Cloudy With A Chance Of Liability: Protecting your Company in an Age of Social Media, Smartphones and Cloud Computing

March 6, 2013

Your presenters

Lara Strauss – Shareholder – Littler Mendelson, P.C.

San Diego, CA

Stacey Adams – Shareholder – Littler Mendelson, P.C.

Newark, NJ

Social Media By The Numbers

Work Use of Social Media

41% of executives believe social media helps to build corporate culture vs. 21% of employees

Positive effect on corporate culture: Executives (45%) vs. Employees (27%)

Increased management transparency: Executives (38%) vs. Employees (17%) (Deloitte Study June 2012)

77% of respondents more willing to buy from a company whose mission and values are defined through their leadership’s involvement in social media (BRANDfog 2012 CEO Survey)

Personal Social Media Use at Work

30% of workers globally – but only 16% in the Americas – believe it is acceptable to use personal social media during business hours (Kelly Global Workforce Index Survey, June 2012)

– Only 19% of baby boomers vs. 36% of Gen Y

– 43% agreed that personal social media use at work undercuts productivity

Personal Social Media Use At Work

In 2010, 50% of businesses reported blocking employees' access to social media, but this number is expected to drop to 30% by 2014. (Gartner Study Mar. 2012)

56% of college students said that if they encountered a company that banned access to social media, they would not accept an offer or would join and find a way to circumvent the corporate policy (GigaOm)

Monitoring of external social media is expected to increase from less than 10% in 2012 to 60% in 2015 (Gartner Study May 2012)

Monitoring Employees’ E-Mail &Social Media Activities

Different Implications? Work vs. Personal Social Media

Who owns the account?

– The Company

– The Employee

And does it matter?

Different Implications? Work vs. Personal Devices

Who owns the device?

– The Company

– The Employee

And what is BYOD?

Concerns Raised by BYOD

Risk of infection by malicious software

Monitoring the device

Disclosure of Confidential Information

Sending a kill command

Federal Laws You Should Know About

Stored Communications Act Electronic Communications Privacy Act Computer Fraud & Abuse Act Lanham Act

State Laws On The Rise

Illinois: Broadly prohibits employers from (i) requesting or requiring that applicants or employees disclose their personal social media log-in credentials; or (ii) demanding access in any manner, i.e. shoulder-surfing

Maryland: Narrow exceptions for investigations into suspected securities violations or trade secret misappropriation

State Laws on the Rise

California: Exception for personal social media reasonably believed to be relevant to an investigation of allegations of misconduct or legal violations

Michigan: Exception to investigate workplace misconduct, misappropriation of confidential business information or when employer has a duty to screen or monitor applicants under the SEC Act

10 More States Currently have similar laws under consideration! (DE, MA, MN, MO, NJ, NY, OH, PA, SC, WA)

Unlawful Surveillance?

Unfair Labor Practice to engage in surveillance of union or organizing activity

– BUT: employer is free to observe employees participating in union activity when employees are doing so openly and in the public

However: Cannot suggest that the employer is monitoring or recording the employee’s protected activities because it can create an “impression of surveillance”

Monitoring E-mail

Company-Owned Accounts

Personal Email Accounts

Risks of Firing Employees Based On Social Media Activities

The Racist Pilot

Customer: “This is a picture of one of your pilots. This disgusts me. I would think that your pilots would be a little more professional than this.”

1 less for the monkey

Venting by Former Employees

What are the response options?

1. Ignore

2. Demand removal of posts that violate the site’s terms of use

3. External PR offensive – Reputation Management Firms

4. Internal PR offensive

5. File a lawsuit

The NLRB Weighs In November 2010: NLRB

announces filing of complaint against American Medical Response in CT

– Employee fired for calling her supervisor a mental patient in a “friends-only” Facebook post in violation of AMR’s social media policy

– Any social networking policy that prohibited disparagement was unlawful per se unless it carved out rights under the NLRA)

The NLRB’s Stance May 2011: NLRB’s Acting

General Counsel added social media to the list of subjects in which he is taking particular interest

June 2011: NLRB reported at least one social media case in every regional office

The NLRA: Protected Activity?

The NLRA prohibits discipline against employees who engage in “protected concerted activity”

Protected = related to the terms or conditions of employment, unionization, or an on-going labor dispute

Concerted = “with, or on the authority of, other employees and not solely by and on behalf of the employee himself.”

