What are the legal reasons that an employer needs a social-media policy? That’s a question that I get a lot when discussing social media with clients and others. And, maybe more often, “Are there any reasons that I need a social-media policy?”  This is a complicated question, really. And there are lots of possible answers. But there’s at least one new legal reason for employers to stop procrastinating, get the idea out of committee, and get to work on such a policy.

Recently, the Federal Trade Commission (FTC), issued regulations that affect nearly every business–at least every business with a workforce that has access to a computer (either on or off working time). The FTC is the government agency charged with the responsibility of protecting consumers against false and deceptive advertisements, among other things.  The FTC’s newest regulations, called the Guides Concerning the Use of Endorsements and Testimonials in Advertising (PDF), sets fairly strict restrictions on employees’ use of social media to talk about a product or service offered by their employers.

Section 255.1(d) of the Guides provides that:

Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers. Endorsers also may be liable for statements made in the course of their endorsements.

The key language in this section is that an “endorser” must disclose any “material connection” between himself and the company that sells the product or service being endorsed. In other words, if I am married to a local restaurateur, I must disclose that connection any time I endorse the restaurant. An “endorsement” is any advertising message, including verbal statements, that consumers are likely to believe reflects the opinions, beliefs, or experiences of a party other than the sponsoring advertiser. See Section 255.0(b). So, if I say that my spouse’s restaurant, hands down, serves the best braised short ribs a girl could ever have, then I need to add a disclaimer such as, “Of course, I may be a bit biased, since I happen to be married to the chef.”

What is the impact on employers?

Under the new regulations, any time an employee endorses your product or service, he is required to disclose his employment relationship. This means that employees must disclose their material connection any time they promote or defend the organization, its products, or its services.

The world of social media provides for an unlimited number of circumstances for this situation to occur. A comment left on a blog, or a tweet on Twitter, or even a few words of praise posted on an employee’s Facebook profile could be construed as an endorsement if it “reflects [the employee’s] opinions, beliefs, or experiences” about a product or service offered by the employer.

What if the employee fails to disclose the employment relationship?

If an employee tweets about his employer’s pizza being the best around, he must do so in compliance with the regulations. Failure to do so and both the employee and the employer are on the hook. Both can be held liable if the comment or statement is false or unsubstantiated. So, if the pizza really is the best in town and you’ve got the studies to show it, then there’s no real risk of liability. But, if an employee leaves a comment on a blog about a particular brand of laundry detergent that works wonders on grass stains, and another person reads the comment, buys the detergent, and isn’t satisfied with its stain-fighting powers, there may be problems.

There is no private right of action under the FTC Act but the organization is exposed to investigation or suit by the FTC.

How to prevent potential liability

The critical take-away from the new FTC Guides is this: Employers must have a social-media policy that addresses the ways employees talk about their employers. The social-media policy should make very clear that employees are not permitted to talk about the company or its products or services unless they provide a clear disclaimer stating their affiliation with the organization.

One thing that the Guides fail to address is what constitutes a sufficient disclosure in the social-media context. The examples that are provided in the Guides are scenarios that occur in the context of television ads, when the speaker (endorser) has an opportunity to state his affiliation. This is not possible in 140 characters or less. Is it enough that the employee includes a disclaimer that states his connection to the company in his Twitter profile? Maybe. The Guides do not address this situation and don’t give any guidance about how the regulations would be applied in this context.

What if the employee’s profile lists a company e-mail address (i.e., Joe@BestPizza.com)? Is that enough to put the average consumer on notice of a “material connection”? Probably not. The Guides do make clear that the disclaimer has to be reasonably apparent to the average person. Asking the reader to imply from an e-mail address that a “material connection” exists is probably hoping for too much.

Until the specifics are known, employers are best advised to take a very proactive approach in order to avoid potential liability. They should include in their social-media policies a provision that specifically addresses expectations for conduct when an employee discusses the company when online. Employers should then train employees on the policy and should not turn a blind eye to a report that the policy has been violated.

The potential exposure to employers for employees’ online conduct can seem overwhelming. But the reality is that Web 2.0 is here to stay. It’s best to get a policy in place now, rather than wait with eyes closed and hope that the issue simply disappears.


Other posts on social media and its impact on employers:

Social-Media Policy Ideas

Sample Social-Media Guidelines

Social Media Is Here to Stay: Time to Start that Workplace Policy

3 Reasons Why Employers Don’t Have a Social-Networking Policy

Social Media Policies: What about my “friends”?

Friends Without Borders: State Off-Duty Conduct Laws and Facebook-Friending Policies

The 3 Principles for Social Media:  How to Be a Good Online Citizen



Follow me on Twitter at @MollyDiBi.

Fortune’s Best Companies to Work For list is back. And the results are as fascinating as ever.

