socialmediaIn a very short time period, Internet-based social media have become a pervasive part of our lives and culture. Inevitably, employee use of social media has become a workplace issue. As a result, employers are concerned about employee social media use and employees are concerned about privacy and rights of individual expression. As social media use has become a workplace issue, it has also created a number of areas of potential liability exposures for employers, particularly as relates to hiring decisions and to other employment actions.

 

One source of potential liability arises from employers’ use of information and material gathered from social media sites about job applicants and employees. Many users of social media are accustomed to documenting their lives in online posts, as well as in pictures and videos. Some of this online information may reflect behavior or attitudes that prospective or existing employers find to be disqualifying. As a general matter, there is nothing unlawful about employers accessing publicly available information about job applicants or employees. But there at least a couple of ways employers could trigger potentiall liability from this kind of information gathering.

 

First, in reviewing social media sites, employers expose themselves to all kinds of information that cannot be legally considered in the hiring process or in employment actions, such as religion, race, gender, sexual orientation, and health status.  As noted in a recent post on the National Law Review entitled “Employers Using Social Media to Monitor Employees: Risks and Liability” (here), an employer’s use of information gathered from a social media site “may provide the basis for claims under employment discrimination statutes if the employer used such methods of off-resume information-seeking to seek out information about the employee that was legally protected in some way.” While it may be difficult for the applicant or employee to prove that the employer used the information as a basis for an adverse action, it is an area of concern.

 

Second, several states have passed laws that prohibit an employer from requesting or requiring that an applicant or employee disclose a user name, password or other means of access an online account or service. Just last week, Tennessee’s legislature enacted a bill with these kinds of protections, joining a number of other states including Maryland, Illinois, California, Michigan, Utah, New Mexico, Arkansas, Colorado, Wisconsin and Nevada. According to the National Council of State Legislatures (here), legislation on these issues has been enacted or is being considered in 28 states. Many of these state statutes also prohibit an employer from forcing an employee to log into their personal accounts in their employer’s presence, or forcing the employee to “friend” the employer or an employer’s representative. Many of the states protect employees and applicants from retaliation for refusing to allow employers access to social media sites.

 

Another troublesome area for employers as they attempt to grapple with these workplace issues are the efforts by some employers to adopt social media policies. Over the last several years, the National Labor Relations Board has issued a series of decisions and guidelines specifying that employer social media policies may not sweep so broadly that they prohibit activity protect by Section 7 of the National Labor Relations Act, such as the discussion of wages or working conditions among employees.

 

Just last week, the NLRB issued a statement that it had reached a settlement with Valero Services in a proceeding in which a labor union contended that the company’s social media policy interfered with employees’ rights to discuss their terms and conditions of employment  on social media sites. In the settlement, the company agreed that it will rescind its unlawful social media policy and notify employees that they will not be prohibited from using social media to discuss their terms and conditions of employment.

 

The settlement with Valero is the latest in a series of NLRB actions relating to employee use of social media, starting with the NLRB’s September 2012 ruling in a case involving Costco (which is discussed at length here). In that case, the NLRB struck down Costco’s social media policy based on a finding that the company’s social media policy “clearly encompasses concerted communications protesting [Costco’s] treatment of its employees.” Costco’s maintenance of the social media policy therefore “has a reasonable tendency to inhibit employees’ protected activity” and as such “violates” the National Labor Relations Act.”

 

In addition to these and other decisions, the NLRB has also released guidelines in three reports, describing acceptable and unacceptable employer social media policies. The first of these guidelines, released August 18, 2011, can be found here. The second report, dated January 25, 2012, can be found here. The third report, dated May 30, 2012, can be found here.  A “fact sheet” posted on the NLRB’s website describing the agency’s position with respect to social media can be found here.

 

Essentially, the NLRB’s position is that employers may not prohibit employee use of social media in a way that interferes with “the rights of employees to act together to address conditions at work, with or without a union.” The protection under the federal labor laws applies whether or not the employees are organized or trying to organize under a collective bargaining agreement. On the other hand, “an employee’s comments on social media are generally not protected if they are mere gripes not made in relation to group activity among employees.”

 

The NLRB’s position on social media has been the subject of criticism. For example a November 3, 2013 article on the Cornell HR Review website (here) notes that while the NLRB’s guidance provides a “baseline structure” for employers, it does not provide “an explicit test for determining what constitutes protected social media activity.” In addition, the NLRB’s approach, while protective of employees’ rights still allows for employers to monitor and even to base employment decisions on an employee’s social media activities. Moreover, while speech related to working conditions may be protected, it may be very difficult to tell when an individual is discussing workplace conditions or is just venting frustrations. By the same token, employers may feel that the NLRB’s decisions and guidance “fail to fully address concerns over disclosure of confidential or private information.”

 

In a July 29, 2013 Bloomberg BNA article entitled “Creating an Effective Workplace Social Media Policy” (here), Spencer Hamer of the Michelman & Robinson law firm suggests in light of these concerns that employers take a number of steps in crafting social media policies, including taking care to ensure that the policy does not prohibit protected activity, at the same time providing that personal complaints and offensive remarks are not protected. The Cornell HR Review article closes by noting that “employers should continue to remain cognizant of employee expectations of privacy and changing employment laws to ensure their policies are not overly broad unlawfully restrictive or intrusive.”

 

In addition to the careful construction of their social media policies, employers concerned about these issues may also want to consider their employment practices liability insurance policies. At a minimum, claims arising from job related actions that are alleged to represent harassment or discrimination are within the scope of protection afforded by the typical EPL insurance policy, and the fact that the alleged discrimination or harassment involved employer access to or information drawn from a social media site should not change that analysis.

