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Social Media Poses Legal Risks for Businesses

Originally published: 12.01.10 by Mike Coyne

Be aware of who is using it for positive promotion of your company and who is not.

While many of us are still trying to understand social media (Facebook, Twitter, YouTube, blogs, etc.), others have already advanced to misusing it, creating mischief and causing harm to themselves and others. The most recent high-profile case involves NFL star quarterback Brett Favre, whom the NFL is investigating for allegedly sending sexually suggestive messages via mobile device to a former New York Jets employee. In another case earlier this year, a state court judge from northern Ohio was discovered posting anonymous derogatory comments on a public website about an attorney handling a capital murder case in her court. The comments were critical of his courtroom demeanor and even referenced his “Amos and Andy” mouth. She said her daughter used her account to make some of the posts. The Ohio Supreme Court is investigating.

Certainly, there are times when using social media technology at work is appropriate, such as for marketing, lead generation, and consumer education. Unfortunately, there are a few circumstances in which an employee’s participation on a social media site can give rise to employer liability. For example, on Dec. 1, 2009, the

Federal Trade Commission (FTC) issued revised guidelines concerning the use of endorsements and testimonials in advertising. The guidelines were specifically expanded to cover social media sites. Within those guidelines is a rule requiring that any connection or relationship between an endorser and an advertiser be clearly disclosed. An “endorser” includes individuals, groups, and even employees. Theoretically, if an employee makes a misleading statement on a social media site that can be construed as an endorsement, both the employer and the employee may be liable for any misleading content.

How could this happen? Consider a business that uses a commissioned salesman to obtain service contracts. The salesman goes on a website, poses as a consumer, and posts very positive reviews concerning the value of service or the service agreements. By not disclosing his employment relationship, the salesman has violated the FTC advertising rules. Additional liability could arise if the statements were false or misleading.

There are plenty of other ways in which an employee’s use of social media can come back to haunt an employer. Use of social media to harass another employee is an employer’s concern, particularly if the harassing employee is accessing social media sites while at work and on the employer’s computer system. Still unclear is use of social media on personal computers and mobile devices to disparage co-workers. Currently, the National Labor Relations Board (NLRB) is siding with a paramedic in Connecticut who was fired after violating her company’s Internet and blogging policy for posting negative comments about her boss on her personal Facebook page. The NLRB contends her comments are free speech and protected by The Constitution.

Additionally, social media sites make it extraordinarily easy for an employee to inadvertently or intentionally disclose proprietary company information. Beyond legal risks, employers need to be concerned that employees’ behavior on social media sites can harm a company’s reputation. An employee’s inappropriate or controversial writings or photographs can harm an employer when the employee makes reference to his employer or simply identifies himself as an employee of the employer.

In business, there are more important things to worry about than what your employees are doing with social media. Nevertheless, if your employees have access to company computers on a regular and continuing basis, it is entirely appropriate to require your employees to refrain from using social media sites while at work (unless it is part of their job) and from posting information regarding their employment, the company, and its products or services at any time without prior permission.

Ultimately, court rulings and regulations should give more concrete guidelines on developing policies for using social media while at work. Until then, we advise speaking with your employees about how they should be using social media and consulting with your attorney about how you are using social media, the risks that it might pose to your business, and how best to protect yourself.

Michael P. Coyne is a founding partner of the law firm, Waldheger Coyne, located in Cleveland, Ohio. For more information on the firm, visit: www.healthlaw.com or call 440-835-0600. 

About Mike Coyne

Mike Coyne

Michael P. Coyne is a founding partner of the law firm Waldheger Coyne, located in Cleveland, OH. For more information of the firm, visit: www.healthlaw.com or call 440.835.0600.

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