Much has been written on the “perils” of engaging in social networking by Australian businesses. There are even some decided cases that have emerged in 2011, highlighting some of these perils. Whilst there is no need to panic, by participating on social media sites during and after hours, employees can, and do, expose themselves and their organisation to a diverse range of legal risks associated with new millennium scenarios that remain largely untested legally.
What’s all the hype about in social media?
Facebook, Twitter, LinkedIn, YouTube and numerous other social media sites have become a part of our daily lives. It seems that almost everyone, from young to old, rich to poor, CEOs to tradespeople, is engaging. Moreover, the advent of Twitter has made live television an interactive event. Social media sites are no longer just for Gen Ys; they have now become invaluable marketing tools for organisations, from large to small.
Social media is now available in numerous different formats, including forums, weblogs, social blogs, wikis, podcasts, pictures, video, and countless derivative applications that pop up almost daily. It provides organisations with many opportunities, such as business development, branding and client communication. But how about the disadvantages? One of the predominant disadvantages is that social media sites can distort the boundaries between the work and private lives of employees, meaning that people now interact in a social setting and also do business as a result of this interaction.
The expansion of social networking law
In recent times, across all jurisdictions, there has been an evolution of the law in relation to social media. We have seen that website owners can owe a duty of care to their users, individuals who cannot be located can be served on their Facebook profile, profile pages of individuals can be used as evidence, paternity orders can be served by Facebook and company directors can be fined personally for misleading and deceptive statements left by others on their Facebook Wall. As a result, legal risk is growing just as fast as the ever-emerging technology.
Classification of risks associated with participation in social media sites
The presentation of an ordered nomenclature of legal risks in this area is not easy. This is because the risks cross both statutory and common law boundaries and are evolving at the same rate as the technology itself. Nonetheless, the following table shows a classification system and whether the threat is internal or external to the organisation or both:
| Risk Category | Internal | External |
| Confidential Information – loss and disclosure |
Yes |
Yes |
| Wrongful dismissal |
Yes | |
Statutory Risks
|
Yes Yes Yes Yes Yes Yes |
Yes |
Occupation and organisation-specific risks
|
Yes | Yes |
| Reputation risk |
Yes |
Yes |
Loss and disclosure from confidential information
Business networking sites such as LinkedIn allow individuals to network with others by creating a connection with them. Employees are able to upload their email address book to LinkedIn and invite clients to connect. Although seemingly harmless, this can, in certain circumstances, constitute a breach of confidential information, as the employee is publicising their organisation’s database.
In addition, when an employee exits the organisation, they are subsequently able to change their status on their LinkedIn profile and notify all their connections (which may include parts of the organisation’s database) of the new company that they work for.
Breaching continuous disclosure obligations
Employees and officers of listed public companies could breach their continuous disclosure obligations through inadvertent disclosure by inviting individuals connect on LinkedIn, Facebook and/or Twitter.
Furthermore, employees should take reasonable care when inviting individuals to LinkedIn with whom they work with. An example is when a contact is recommended as a “partner” when, in fact, an alliance has been formed between companies has not been announced to the market.
Tweeting, tagging and status updates
By publicising what you are doing and your location on social media sites, there is a chance that an informed user could make inferences based on your activities. An example is when you are supposed to be at a business meeting and you tag yourself on the Gold Coast with a status update of “enjoying the sun”. The disclosure of your location may be an inadvertent breach of confidential information and a listed public company’s continuous disclosure obligations.
Wrongful dismissal
In the decision of Mr Damien O’Keefe v Williams Muir’s Pty Ltd T/A Troy Williams The Good Guys[1], Fair Work Australia upheld the right of an employer to dismiss an employee over a crude and threatening Facebook rant against a manager that was posted out of hours on his home computer. The Tribunal’s deputy president stated, “The fact that the comments were made on the applicant’s home computer, out of work hours, does not make any difference“. It would seem that this case is simply an extension of common law principles as decided in B. Rose v Telstra Corporation Limited Print Q9292 (1998) IRCommA 1592.