Software giant SAS landed top honors this year, jumping into first place from 13th in 2009. Although the top slot may be a new position for SAS, it’s very familiar with the list–it’s been named a “Best Company” for each of the 13 years the honor has been awarded. image

As the largest privately held software business, SAS employs more than 4,000 people in its headquarters outside Raleigh, North Carolina. The company hired 246 new employees in 2009. This statistic is notable not just because of the dismal economy and job market as a whole but also because of the company’s incredibly low turn-over rate (2% compared to the industry average of 22%). For every available position, the company received 100 resumes.

The unusually high retention rate can be explained, at least in part, by the perks the company offers its employees. 100%-paid health-care, two on-site day care centers for up to 600 children, as well as summer camp, subsidized cafeterias are just some of the benefits. Google modeled its renowned program after SAS, if name dropping is of any interest. The incredible perks may help explain why the average employee takes only 2 sick days each year.

But SAS says there is another reason for the enduring dedication of its workforce–trust. Most employees set their own schedules and no one keeps tabs on who arrives first in the morning or is first to leave at the end of the day. The company explains that this feeling of trust is a result of an engrained mentality not to treat employees “like criminals.”

In short, SAS’s strategy of keeping workers happy has generated a fiercely strong and long-lasting sense of loyalty, which, in turn, has meant global success for the entire enterprise. More proof that a happy and engaged workforce means a fiscally healthy organization. So, what are you doing to keep your employees happy and engaged today?

It now appears the Conan and NBC saga is coming to the end. It is being reported that Conan will leave NBC with a boat load of cash and will be free to have a new show on another network in the Fall. The specific terms of the deal have not yet been released, but they will definitely be detailed in a contract between Conan and NBC. Such a contract, often called a severance agreement, is used in high risk terminations as a means of avoiding costly and distracting litigation.

The key elements of a severance agreement include:contractguy

  • A provision detailing the nature of the separation. Employees usually want it characterized as a resignation. This allows the employee to search for new work without the stigma of a termination on his or her record. This provision should, of course, describe the last day of work.
  • A discussion of how much money is going to be paid to the employee and how it is going to be paid. This is obviously a key provision for both the employee and employer. While it is unlikely that an employee will be receiving $33 million like Conan, it is likely that some payment will be made. Such a payment may be in a lump sum or paid on some schedule agreed to by the parties.
  • A release of all claims the employees may have against the employer. This release must be broad enough to ensure that the settlement is truly the end of the matter. As a result, it should be drafted in a way that covers all entities and people who may be the target of a lawsuit. It should also cover any particular state or federal statute or claim that can be brought by an employee against a former employer. Special care must be given when drafting a release involving a claim under the Age Discrimination in Employment Act (ADEA). A federal law, the Older Workers Benefits Protection Act (OWBPA), requires that the employee: be provided notice that ADEA claims are being released ; allowed at least 21 days to consider the release; be given 7 days to rescind the release; and be advised that they should consult an attorney.
  • A provision detailing payments for any accrued but unused sick or vacation pay.
  • Provisions detailing the treatment of confidential and proprietary information. It is crucial that the obligations of the employee be spelled in a way that both parties know what is expected of them. For example, it is reported that Conan will be required to leave behind the various characters he and his team developed through their years at NBC. All employees should be required to return any company papers, computers, and the like.
  • Terms describing when and how the departing employee can compete with his old employer. Key employees, like Conan, often have an employment agreement containing a restrictive covenant limiting their ability to work in the future. The scope of such a covenant is often modified during the negotiations involving the employee’s departure. In Conan’s case it appears that he will be able to launch a new show sometime in September. You can bet, however, that there was a lot of discussion over what Conan could do in the interim.
  • A term discussing whether the employer will oppose the employee’s unemployment compensation claim
  • A discussion as to whether the employer will continue the employee’s health care coverage and for how long. Such continuation may be for a number of months or until the employee obtains new coverage from an new employer.
  • A discussion of how the employer will respond to requests for references from potential new employers. Consideration should be given requiring the employee to direct all such inquiries to a specific person who will respond in an agreed upon way.
  • The agreement should require that the terms of the agreement remain confidential or, at a minimum, provide what will be provided to the press or public. Such a provision is especially important in high profile terminations in which each party will need to “save face.”

To catch up on the Conan/NBC saga, see my previous posts, Why NBC Should Have Used Delaware Law In Conan O’Brien’s Employment Contract, and What Can Employers Learn From Conan O’Brien and NBC?


Follow me on Twitter @Bill_Bowser

Just a short announcement that I’ve started a second blog, which is now live, called Going Paperless.  There, I’ll be posting about the ways we can put technology to use for improved productivity and efficiency at work.  There are so many times that I come across helpful tips or tutorials but, until now, haven’t had a forum through which I could share them.  Some of the content will be legal-centric, with an eye to productivity for lawyers and legal professionals, but most of the tips will be equally applicable for anyone who wants to make work easier. 

I hope you’ll join me in the exciting conversation at my new blog.  And, of course, you can keep up to speed on what’s happening at Going Paperless and at DELB via my Twitter feed by following me at @MollyDiBi.

