Social Media:Critical Issues for Employers

David S. Almeida, Steven J. Teplinsky & Charmaine M. Butler

M ic h a e l B e s t & F r ie d r ic h LLP

October 7, 2010

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What is Social Media?

Many, many definitions however some universal truths are that Social Media is . . .

interaction using web-based technologies to publish and to distribute user generated content (UGC) or consumer generated media (CGM)

a blending of technology and social interaction for the co-creation of value

Word of Mouth Marketing on Steroids

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Social Media is . . . Personal Networking

MySpaceFacebook

Business NetworkingLinkedInPlaxoAvvo

Video SharingYouTube

News SharingDigg

BloggingPersonal SitesTwitter (Micro-blogging)Tumblr

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Facebook is King AND Queen

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Over 50MM tweets per day …

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Overview of Social Media Benefits Word of Mouth marketing through

UGC Fosters brand loyalty and credibility Responsive Customer

Service/Feedback Allows for quick responses in

responding to Negative Publicity, Crises

Promotions and Contests Corporate Social Responsibility -

spread the word about community outreach or other initiatives

Limitless Potential Lessens advertising spend

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MySpace, Facebook and Twitter

1. These sites are extremely popular

2. Employers can and do use them

3. Many people, especially many younger people, have a view of “privacy,” under which they think employers looking at their online information is somehow “unfair.”

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Potential Issue Attendant with the Use of Social Media

1. Breach of confidentiality/trade secrets 2. Defamation 3. Harassing or offensive content 4. Inappropriate content 5. Smear campaigns6. Intellectual property protections 7. Copyright protection 8. Securities law issues

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Social Media Policies

An effective policy should include the following provisions:1. State that employees will be responsible for the purposeful or

inadvertent disclosure of any confidential or proprietary company information, trade secrets, information that violates the privacy rights or other rights of a third party, or the content of anything posted on the website in general.

2. State that you are free to view and monitor an employee’s webpage at any time without consent or prior approval.

3. Clarify that employees are prohibited from making statements about your company, their co-workers, and your customers, competitors, agents, or partners that is harassing, threatening, libelous, or defamatory.

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Social Media Policies (cont’d):

1. Explain that anything posted on an employee’s website is subject to all other corporate policies, rules, regulations, and guidelines contained in your employee handbook or any other source.

2. Require permission to post or reproduce any company logo, material, or trademarks.

3. State that employees are subject to discipline, including being fired, for violating your policy.

4. Prohibit the taking of photographs in the workplace (including photographs taken with mobile telephones) to minimize the likelihood of images appearing on a blog that reveal confidential, proprietary, or otherwise sensitive information or trade secrets.

5. Language related to professionalism, ethics, and conflicts of interest that provide employees with an employer’s expectations both on and off duty.

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In Addition, for Company-Sponsored Blogs:

Develop, communicate, and enforce a policy governing what is and is not appropriate content for a company-sponsored blog.

Secure, through passwords or other means, company-sponsored blogs to prevent their unauthorized viewing and protect the confidentiality of posted information.

Monitor the Internet and search for blogs that contain the company’s name, products, and/or names of personnel.

As with all policies, your blogging policy should be written, clear, and unambiguous. It also should be communicated to your employees by being posted in your workplace, circulated interoffice after it’s adopted, and published in your employee handbook. You should require your employees to acknowledge receiving the policy. And finally, you should ensure that it’s enforced fairly and consistently.

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Social Media Policies: Why?

Reduce charges of inappropriate conduct, including harassment, discrimination, and hostile work environment Offensive messages Pornographic materials Jokes, messages, cartoons E-romance sites

Prevent illegal online activities Copyright infringement/software licensing Illegal gambling Computer crimes Stock manipulation Cybersmearing Child pornography Defamation

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Social Media Policies: Why? (cont’d.)

Prevent damaging publicity

Restrict employees from conducting personal business on company time, i.e., chat rooms, shopping

Provide notice of use standards and expectations

Reduce union’s use of the Internet to conduct business with your employees

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Social Media Policies: How?2. Develop a comprehensive technology policy regarding use of

company computers and the Internet. Identify appropriate and inappropriate use. Address issues regarding non-expectation of privacy in employer-owned systems, monitoring of systems, and penalties for non-compliance.

a. Address privacy expectations.

b. Employees should be placed on notice that their communications may be monitored.

c. Employees should have no expectation of privacy in workplace communications.

d. Employee consent to such a policy should mean: no expectation of privacy in any stored communications (i.e., voicemail messages, e-mail messages, or downloaded files).

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Social Media Policies: How? (cont’d)

1. Disseminate the policy

2. Discuss the policy with employees, including telecommuters

3. Require that employees sign an acknowledgment of receipt of the policy

4. Periodically monitor e-mail and Internet use

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NLRA Considerations

Protects right to engage in protected and concerted activity

Any time two or more employees are discussing work, whether in person, or as part of a web based community, there may be concerted activity

All activity that is concerted is not protected (e.g., disloyal, reckless, maliciously untrue)

Policies are important

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Policies Regarding Email & Internet Use

Potential Liability for Monitoring Communications

Two federal wiretapping statutes may be applicable:

18 U.S.C. § 2510, which governs the monitoring of communications during their transmission, including surreptitious recording of, or real-time listening to, telephone conversations.

18 U.S.C. § 2701, which governs the examination of communications after their transmission, such as reading an e-mail message after it was received by the recipient. (Determinant factor is ownership of the system)

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Potential Liability for Monitoring Communications (cont’d)

State laws may be more restrictive.