 

An employer’s retaliation against an employee for refusing to provide social media password information, if in violation of one of the applicable state statutes, may present a different analysis, and the question of coverage will depend on the company’s EPL policy’s definition of Employment Practices Wrongful Act. To the extent employer retaliation in and of itself comes within the definition, the policy’s coverage may be broad enough to provide coverage for this type of claim. However, this issue may be the type of concern that needs to be specifically addressed in an amendment to the definition of Employment Practices Wrongful Act.

 

In thinking about the potential EPL insurance implications of the NLRB’s position that social media policies may violate the protections of the National Labor Relations Act, it is important to note that many EPL policies have National Labor Relations Act exclusions, precluding coverage for claims based upon alleged violations of the NLRA or similar federal, state and local statutes. However, many insurers are willing upon request to amend this exclusion to provide a carve-back specifying that the NLRA exclusion does not apply to claims for retaliation.

 

A retaliation carve-back to the EPL policy’s NLRA exclusion would not preserve coverage for all claims asserting that a company’s social media policy violates the NLRA. The retaliation claim coverage carve-back to the NLRA exclusion might preserve coverage for a claim by an employee that he or she was terminated in retaliation for engaging in activity that contravened a social media policy that violated the NLRA – or to put it more simply, in retaliation for engaging in activity protected by the NLRA. However, even among carriers who are willing to extend the carve-back to the NLRA exclusion, the carriers sometimes restrict the carve-back so that it does not extend to extend coverage to class or mass action claims.

 

The workplace issues surrounding employee social media use continue to evolve rapidly. Employers, employees, regulators and the courts will continue to struggle with these issues as we seem an equilibrium position that appropriately balances employer’s needs with employees’ expectations of privacy and free expression.

 

More About Antitrust Enforcement and Follow-On Civil Litigation: In a recent post, I noted the rising global levels of antitrust enforcement activity, and also noted that increasingly antitrust enforcement actions are accompanied by a follow-on private civil action as well. A recent lawsuit filing provides yet another example of this phenomenon.

 

On April 11, 2014, a Microsoft shareholder filed a derivative lawsuit in the Western District of Washington against certain directors and officers of the company, as well as against the company as nominal defendant, in connection with recent EU antitrust enforcement actions against the company. The complaint, which can be found here, alleges that the individual defendants breached their fiduciary duties by willfully violating a prior European Union antitrust settlement agreement and incurring a $731 million fine.

 

In, 2009, Microsoft had entered an antitrust settlement with EU regulators that required Microsoft to offer consumers a choice of web browsers within the Windows operating system. It was later alleged that the company had eliminated the choice option, which resulted in an action against the company to enforce the prior settlement agreement and ultimately in the entry of the massive $731 million fine. The plaintiff alleges that he had made a demand on Microsoft’s board to investigate the matter and initiate a lawsuit those responsible for the actions that led to the fine, but that the board refused.

 

As I noted in my recent post, the current regulatory enthusiasm for antitrust enforcement not only represents an important liability exposure for companies and their boards, this trend may also represent a significant exposure for their D&O insurers as well, even if only in the form of the follow on shareholder litigation. The recent derivative lawsuit filed against the Microsoft board is just the latest example of this phenomenon.

 

You’ll Never Walk Alone: A couple of weeks ago, on March 30, 2014, I was in London the day of the Premier League soccer game between Liverpool and Tottenham. The game took on unanticipated importance when the day before league-leading Chelsea lost unexpectedly to lowly Crystal Palace, meaning that if Liverpool won its game against Tottehamn it would take over the at the top of the league table. I watched the afternoon match between Liverpool and Tottenham at the Famous Three Kings pub on West Kensington, in London.

 

Because the pub is in London and because Tottenham is a London team, I had assumed that it would be a Tottenham crowd watching the game. As it turned out, the pub was packed with “Scousers” (that is to say, serious Liverpudlians). Even though I had arrived before the match began it was standing room only inside the pub. The crowd was decked out in red and white and chanting and singing as if they were at actually at the game at Anfield, Liverpool’s home field. It was great fun standing in the crowd and watching as Liverpool dominated the match. Liverpool eventually won, 4-0, sending the team into first place in the Premier League.

 

I have always enjoyed watching Premier League soccer but I have never really had one particular team that I have rooted for. I can’t say that my London pub experience with the Liverpool fans has made me a complete Liverpool fan, but I did come away with much stronger feelings for the team, which has a loyal fan base, a great history, and is having a great run at the top of the league table.

 

One of the great traditions for Liverpool fans is their singing of the song “You’ll Never Walk Alone” at the start of each game. The song’s title has become something of a motto for the team and its fans. The video below, which captures some of the team’s great fan loyalty and emotion, shows Liverpool’s fans singing the song before yesterday’s game against Manchester City at Anfield.

 

The video doesn’t show it, but after the song, there was a moment of silence for the 96 people that died in the Hillsborough disaster in April 1989. Perhaps as a result, the game between Liverpool and Manchester City was very emotional. It was also a great game. Liverpool scored early and led at the half, 2-0, but Manchester City came back to tie the game 2-2 before Phillipe Coutinho scored the game winner to seal the game – and possibly the league title — for Liverpool. It was a great game for a great team with great traditions.

 

So in honor of the team and its fans, here is a video of the crowd singing “You’ll Never Walk Alone” before yesterday’s game.