Serfing the Web

AOL's treatment of its volunteer workers should give pause to those arguing for less regulation of business

Sometime during the last two decades of the Technology Age -- perhaps it was after the publication of the 250th touchy-feely management best seller, or after the broadcast of public television's 100th Sesame Street-like investment tips show -- Americans came to fully accept the idea that profitable corporations are like churches.

Successful companies emphasize Love: "At firms with strong cultures, employees care about the company, each other, and customers," writes Whitney Tilson, a management analyst for The Motley Fool, a child-friendly stock-advice show, Web site, and book series. They foster Brotherhood: "They share information and cooperate," Tilson writes. Their employees achieve Inner Peace: "They feel good about their jobs." They are, above all, Caring: "They are willing to go the extra mile."

"This," Tilson writes in an online Fool column, creates the business version of salvation: It "can provide a meaningful competitive edge."

Tilson's platitudes have been penned in varying ways by thousands of like-minded business pundits. And their message has permeated our national psyche. UC Berkeley's Haas School of Business now requires students to periodically attend weekend camp-outs together, so they might bond. General Motors' Saturn Corp. division sells cars based on the idea that its factories are friendlier than its competitors'. Management gurus fill conference rooms at $1,000 a head by preaching and repreaching this message: Nurturing, empowering corporate culture is the straightest path to profitable grace.

This is the philosophy that led Internet start-ups to give employees free Odwalla and neck massages. And it is the theological bedrock of the Yoga Republicanism described in Paulina Borsook's book Cyberselfish, in which a dominant Silicon Valley libertarianism entertains left-wing ideas of social liberty while embracing right-wing repugnance for government oversight of business affairs. If corporations earn profits through Love, Brotherhood, and Inner Peace, this view holds, government regulation can only worsen people's lives.

But this may be a corrupt faith. A class-action lawsuit against the world's most successful online company suggests that profitable corporations still make money the old-fashioned way: They exploit, manipulate, and underpay employees; they usurp Americans' common patrimony; they flout the law. They're certainly not churches.

The class-action suit seeks back payment for around 5,000 California residents who volunteered to act as hosts and moderators for AOL's chat rooms. It seeks the California minimum wage of $6.25 per hour for the plaintiffs, some of whom spent as many as 80 hours a week testing AOL beta software, enforcing AOL terms of service, assisting subscribers, and keeping detailed time sheets and activity logs.

This volunteer army -- which at one point may have reached 20,000 worldwide -- was critical to the firm's survival just as competitors such as Prodigy and CompuServe were flailing.

According to one estimate, AOL may have saved $1 billion by using these volunteers who may at one point have generated nearly a third of the company's revenue. Left untended, AOL chat rooms devoted to subjects such as cancer survival, botany, and relationships rapidly dissipate into a chaos of cussing and pranking adolescent boys. By purging rabble-rousers, providing instruction and encouragement to AOL newbies, and writing original instructional and other chat room material, the volunteers helped lure millions of dues-paying, online-advertising-viewing customers.

The result: AOL accumulated so much cash it was able to thrive during its difficult, early years and eventually buy media giant Time Warner a year ago. According to Mark R. Thierman, whose San Francisco law firm is representing the California plaintiffs, AOL's peculiar reliance on volunteerism was no more legal than if Saturn allowed enthusiasts to walk into a factory and volunteer to install door handles, or if a janitorial firm encouraged employees to volunteer extra hours in lieu of overtime.

"Our whole labor law system is based on people getting paid for what they're working," Thierman says. "If you let people volunteer, it would undermine the whole system. If you want to do charity work, that's volunteering. AOL Time Warner's not a nonprofit corporation."

AOL's lawyers drafted a memo in 1995 fretting about the legality of using the volunteers, according to a Forbesmagazine story that discussed a similar lawsuit filed earlier in New York. The volunteers initially signed on to save money on AOL hourly online charges, which for heavy users amounted to hundreds of dollars a month. But they continued working even after AOL began charging a monthly flat fee in 1996, and their $300 savings in online charges suddenly became worth less than $20. AOL appeared to understand that it was bending U.S. labor laws. According to the lawyers' memo cited by Forbes, the company realized that the volunteers' situation closely resembled what the law defines as employment: They were required to fill out time cards, undergo training, and file reports. In response to its lawyers' preoccupations, AOL hired a hundred of the busiest volunteers and shunted the rest of them off to a specially created subsidiary, changing some of their job requirements to differentiate them from paid employees. When the volunteers filed a lawsuit in May 1999 in New York, AOL again cut back its reliance on volunteers, further suggesting that the company knew it was on shaky legal ground.

The chat room volunteers have received little sympathy since they filed the New York suit. Why, after all, should one feel sorry for people whose social life consists of assuming a new identity online? One libertarian essay even used the case as an example of how old labor laws, drafted during the Industrial Revolution, have no relevance in today's technology-based economy.

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