Note: Employees in a non-unionized workplace can engage in protected, concerted activity

Examples of On-line Protected Concerted Activity

Group discussions of employee discipline

Shared complaints about unsafe working conditions

Posts that are an outgrowth of earlier discussions about the terms of employment

Employees planning for a meeting with management about terms or conditions of employment

Complaints about mismanagement by a supervisor

Name-Calling On Facebook

In the cases where a discharge based on social media comments violated the NLRA, the Board found comments included:

“swearing and/or sarcasm”

Use of a “short-hand expletive”

References to managers as an “asshole” and a “scumbag”

Did the Employee Cross the Line?

What is the subject matter of the post?

– Does it relate to collective activity or individual gripe?

Nature of the employee’s post

– Any verbal or physical threats?

Who is participating in the discussion?

Was the post disruptive of workplace discipline?

Was the post provoked by the employer’s labor practice?

The Use of Social Media In Background Investigations

Use Of Social Media Checks By Recruiters and Hiring Managers

More than 92% of recruiters and hiring managers use, or plan to use, social media for recruiting

– Facebook (66%); Twitter (54%); LinkedIn (93%)

73% of recruiters have successfully hired a candidate who was introduced or identified through a social network

78% had a negative reaction to illegal drug references; 66% to posts of a sexual nature; 61% to profanity; 54% to spelling or grammatical errors.

– 89% LinkedIn; 26% Facebook; 15% Twitter

(Jobsite Social Recruiting Survey Results 2012)

The Risk

Reliability

Relevancy

“TMI”

FCRA violations

GINA Violations

NLRA violations

Violation of State Law

Fair Credit Reporting Act (FCRA)

Applies to reports prepared by a third party that regularly assembles or evaluates credit or other information on a consumer (“consumer reporting agency”)

Covers any inquiry for employment purposes bearing on an individual’s “credit, general reputation, personal characteristics, or mode of living” – Criminal history checks, credit checks, sex offender registry,

motor vehicle record checks, employment and education verification

Does not apply to inquiries by the employer’s own employees

Does not apply to investigations by third parties into suspected misconduct related to employment

If FCRA applies, what are the Employers obligations?

1. Must provide advance notice and obtain authorization

2. Must provide a “pre adverse action notice” if adverse action is planned based upon something found in the credit report, so that employee has an opportunity to dispute the adverse information

3. Must then wait 5 days before taking action

4. Must deliver a “final adverse action notice” which includes certain required information

Social Media Checks & The FCRA

Social Intelligence Corp. – Internet & social media background screening service for employers

Reports include public information gathered from social networking sites:

“Social Intelligence offers social media screening and investigative services including employment background checks, insurance claims investigations, corporate due diligence, government services, and more. Social media content provides valuable information for a myriad of decisions, but it needs to be used properly. Social Intelligence provides unrivaled, custom-tailored solutions for human resources, insurance, corporate, and government to help organizations leverage the benefits of social media research while reducing costs, time, and legal risks.” (Social Intelligence website)

Social Media Checks & The FCRA

May 9, 2011 FTC letter

– Social Intelligence is a consumer reporting agency

– Social Intelligence (and employers that use its services) must comply with FCRA

Forbes (6/15/11): [SI] modified its language in the background check permission form that job applicants must sign to make it clearer exactly what they would be subjected to during [SI’s] review. They also added a few examples to the form of what might be included in a search. … [W]hat’s previously turned up in applicant background checks: a job seeker who had an Internet photo featuring him holding multiple guns and a sword, another who was a member of a “racist” Facebook group (“I shouldn’t have to press 1 for English! Learn the language”), and a third whose Internet footprint indicated drug use, including membership in a pro-Cannabis 2012 campaign and Craigslist ads seeking OxyContin.

GINA

Prohibits discrimination on the basis of genetic information, including in employment decisions

Prohibits acquisition of genetic information by employers

Limits disclosure of genetic information

Exceptions:

– Inadvertent Acquisition

– Information that is Commercially or Publicly Available

GINA: Why you should be worried

Genetic Information is defined broadly!

– Includes medical conditions of family members

EEOC has pointed out that employers may violate GINA without a specific intent to acquire genetic information

Reviewing an applicant’s Facebook profile could unintentionally result in a violation

Best Practices for Employers

1. Establish internal protocols for social media checks

2. Comply with FCRA when using third-party vendors (or just use your own employees)

3. Limit who conducts social media background checks

4. Wall off decision makers from unscreened search results

5. Provide applicants the opportunity to rebut or explain adverse information

6. Comply with applicant data retention requirements

Social Media Policies

Why are they important?

