Caveat Employer: Let the Employer Beware of Employee Endorsements on Social Media Websites

Posted on January 5, 2010 by Employment Litigation Practice Group

Employers already face concerns about how to handle employees trash-talking about them on blogs, Facebook and other social media. Now, employers must be cautious of the converse — employee endorsements of their employers’ products and services on social media websites. The Federal Trade Commission (FTC) recently issued updated guidelines aimed at protecting consumers from misleading endorsements and advertising. As these guidelines make clear, employers whose employees use social media like blogs or Facebook to comment on their employer’s products or services face potential liability, even where the employer has not authorized or ratified the employee’s remarks.

The FTC’s revised Guides Concerning the Use of Endorsements and Testimonials in Advertising, published in the Federal Register at 16 C.F.R. Part 255 (the “guidelines”), address the application of Section 5 of the FTC Act (the “Act”) – which prohibits unfair or deceptive acts or practices and unfair competition in or affecting commerce -- to the use of endorsements and testimonials in advertising.

In the guidelines, the FTC identifies the general principles it will apply when evaluating whether endorsements and testimonials, including those given by employees about their employers’ products and services, are deceptive. The guidelines provide specific examples, and suggest that employees endorsing their employer’s products or services have a duty to disclose to their audience their relationship to an employer at the time they give the endorsement or testimonial. To be an endorsement or testimonial subject to these guidelines, the posting must be a message “that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser. The party whose opinions, beliefs, findings, or experience the message appears to reflect will be called the endorser...” 16 C.F.R. Part 255.01(b).

The duty of disclosure applies even when the employee’s endorsement appears on a site that is not maintained by the employer or employee (such as a popular “bulletin board”) and the statement itself is not misleading. See 16 C.F.R. Part 255.5 (entitled “Disclosure of material connections”), Example 8. Failure to make such disclosure may expose the employer to liability under the Act.

If employees make misleading statements about the employer’s products and services that result in injury to consumers, the FTC may bring an enforcement action against the employer. The FTC reports that it has brought enforcement actions against employers “whose failure to establish or maintain appropriate internal procedures” had resulted in consumer injury, but the FTC suggested in comments on the guidelines that it would be unlikely to take action against an employer for the conduct of a single “rogue” employee whose conduct violated an adequate company policy.

Additionally, because postings on blogs and Facebook pages can reach wide audiences, employers may be vulnerable to large-scale liability like class-action lawsuits by consumers and/or legal action by state attorneys general.

In view of this latest possible exposure to employers from employees’ use of blogs and social websites, employers should consider reviewing their electronic communications or social media policies to ensure: (1) that they have policies addressing the use of the company’s name, trademarks, and other proprietary information in blogs and other social media; and (2) that these policies include either prohibitions or appropriate guidance regarding references to company products or services. Such prohibitions and/or guidance should no longer be limited to criticisms of the employer and its products and/or services. Endorsements, if permitted at all, should be limited to truthful and verifiable statements, or should be subject to prior approval by management. And in either event, such statements must be accompanied by an employee’s written disclosure of the employment relationship so that consumers can fairly weigh the testimonial.

This entry was written by Lisa Brauner.

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Firestorm Over Change in Facebook's Privacy Settings Has Important Implications for Employers

Posted on December 16, 2009 by Privacy and Data Protection Practice Group

This past week, Facebook asked each of its 350 million users whether they wanted to change their privacy settings to new settings offered by Facebook. The request ignited a firestorm among privacy advocates who believed that the changes meant less privacy for users. At the same time, the request forced users to consider their old settings and whether to change them to the new ones. The Financial Times reported that, according to Facebook, before this week’s rollout of the new settings, only 15% to 20% of users had changed their default privacy settings, but in response to the inquiry about changing their privacy settings, 50% of users — approximately 175 million users — had made changes.

Why is this massive review of Facebook privacy settings significant to employers? Facebook’s default privacy setting is, perhaps ironically, “Everyone.” In other words, job applicants and employees who do not change their default privacy settings on Facebook permit the general public, including recruiters, human resources professionals, in-house employment counsel, and employment litigators to view all information posted on their profile. Because the information is readily accessible to the general public, the law imposes no restriction on these viewers, even when their interests may be adverse to those of the applicant or employee.

Facebook’s privacy settings include an option that permits a user to restrict viewing to “Only Friends,” i.e., only those people whom the user has permitted to access her profile. While some users exercise little or no discretion in accepting friend requests and have hundreds of friends, many users restrict their friends to those whom the user can trust to further disclose information posted on the user’s profile page only with permission. Employers face significant legal restrictions on access to a user’s restricted Facebook page. One of our recent blog posts highlighted an adverse jury verdict against Houston’s restaurants where two managers who were not on the friends list of a MySpace group page, nonetheless, gained access to the page and fired two of the group’s members who were Houston’s employees based on their postings.

Even if only one-quarter of the Facebook users who recently changed their privacy settings restricted access to “Only Friends,” that change would translate into approximately 44 million users. Put another way, employers may be seeing the start of a cultural shift in which social networking users become far more careful before posting information about themselves that could be lawfully accessed without their knowledge or consent and used against them in employment-related decisions.

This entry was written by Philip L. Gordon

Image credit: DaytonChildrens
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A "Friend" Indeed? Attorneys' Use of Third Parties to Gain Access to Social Networking Sites Could Result in Discipline

Posted on May 15, 2009 by Privacy and Data Protection Practice Group

The explosive growth in Facebook and MySpace pages has created a fertile ground for evidence-gathering by trial lawyers. However, these websites enable users to establish privacy settings, and to serve as “gatekeepers,” to control who can gain access to their posted material. One privacy setting limits access to those whom the user has accepted as a “friend.” An attorney who is not on the user’s “friends list,” in theory, could effectively circumvent the user’s gatekeeping by asking a third party to send a friend request to the user. Many social networking users are not particularly selective when it comes to making “friends.”

The Philadelphia Bar Association’s Professional Guidance Committee recently addressed the ethics of this strategem, cautioning that it is unethical for an attorney to use a third party to “friend” a Facebook user who is a litigation witness for purposes of obtaining information that the attorney might use to impeach the witness.

The Committee’s advisory opinion found that an attorney violates rules of professional conduct by gaining access to a private (“invitation only”) social network site by way of deception. Specifically, the opinion explains that by not disclosing to the potential witness the third party’s affiliation with the attorney, the attorney has omitted a “highly material fact” and has “purposefully conceal[ed] that fact from the witness for the purpose of inducing the witness to allow access.” Presumably, had the witness known the “whole story” and the true motivation behind the third party’s friend request, the witness would not have permitted access to his or her social network profile.

Importantly, the advisory opinion distinguishes such invitation-only websites from, for example, videotaping a potential witness in public – again, with the intent of using that information to impeach the testimony of the witness. The attorney who retained the videographer acts ethically because the videographer records the witness’s activity only in public spaces to which access is not restricted. By contrast, through security settings, social network sites are not open to anybody and everybody.

Although the Bar Association’s advisory opinion is not binding on the Disciplinary Board of the Pennsylvania Supreme Court or any court, the opinion does provide a clear message to in-house employment attorneys and outside counsel – namely, that they should proceed with caution before attempting to access a social networking profile or other on-line forum that is password protected or otherwise restricted. This note of caution is even more directly relevant in the context of litigation, where specific rules of evidence and overarching rules of professional conduct are in place.

For additional insight into this developing area, see our earlier entry "No Invasion of Privacy for Publication of MySpace Posting."

This entry was co-authored by Philip L. Gordon and Richard L. Sloane.
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