Social Media: New Frontier, New RiskBeth J. Leahy Esq.Walton Lantaff Schroeder & Carson LLP

What is Social Media?• “Social media generally refers to online activity such as blogs,

forums, wikis, social networking sites and photo-sharing sites that enable users to share information, opinions, content, interest and experiences. Forms of social media generally share the following characteristics:  

• Participation – users of the activity are also contributors . . . the line between the media and the audience becomes fuzzy.

• Community – social media allows users to build connections and create a sense of community. Social media sites are often built around common interests and shared experiences. They become an alternative method of communication.

• Interaction – contributions and feedback are encouraged and collaboration is keen. There are generally few barriers to participation. Communications flow in many directions . . . users often can help shape the experience.”

• 1001 PLI pat 83.

• Facebook reported that more than 200 million people were active users and more than 100 million users log onto the site at least once per day.

• LinkedIn has more than 40 million registered users. Twitter has approximately 10 million users.

• A Partial List of Websites•  • Classmates.com - keep in touch with classmates from school, college and military service. •  • Ecademy - online networking for business, offline networking events and global networking groups. •  • Facebook - site once limited to connecting only college students has expanded to include the general public. •  • Hi5 - personal global social networking site that focuses on membership of young people. •  • IMVU - instant-messaging software using customized 3-D avatars. •  • Jobster - social networking intersects with job searching. •  • LinkedIn - site dedicated to strengthening your business contacts and professional network. •  • MySpace - originally focused on musicians, this general social networking site has mass appeal. •  • Ryze - site designed to connect business professionals. •  • Second Life - a 3-D virtual world where users can use voice and text chat to socialize, connect and create. •  • Twitter - micro-blogging service focused on connecting friends, family and coworkers. •  • Utterz - allows users to update their blog via short-message service (SMS) and multimedia message service (MMS). •  • Vox - blog platform built with extensive permission settings. •  • Windows Live Spaces - this is Microsoft's social networking platform. •  • Xing - displays how each member is connected together, creating an "it's a small world" network for professional. •  • Yahoo 360 - Yahoo's social networking platform. •  • Ziggs - allows users to professionally market themselves online.

• “ What was said in the living room is now published on Face-book. What we do in private is now broadcast on YouTube. What employees talked about at the water cooler now appears as tweets on Twitter, or worse, goes viral across myriad social media platforms. And all of it memorialized in discoverable form. All of it available to millions with the simple press of ‘send’.”

• 8 No Internet L. 5& Strategy 5

• According to a survey in 2009 by Robert Half, 54% of U.S workplaces completely block access to social networks, whereas 19% permit access solely for business purposes, 16% permit limited personal use and 10% permit any personal use of social networks. 24 No.12 Corp. Couns. 7, citing “Whistle –But Don’t Tweet---While You Work.”

• Benefits of Social Networking:• 1. personal connections and business networking• 2. company advertising and branding• 3. company public relations and damage control-

Companies need to engage in social networking, as “ it is happening (with or without them) so (they) might as well have a piece in the conversation and be part of the conversation.” 8 No.2 Internet L• A. Compare how United and Dominos dealt with adverse

network postings- one confronted it, and got positive responses, one ignored it, and it mushroomed, causing a 10 % drop in their stock

• Benefits continued:• 4. Investigative use- verify activity from postings,

see video of litigants, compare what they claim they can not do, to what they post in photos, in videos, and in writing• Because of rules governing lawyers, they can not

communicate with represented parties, if the sites require interaction. Parts of sites that are open to the public, can be accessed. Adjusters should not use false names to access sites.• This type of investigation can apply to pre-hire screenings.

When this is done, if the employer hires an outside company, it needs to comply with the Fair Credit Reporting Act and get the consent of the potential hire. Use of such an investigation may give a more rounded view of a potential hire.

• Pitfall Potential: the risks:• “ A few short years ago, the word “ friend” was a noun,

not a verb. …Online social media can elevate the time-honored act of saying or doing something stupid to a whole new level by instantaneously sharing ill-advised comments and acts with a potential audience of millions, including fellow employees, customers and competitors. Once a social media posting has been made, there is little or no opportunity for second thoughts. And there is the added bonus that an employee's online display of stupidity may forever be preserved in electronic or printed form, to embarrass and haunt the employer on an ongoing basis.” 18 Sept. Nev. Law 16

• Risks:• 1. Non-productive work force- surveys show 12.5%

productivity loss• 2. Risk of exposures to virus and malware• 3. Extended liabilities- including for employee

accidents- are they in the course and scope if injured while tweeting, and is the employer vicariously liable to third parties for those accidents?

• Additional Risks:• Disclosure of Confidential Information or Trade

Secrets:• Data leakage- intentional or non-intentional. A posting

about a new product, an assignment, a marketing plan.• Customer lists which are typically considered to be trade

secrets, provided that reasonable efforts are made to maintain secrecy, may now be LinkedIn, and thus arguments have been made in litigation that they are not protected. Use of personal equipment to contact sites and thus network with customers provides employees with immediate access to company customers, who can easily be notified of any shift in that employee’s job status to a competitor.