Protecting your organizations reputation

Protecting trade secrets and confidential business information

Discouraging on-line harassment and reducing risk of liability for it

Enabling investigations

Preserving right to discipline with less risk of retaliation or unfair labor practice charge

Avoiding bad publicity

But, the NLRB is cracking down! August 2011 – May 2012 –

NLRB’s GC issues 3 reports summarizing 28 social media cases, the vast majority of which find some aspect of the employer’s social media policy unlawful

May 2012 – First social media policy found lawful in its entirety

Seven Tips For Drafting Your Social Media Policy

Tip #1: No Trash Talk

Disfavored Language:

1. Prohibition against “inappropriate discussions about the company, management, and/or coworkers”

2. Prohibition on any social media post that “constitutes embarrassment, harassment or defamation of . . . any [company] employee”

Permissible Language: Prohibition against posting any comment that is vulgar, obscene, threatening, intimidating, defamatory, harassing or discriminatory

Tip #2: Keep It Confidential

Disfavored Language: Prohibition on disclosing “material non-public information” or “any information that is considered confidential or proprietary”

Permissible Language: You should not disclose any of the Company’s trade secrets or confidential business information. Trade secrets may include information regarding the development of systems, processes, products, know-how and technology. Confidential business information may include internal reports, policies, procedures; business plans and product-launch dates; financial information of patients/customers; the Company’s attorney-client communications or other internal business-related confidential communications.

Tip #3: Protect Your Logo

Disfavored Language: Prohibition on using “the Employer’s logos and photography of the Employer’s store, brand, or product, without written authorization”

Permissible Language: You should not use the Company’s logo, trademark or proprietary graphics in a way which suggests that you are representing the Company or while engaging in conduct that violates Company policy. For example, you should not create a social media page with the Company’s logo placed in a way which might suggest to readers that the Company is sponsoring the page.

Tip #4: Protect Privacy

Disfavored Language: Prohibition on “revealing . . . personal information regarding coworkers, company clients, partners, or customers without their consent”

Permissible Language: To reduce the risk of identity theft, stalking, and similar criminal conduct, you should not disclose personally identifying information (such as personal contact information obtained from the Company’s files, Social Security numbers, credit or debit card numbers or financial account numbers) of the Company’s employees, customers, vendors or competitors.

Tip #5: No Photography

Disfavored Language: “Get permission before posting photos, video, quotes . . . of anyone other than you online.”

Permissible Language: You should not post images or video of the Company’s employees, customers, vendors or competitors that would be discriminatory, harassing, threatening, vulgar, obscene or similarly inappropriate or offensive.

Tip #6: Employee Disclaimer

Disfavored Language: Requiring that employees state in any post about the employer that they are expressing their own view

Permissible Language: Unless you have received prior authorization from [insert job title], you should not represent or suggest in any social media content that you are authorized to speak on the Company’s behalf, or that the Company has reviewed or approved your content. If that will not be obvious from the content, you should specifically state, “The views expressed in this post are my own. They have not been reviewed or approved by [insert name of company].”

Tip #7: Social Networking On The Job?

Disapproved Language: You cannot engage in social networking “on company time.”

Permissible Language: Unless specifically authorized, employees are prohibited from using the Company’s electronic resources to engage in social media activity. Employees may use personal devices, such as a non-Company smart phone or tablet, during rest breaks and meal periods to engage in social media activity as long as the employee’s personal device is not connected to the Company’s network.

Disclaimer Option?

Board’s repeated comment: “[T]he rules contained no limiting language to inform employees that [the rules] did not apply to Section 7 activity.”

Use a disclaimer: This policy will not be construed or applied in a way that improperly interferes with (A) employees’ exercise of their rights under the NLRA or any other law, or (B) employees’ legally protected social media discussions regarding wages, hours, or working conditions.

Note: NLRB’s January 2011 Report calls disclaimers into question

Other Policy Issues

Friending by Managers

What should employers do about managers’ “friending” subordinates?

Policy:

Managers should not send “friend” requests to subordinates

Any employee may reject any friend request without any retaliation

LinkedIn Recommendations: Policy Options

1. Prohibit all recommendations

2. Prohibit recommendations by anyone who reviewed the requestor’s performance

3. Permit recommendations only for former employees who left voluntarily

4. Recommend anyone about whom you have nothing negative to say; be accurate complete and truthful

Do not give devices to non-exempt employees

Monitor off-the-clock work and pay for it if you find it

Think carefully about what is necessary for the work

Off-The-Clock Work

How Social Media Is

Impacting Litigation

What is discoverable?

Social media content that meets basic discovery principles (such as being relevant or reasonably likely to lead to the discovery of admissible evidence)

– Includes information re: emotional distress

Generally, fishing expeditions will not be permitted

BUT – in some instances, courts may order usernames and passwords to be disclosed

THANK YOU!

Lara Strauss Littler Mendelson

lstrauss@littler.com 619-515-1821

Stacey Adams Littler Mendelson sdadams@littler.com 973-848-4738