The Ragan video featuring Mayo Clinic, which I described in the last post, is well timed.  Earlier this week, Cisco announced the findings of a study on social networking and its adoption in the enterprise.  Based on interviews with more than 100 companies , the study explores the primary tools being used, which areas of business are adopting them and how they’re putting them to use, and some of the challenges that are arising.

One of the lead researchers, Neil Hair of the Rochester Institute of Technology, discusses two of the study’s most interesting findings:  the proliferation of social media tools to new areas of the business and the growing need for governance models.  Both are issues facing the modern employer.


For more examples of great social-media ideas, see these related posts:

Learn by Example: Top Social Brands of 2009

Social-Media Policy Ideas

Sample Social-Media Guidelines





Follow me on Twitter @MollyDiBi

If your organization is considering putting social media to use but is struggling with innovative ways to use these new tools, there’s no need to reinvent the wheel.  Instead, look to others who have come up with these ideas and implemented them in their workplace.  In a short video On My Ragan TV.com, Mayo Clinic’s Linda Donlin discusses how the hospital uses video, enewsletters, blogs, and other tools to keep staff informed about strategic initiatives and to keep personnel engaged at work. 



For more examples of great social-media ideas, see these related posts:

Learn by Example: Top Social Brands of 2009

Social-Media Policy Ideas

Sample Social-Media Guidelines





Follow me on Twitter @MollyDiBi

The U.S. Department of Labor (DOL), has been conducting an interesting online initiative designed to identify the best online job search and career advancement tools. They currently have 610 tools (!) posted on their site and are seeking input from people who have used the tools.

The tools fall into categories such as general job boards, niche job boards, career tools, career exploration guides, and web 2.0 / social-media sites that specialize in job searches or postings. Visitors to the site are encouraged to try the tools, comment on them, and recommend the ones they like. In a YouTube video on the website, Secretary of Labor Hilda Solis explains the initiative. The DOL promises to publish the tools that rank the highest on its website and also to encourage the creation of a nationwide network of “One-Stop Career Centers.” Voting ends on January 15.

Anything that the DOL can do to help job seekers is a good thing.

Yesterday, I wrote that NBC’s dispute with Conan O’Brien might turn on an interpretation of his employment contract. If NBC’s actions were in breach of its agreement, any restrictive covenant preventing Conan from moving to Fox would likely be unenforceable.

Since that post, several commentators have opined that any such restrictive covenant would be unenforceable under either New York or California law-both states have passed statutes prohibiting restrictive covenants in employment contracts.

NBC’s legal position would probably be much stronger if it had included both “choice-of-law” and “choice-of-forum” provisions requiring that Delaware law be used to interpret the agreement and that Delaware courts interpret the agreement. Teresa Cheek’s recent post on this topic details the real advantages of using Delaware law in employment contracts involving executives or key employees.

Follow me on Twitter @Bill_Bowser

Just a few days ago, NBC announced that it was moving the Jay Leno Show from its current 10 p.m. starting time to 11:35 p.m. This move was prompted by complaints from NBC affiliate stations that the Show’s poor performance was damaging the ratings of their local news programs and their profits. The move of Leno’s show, however, will require moving the start of the Tonight Show to 12:05 a.m. Yesterday, Conan O’Brien released a statement objecting to the changes and threatened to leave the show. What can employers learn from this high profile, high-stakes predicament?

Conan and Leno are employees of NBC and their rights and obligations are governed by employment agreements. As a result, the options of all three parties will be determined by the terms of these agreements.

Conan’s threat to bolt from NBC is likely based on a basic tenet of contract law: a party to a contract is relieved of the duty to perform (no pun intended) if the other party to the contract materially breached the contract first. While I have not seen the terms of Conan’s agreement with NBC, the final resolution of this highly public squabble may well turn on whether NBC’s actions are in breach of its agreement with Conan.

But how does the Conan-NBC contract apply in the real world? Well, Conan’s agreement with NBC, like many employment agreements, probably contains express restrictions on Conan’s ability to jump to another employer. Indeed, rumors are flying that Fox may be interested in bringing his talents to that network. If Conan can show that NBC actions materially breached his contract, he could be relieved his contractual obligation to provide a show for NBC and any restrictions preventing him from jumping to another network.

As a result, an employer should always make sure that any material changes affecting a key employee are in compliance with the terms of any employment agreement with that employee. If not, a court may refuse to enforce any non-competition provisions contained in the agreement.

I had the pleasure of speaking to the Delaware SHRM membership last night on the topic of GINA, the new federal law protecting against discrimination based on genetic information.  It was a great audience, and a topic of considerable interest.  My handout is below.

Having gone into effect in November 2009, but without any regulations issued yet to help us interpret this brand new protected category, there are many good questions left unanswered.  We will keep you posted on when the final regulations are put into place.

In the meantime, there are some interesting issues and potential scenarios that are worthy of greater discussion.  My plan is to address some additional questions on  GINA issues here in this blog.  Until then, you can read more about GINA in this previous post: Genetic Information Nondiscrimination Act Update.


Handout for GINA Presentation to Delaware SHRM by Adria B. Martinelli

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