• FTC Compliance Issues:• The U. S. Trade Commission has adopted guides

relating to testimonials in advertising. The guides require disclosure of material connections between advertisers and endorsers. An employer may be liable under the guides for their employee’s posing on social media sites that comment on the employer’s products or services, without properly disclosing the employment relationship or are otherwise misleading. • The cheerleader employee.• The retailer example- they offered bloggers a fashion

show ticket and a gift at the show, but when the bloggers did not disclose the gift, the retailer was in violation.

• The FTC recognizes that business can not realistically oversee all the social media posts of its employees to ensure that they do not violate the Endorsement Guidelines. The employer will not be liable therefore if:

• 1. it has a social media policy concerning media participation of its employees, and; 2. it has an established company policy that adequately covers how to deal with the rogue employee.

• This requires the employer have a procedure to monitor compliance by its employees of its policy.

• Securities Law• Increased risk of violation of Securities Law. • Material misstatement that could expose a publicly

traded company to liability for securities fraud.• Disclosures of material non-public information that

could be a prohibitive selective disclosure.• The SEC has said that while on the whole social

media communication tends to be informal, companies are liable for the statements.

• Defamation- libel• “ The speed and the ease of posting a tweet or

blog entry or contribution to an online community exacerbates the risk of impulsive comments, that may be defamatory or constitute trade libel.” 1001 PLI/Pat. 83

• Defamation: publicity, falsity, reckless\knowledge or negligence, damages• 47 U.S.C. 230 Communications Decency Act- may protect

an employer if it hosts a site, and the statement is from an outside third party posting. It will not protect the employer if its employee makes that posting.

• Intellectual Property Infringement • If company employees submit material that

infringes on a copyright to a company blog, the company can become liable for that infringement. If a third party submits the material, and the company does not alter it, they may not be liable.

• 17 U.S.C. 512, the Digital Millennium Copyright Act, can offer protection to a company running a site (if it is a site vendor as defined), but it must comply with specific requirements, which include having an agent to accept notices of copyright infringement, and then acting on those notices, by removing copyrighted material.

• Privacy• If use social media sites to collect information,

varied statutes dealing with privacy laws may apply.• Information relating to children- Children’s Online Privacy

Protection Act• Unsolicited commercial emails- CAN-SPAM Act of 2003

• Impact on Employment Law:• Discrimination Claims;• If use sites to vet potential hires, employer may be on notice of

protected class information, or information about disability, that can then be used in suit. To avoid this, where possible, the decision maker should not do the site investigation, or be privy to it. • If use sites to vet hires, an established protocol needs to be

consistently followed for every applicant, to avoid claims of discrimination. The same sites should be reviewed for each applicant.• Sites may fuel hostile work claims. If supervisors “friend”

employees, what they see on the sites- and what they say on the sites, can be evidence that an employer knew or should have known of claimed harassment. Knowledge of manager and actions of manager are imputed to employer.

• Employment Impact• Where non-exempt employees are encouraged to

use social network for employer benefit, overtime claims may be made.

• Where employees are terminated for performance issues, “recommendations” by their supervisors on sites like LinkedIn may create an evidentiary challenge to employer expressed motive.

• Employer Ability to Review Employee Networking• 18 USC 2701, the Federal Stored Communication

Act has been used a basis to sue employers where they required employees to give them access to private sites. That act provides criminal and civil penalties for 1. intentionally accessing electronic communications without authority, or 2, intentionally exceeding an authorization to access electronically stored communications.

• Employer Ability to Prohibit Negative Comments About Employer • “ As a general rule an employer may adopt a policy forbidding

employees from disparaging an employer or its customers by posting threats, or engaging in other inappropriate behavior on social media. And as a general rule may discipline or terminate employees who engage in such conduct” 18 SEP. Nev.Law. 16.

• However there are statutes that can restrict that ability, and cases around the county have litigated this. Numerous legal articles caution against forbidding criticism or terminating based on criticism alone.• Public employers need to consider 1st Amendment rights, as public

employee speech is protected on matters of public concern.

• The National Labor Relations Act has been used, in part, where employer attempted to terminate employee for critical statements posted on a networking site.

• To Minimize Risk:• Develop and enforce a Social Media Policy• Train and Educate Employees on the policy

• Policy should • Define what electronic mediums are covered by it- and be broad enough to include all

hardware, software and communications activity.• Set meaningful limits on what activity is allowed during work hours, on company systems, by

whom, what time, and what content and access limits apply.• Address employee personal use during the work day.• Tell employees to stop and think how their posting will reflect on the company, its clients or

potential clients.• Remind employees that posts may become public. • Require employees to identify themselves.• Require employees to make clear that any opinions they express are their own, and not the

view of their employer.• Require employees maintain business confidences. • Bar any discriminatory or harassing posts. • Advise employees not to endorse company products until their message is reviewed and

approved by the company. • Bar use of defamatory content- including against the competition.• Remind them not to violate the privacy right of others, by posting their personal images or

information without express permission.

• And, since something will always happen- check your insurance coverage…

• Other impact: • E-discovery- check your retention policy. • Consider Judicial Recusal if “ friend” of plaintiff’s

counsel• Consider the impact on jury • ABA Journal reports juror use of social networking sites

during jury selection and during trials, commenting on evidence, and commenting on their planned verdicts. One article noted a judge who was called to jury duty did the same thing.