Where an employer provides telephone and e-mail service to its employees, including cell phones, then the employer can intercept communications made on its own systems if necessary to protect its “rights or property.”

Attempts to detect unauthorized disclosure of trade secrets to third parties.

Attempts to detect illegal activities, such as insider trading or discriminatory conduct that may cause legal liability to the employer.

Employers typically prevail in cases involving employee privacy claims stemming from employer monitoring of e-mail or Internet use.

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Using Social Media to Hire

“Background” check – Disclosure? Discovery?

Do you really want to know that? Sexual orientation Disabilities Race Associations (non-professional) A picture tells 1000 words – sometimes a 1000 words too many

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Should You Use Social Media To Hire?

What happens in Vegas does not always stay there

What looks like happened in Vegas, didn’t always happen

The red cup never lies – or does it?

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The Red Cup

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Areas of Potential Concern Breach of confidentiality

Defamation

Harassing or offensive content

Inappropriate conduct

Invasion of privacy claims Smear Campaigns

Intellectual property protections

Security issues

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Disciplining Employees Employment at Will

Ability to discipline/terminate an employee for blogging depends on several factors On or off company time Connection between employee conduct

and employers business interests

Examples of termination for employee blogging

Other possible pitfalls First Amendment/Journalist Sarbanes Oxley Discrimination

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Parameters For Regulating Off-Duty Conduct Arbitral Guidelines. Grievance arbitration decisions provide some direction

as to the standards normally applicable to evaluate an employee's off-duty misconduct. The following criteria are often used:

Nexus Standard. The primary standard used by decision makers to evaluate the appropriateness of any discipline levied for conduct away from work is the "nexus test" or "nexus requirement." This "nexus" requirement is measured in a variety of ways.

One arbitrator has written: "The right of management to discharge or suspend an employee for conduct away from his or her place of employment depends entirely upon the impact of that conduct upon the employer's operations." City of New Hope, 89 LA 427, 430 (1984).

Injury or Damage to the Employer's Reputation or Business.

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Disciplining Employees

State Law Lawful Use

It shall be unlawful for an employer to refuse to hire or to discharge any individual, or otherwise disadvantage any individual, with respect to compensation, terms, conditions or privileges of employment because the individual uses lawful products off the premises of the employer during nonworking hours. 820 ILCS 55/1

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Disciplining Employees

Exceptions. This Section does not apply to:

(1) Any employer that is a non-profit organization that, as one of its primary purposes or objectives, discourages the use of one or more lawful products by the general public.

(2) The use of those lawful products which impairs an employee’s ability to perform the employee’s assigned duties.

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Disciplining Employees

Privacy Unreasonable intrusion upon privacy Use of another’s name for commercial purposes Unreasonable disclosure of personal facts

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Disciplining Employees

Labor agreements

Employer policies and past practice

Consult with counsel before disciplining or terminating an employee

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Social Media as a marketing tool

Companies seeking to harness the incredible power of digital technology, UGC and the like must be extremely vigilant that they are …

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complying with all applicable laws and regulations, including the FTC’s Revised Guides Concerning the Use of Endorsements and Testimonials in Advertising Guidelines

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Learning from the past

Direct marketing via mail and robo-calls

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and E-mail

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Continuum of Marketing Practices

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Paradigmatic Shift in Marketing

Traditional Marketing – mass advertising, large reach, carefully tailored message, no interactivity

On-line Marketing – one to one advertising, different design to different audiences, interactive

Mobile Marketing – location based, highly targeted, highly interactive, viral, very personalized, ubiquitous and permission based

Traditional marketing (outbound marketing) seen as an interruption – technology developed to avoid it (Caller ID, TIVO), whereas SM and mobile marketing (inbound marketing) focus on permission based, highly personalized advertising

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Social Media & Mobile Marketing: The Next Frontier

Recent explosion in amount of marketing dollars spent on mobile marketing campaigns, including:

Text messaging Mobile Websites Applications Location Based

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Biggest Challenges

Requirement of Consent

Lack of space for sufficient disclosure

Absence of national and international regulation

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80% of businesses across various industries, including retail, computer hardware and software, and media, have or are preparing a mobile web site, according to the new Adobe Scene7 Mobile Commerce

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Accurate Disclosure is Paramount

Companies must ensure that when anyone “speaks” on behalf of the company on any SM platform, endorsers must:

Disclose identity, and any other relevant affiliations from the very first encounter

Disclose any business/client relationship if communicating on behalf of a third party

Provide a means of communicating

Inform employees, agencies and brand advocates that a formal policy of disclosure exist (and take action quickly to correct problems where possible)

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Blogger Reviews: FTC Revised Guidelines

Disclose connection between blogger and company Never instruct the blogger regarding what to say in the review Never ask to review or edit the review prior to posting Can provide blogger approved product information sheets, but

should not reflect the company's opinion or include prices Company can be held liable for comments made by blogger

Never engage in “Astroturfing”

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Key Takeaways

Disseminators: Bloggers and other social media users Usually provided free products

FTC Releases New Guidelines: Issued in December 2009 When disclosure required: Gift, “street team” employment, or any other form of

endorsement Outlined need for advertisers to establish training and monitoring programs for

their use of social media

Liability: Advertisers liable for endorser’s failure to disclose Cannot rely on “remoteness” to social media or lack of control over endorsers

Best Practice: Written policy regarding disclosure and point-person/team to assure compliance

FTC notes it will exercise its “prosecutorial discretion” when advertisers have

policy in place and it is followed

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Questions?