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Companies that publish content on the internet should view themselves as just that-publishers. Just as a newspaper is responsible for its reporters, employers may be liable for content published by their employees. They are subject to the same liability risks as newspapers, magazines and broadcasters while enjoying fewer privileges and immunities. The First Amendment protections for "newsworthy" speech, such as news and political opinion, are diminished for commercial speech, including advertising and marketing.
Under agency law, even unauthorized posts can be attributed to the employer through legal doctrines such as respondeat superior (Latin for "let the master answer"). Generally, courts and juries look to whether the employee was acting in the scope of his employment with actual or merely apparent authority. Yet these doctrines can also include unauthorized conduct if it benefits the employer. And liability can arise from posts by employees on social media sites, forums or blogs, particularly when they claim company affiliation or discuss company business.
Here are the areas where liability is most likely to arise.
Third Party Statements
Employees may put their companies at risk if they solicit third parties to comment on a company site. Although the federal Communications Decency Act provides internet service providers (ISP) with immunity for content posted to the ISP's site by third parties, this immunity is limited. While the company likely will qualify as an ISP for its own site, the immunity does not extend to content posted by the company and its employees. Immunity also does not extend to intellectual property violations, such as copyright and trademark infringement.
Recent cases also suggest that website operators may forfeit immunity if they (or their agents) solicit or induce objectionable content. For instance, an employee who solicits "horror stories" regarding experiences with a competitor should not expect immunity for defamatory comments.
Defamation and False Light
The most common publishing risk entails publishing false facts that injure the reputation of another person or a corporate entity. The various forms of trade libel, whether under common law or statute, apply to false statements disparaging another's goods and services.
Under either scenario, there may be a fine line between protected statements of opinion and an actionable statement of fact. Well-intentioned employees seeking to convey damaging news about a competitor or to promote the superiority of their employer's products and services may inadvertently cross that line. "Truth" is generally a defense to defamation, but even a technically true statement may give rise to "false light" liability if it is misleading. Unfair juxtapositions of photos and text or missing explanatory facts may allow information to be taken out of context.
False Advertising and Online Disclosures
The Federal Trade Communication Act and various state laws that prohibit false and deceptive advertising -- including improper uses of celebrity and expert endorsements and customer testimonials -- also apply to online advertising. These statutes, which often overlap with trade libel theories, typically include fee shifting to permit the prevailing party to recover attorney's fees.
In addition, the Federal Trade Commission (FTC) recently issued specific guidelines regarding advertising via online media. The guidelines require that bloggers and other online writers disclose any "material connections" between themselves and the companies whose products or services they discuss. Employees enjoy an obvious "material connection," but this guideline can include third parties who received monetary or product compensation. If a video game company provides a gaming blogger with a copy of a game to review, for example, the failure to disclose this fact in the review may subject the blogger and the company to fines. Similarly, a company can be liable if an employee or agent, purporting to be an objective critic, posts a review of the company's product. Companies should ensure that any affiliated blogger or website that discusses the company's products comply with the FTC's disclosure requirements.
Privacy and Publicity
Most states recognize an individual's "right of publicity," meaning he or she -- and he or she alone -- control and are allowed to profit from his or her identity and likeness. This explicitly bars the commercial exploitation of a person's identity without explicit consent.
There is also a well-recognized right of privacy with respect to non-newsworthy facts when disclosure would be highly offensive to an average person. This is admittedly a subjective and unpredictable standard, but many states have enacted publicity and privacy statutes that expand on common law doctrines and sometimes award attorney's fees.
Some information may also be protected from disclosure by federal and state statutes. For instance, the Health Insurance Portability and Accountability Act (HIPAA) provides for the privacy of medical records, while the Gramm-Leach-Bliley Act protects the privacy of certain financial records. Employers who are subject to these statutes and others must take care to ensure compliance.
Cyberstalking
Most states have harassment laws on the books that explicitly include harassment via the internet, often called "cyberstalking." These laws can cover everything from threatening physical violence to hacking into computers and sending viruses to transmitting obscene or intentionally annoying emails. Employers can find themselves liable for cyberstalking when employees harass co-workers, competitors or customers online.
Intellectual Property
Copyrighted video, audio, images and any other works that were created by a third party should not be posted without permission. Employees who post content created by others should include proper attribution and limit the quotations to "fair uses" of copyrighted content. A brief quote with a link to the entire article at its site of origin is a good example of appropriate usage.
Employees should not reference competitors' trademarked terms or logos, particularly when discussing their employer's products or services. Further, companies should police their own trademarks to prevent undesirable usage and the dilution of the strength of the marks through widespread unauthorized use.
Trade Secrets
Companies can be liable for employees posting competitors' trade secrets and confidential information online. Businesses can also forfeit protection for their own confidential information if employees allow it to leak online. Naturally, a trade secret only remains such for as long as it is kept a secret. Publication of a company's confidential information can also lead to loss of attorney/client and other privileges.
Recommendations and References
Many companies limit reference information, but human resources departments no longer enjoy a monopoly on references. Social media sites, such as LinkedIn, allow users to "invite" colleagues to post recommendations to their profiles. Positive recommendations might undermine the employer's stated grounds for termination of employment.
On the other hand, a negative reference posted by a current employee regarding a former employee could expose the employer to liability for defamation and other torts. Employers should prohibit employees from recommending or otherwise discussing their current or former co-workers' work performance, online or elsewhere. Instead, they should require employees to refer reference requests to a designated official.
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Written by Damon E. Dunn
Damon E. Dunn is a partner at the Chicago law firm of Funkhouser Vegosen Liebman & Dunn Ltd.
Risk Management Magazine and Risk Management Monitor. Copyright 2012 Risk and Insurance Management Society, Inc. All rights reserved.
