wow.  So how does a tv or print reporter fit into that rubric?

Here is some more from that white paper:

[T]he final regulations clarify that employees of newspapers, magazines, television and other media are not exempt creative professionals if they only collect, organize and record information that is routine or already public, or if they do not contribute a unique interpretation or analysis to a news product. For example, reporters who rewrite press releases or who write standard recounts of public information by gathering facts on routine community events are not exempt creative professionals. Reporters whose work products are subject to substantial control by their employer also do not qualify as exempt creative professionals. However, employees may be exempt creative professionals if their primary duty is to perform on the air in radio, television or other electronic media; to conduct investigative interviews; to analyze or interpret public events; to write editorial, opinion columns or other commentary; or to act as a narrator or commentator.

To translate (my take):  If you go out and simply cover event-driven news, you are not exempt and are entitled to overtime.  By contrast, if you are contributing opinion, are “performing”, or are conducting “investigative interviews” or analysis, an employer may lawfully deny you overtime.

Anyone who has worked in a newsroom should see the problem here:  Most reporters chase event-driven stories, but their employers want them to do more.  A typical general assignment reporter at a television station should come to a morning editorial meeting with a story pitch that is source-driven and derived from some level of investigation; this is the expectation.  In fact, many newsrooms mandate this.  In practice, many reporters do not develop sources and wait for an assignment editor to send them to a fire or a homicide, etc.

So what should a media company take away from this?  Clearly, it is impractical from an accounting standpoint to create different classes of reporters.  To take the position that your reporting staff is non-creative and therefore, non-exempt, exposes you to FLSA liability (as seen in this litigation) and statutory liquidated damages, not to mention that it is, on some fundamental level, disingenuous (how could a news organization, in good faith, claim that its reporting staff never “conducts investigative interviews” and expect to have any credibility in the community?).  A number of media companies continue to do this however, and, as typified by this lawsuit and others, are going to have to trek through this clear legal quagmire, at great expense, to find resolution.  Alternatively, other media companies have, during the past half-decade, elected to convert their entire reporting staffs to exempt status.  This means that once-salaried reporters are now making their salary-plus-overtime and it has surely added significantly to newsroom overtime budgets.  It is however, the conservative approach, and may bring certainty that they have controlled their exposure under the Act.

To those companies that have not taken this “conservative” approach, the ambiguity in the statute has created opportunity for plaintiffs.  The wrongful classification of an employee may entitle that employee to backpay (unpaid overtime for all hours over 40 worked), liquidated damages and, as argued in this case, punitive damages for alleged retaliation (if you terminate an employee who claims that you fired him for notifying you of the misclassification).

If you worked for one of those media companies that went through a large-scale payroll conversion, you now know why.   Here again is a link to the DOL’s position on journalists.

The Federal Communication Commission’s recent proposal to study the “critical information needs of the American people” has been met with rebuke by the Radio Television Digital News Association and others.  The proposal, linked here, recommends newsroom visits (of all media) and in-depth neighborhood studies.  It also involves monitoring broadcast content during random weeks both inside and outside sweeps periods.

Foxnews.com has made this its top web story.  You can read their piece here.

Of particular interest here, is the portion of the proposal that involves FCC contractors doing follow-up interviews with newsroom personnel, including newsgathering staff.  To wit:

The final component of this qualitative piece involves the execution of in-depth interviews with corporate management, local management, and support staff. We suggest a maximum of 56 media provider sites (radio and television stations) be surveyed. Within that maximum, interviews will be conducted within each market, stratified by market size. We propose that interviews be conducted at six sites in each of the selected small markets, ten sites in the selected medium markets, and 12 sites in large markets.  Five interviews will be conducted at each media site. The selection of the type of staff to interview within each market shall be largely dependent on the number of properties within each market.

….

The purpose of these interviews is to ascertain the process by which stories are selected, station priorities (for content, production quality, and populations served), perceived station bias, perceived percent of news dedicated to each of the eight CINs, and perceived responsiveness to underserved populations.  Due to the highly sensitive nature of information collected (particularly among reporters and anchors of television news stations), demographic information will not be reported. Additionally, confidentiality will be assured among all participants interviewed.