Social Media: Legal Risks to Your Company

Posted by: kevensteinberg
Category: Blog, Employment Law
Smart phone with social media icons displayed

Social media has become a global and pervasive tool for both individuals and businesses to build their brands, expand networks, foster relationships, and recruit new customers. 

While the benefits of social networking can be clear, if not managed properly, social media can also pose significant risks for both employees and a company. According to the EY Information Security Survey, 59% of businesses had a “material or significant” social media incident in the last year. 

Risks include irreparable HR and PR harm such as reputational damage and destruction of relationships, which could potentially cause loss to brand equity. There are also privacy concerns for employees for which the boundaries are blurry. For example, is it appropriate for a senior law firm partner to “follow” a junior attorney on Twitter? Could this activity be considered monitoring? For both employers and employees, social media activity can be uncharted waters.

In order to navigate these waters with limited risk, create a protocol surrounding social media activity for your business. A social media policy can clear up questions and guide actions, protect employee rights, and protect social media employer liability. 

4 Common Social Media Legal Risks to Business

In addition to the risks of the potential PR nightmares and damage to your reputation and relationships, there are some significant legal risks that can be avoided with the appropriate policies. These confidentiality and privacy risks could pose significant concerns specifically for industries such as the financial sector, government, and healthcare organizations. 

Here are some common legal risks that social media can pose and ways to protect yourself against them. Common landmines include (but are not limited to): 

  1. Employee discrimination: According to the National Labor Relations Board (NLRB), private sector employees do not have the right to make racist or other inflammatory comments on their private social media accounts. Online speech that attacks immutable characteristics protected by law (age, race, sex, religion, etc.) or constitutes workplace harassment will not be protected under free speech laws and might reflect on the employer. In many states, there are also a number of protective measures to prevent retaliatory actions of employers against their employees. Legal counsel should be attained to clarify state and federal laws guiding employee rights and discriminatory actions that can be expressed via social media. Discriminatory statements made by employees could be misconstrued as being representative of your company and should be monitored. 
  2. Copyright infringement: This is a basic legal lesson that can become confusing online. It can be difficult to know the source of digital content, but to be clear, anything you download off of the internet (including a photo or text) could be susceptible to copyright infringement. Even providing credit does not always excuse infringement, as copyright owners have exclusive rights to control reproduction, distribution, and display of their creative works. However, a hyperlink to the original content could be sufficient. The terms and conditions of a website should be analyzed carefully before re-posting any content in blogs, social media, or on your website. 
  3. Misleading Conduct and False Advertisement: Recently the Federal Trade Commission (FTC) issued new guidelines regarding product endorsements. Among these new guidelines is employer liability for false or misleading advertisements stemming from employees’ online postings about their employers’ products or services, whether the postings are authorized or not. Disclosure of “material connections” must also be considered. Companies could face FTC enforcement actions if advertisements are deemed false. Because online advertisements have the potential to reach a wide audience, false advertisers could find themselves vulnerable to large-scale class-action lawsuits if consumers are significantly injured by said false advertisements. This could pose additional risks to specific industries such as financial services, government, and healthcare. 
  4. Defamation: Due to the wide reach of social media, a statement of untrue fact in social media on behalf of your business could result in litigation whether the posting was authorized or not. In addition to text, modifications to photos that are shared and “go viral” could also be subject to defamation litigation. Finally, while opinions may be privileged under the law, they cannot be discriminatory, and, depending on the way they are stated, could be interpreted as a statement of fact in a court of law.  

Reduce Social Media Employer Liability with a Strong Policy 

In order to mitigate risks, your HR department should work closely with legal counsel and marketing teams to design a social media legal strategy, social media policy, and/or social media policy statements in your current employee handbook and employee contracts. 

Because employers can be held accountable for employees’ social media activity, employers have a duty to supervise their employees’ handling of social media accounts. In order to avoid risk, strong social networking policies must clearly outline what employees may and may not discuss on social media. Policies should be in writing and consistently implemented and monitored. 

Social media in the workplace can be a great way to connect with clients and future customers and build a two-way interaction between your audiences and your company, thereby increasing transparency and trust. However, because social networking has become a cultural commonplace, employee training for effective and compliant social media practices is critical to ensure that anyone engaging in business communications understands the policy as well as the potential risks involved. 

An expert business attorney can work with your HR department and communications teams to ensure that your employment law and social media policies are effectively integrated. Protect your employee rights as well as mitigate liability for your business. Contact our experienced business attorneys at Steinberg Law to learn more about how to create a legally compliant social media policy so that your team can connect with customers with confidence. 

Author: kevensteinberg