Trade mark infringement
Most social media sites have the capability to establish personalised URLs, groups, and fan pages for users. An example is www.facebook/dundaslawyers.
Has your organisation reserved all the names that it can on social media sites to protect itself from someone taking your trademarked name?
What would you do if someone had taken your trademarked name on a social media site and started using it inappropriately without your consent? What’s worse is that it’s possible that an organisation in another country may have an equal and competing right to use that name in their country.
Misleading and deceptive conduct
In the case of Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd (No 2)[2], a question arose for determination was whether Allergy Pathway Pty Ltd (AP) and its sole director were responsible for false and/or misleading and deceptive statements made by third parties on its Facebook and Twitter pages.
In 2009, the Australian Competition and Consumer Commission (ACCC) brought proceedings in the Federal Court against AP and its sole director, Mr Paul Keir, alleging that representations made about its allergy diagnosis products were false. The allegations were not contested.
In 2010, the ACCC subsequently alleged that AP and Mr Paul Keir breached their undertakings and were in contempt of court by publishing statements which included testimonials written by clients that were posted on AP’s website and social media pages.
It was concluded by the court that AP “accepted responsibility for the publications when it knew of the publications and decided not to remove them. Hence it became the publisher of the testimonials”.[3]
The case provides an important lesson that a party can be liable for comments made by third parties on their social media pages if they are knowingly false, misleading or deceptive, and they knew of the statements’ existence and still failed to remove them.
As a result, organisations engaged in social media should regularly monitor comments made by third parties on their social media pages and quickly remove statements that they know to be false, misleading or deceptive.
Discrimination
Do your managers accept all friend requests on social networking sites from their employees? Does non-acceptance of a request amount to an act of indirect discrimination?
Section 7 of the Anti-Discrimination Act 1991 (Cth) (Anti-discrimination Act) prohibits discrimination on the basis of a variety of attributes such as sex, relationship status, age, race and so on. If managers indiscriminately accept friend requests, it could be argued that non-friending could amount to discrimination on the basis of one of the attributes in section 7.
Organisation’s liability for employee acts of defamation
The general rule is that an employer can be variously liable for the acts or omissions of their employees. An employer could be held liable for defamatory acts and/or statements of an employee if the employee was engaged by their employer to perform social media tasks.
Reputation risk
Reputation risk is probably the most imperative risk to minimise in the social media environment, as the intangible loss of reputation can significantly damage the hard-earned brand in a very short time. Numerous examples of organisations’ reputations being harmed on social networking sites occur on a seemingly daily basis. The Domino’s viral video disaster is but one.
What can an organisations do to protect themselves?
An organisation can implement several safeguards against the unwanted conduct of its employees, contractors and third parties on social media sites. These include, but are not limited to:
- blocking social media sites that are not being used as part of an employee’s tasks;
- monitoring employees’ use of social media sites whilst at work;
- reviewing employee/contractor contracts who participate in social media sites as part of their job and include revised clauses relating to use of social media sites;
- introducing a comprehensive Social Media Policy to provide guidance and to bind employees both during and after work hours;
- engaging various technological measures to protect against viral and malware threats;
- engaging a social media reputation monitoring service;
- training employees in how to engage effectively in social networking sites and knowing when to escalate issues to their legal advisers;
- having a system in place to respond to complaints on forums, sites and fan pages;
- having a documented effective Social Media Strategy in place; and
- preparing a crisis management plan to deal with a social media crisis.
Like most things a common-sense approach is required and senior management should be involved in the process. Senior management needs to make informed decisions relating to the acceptance or rejection of the identified risks that are specific to their organisation so that they can obtain the benefits of participation.
Related articles
How much is a Twitter follower worth?
Social Media Policies are a necessity for Large Companies – Fair Work Australia
User posts are advertisements!
Media commentary involving Dundas Lawyers
More than social – BRW
Paternity test ordered via social network Facebook – The Australian
In the Black – the Magazine of CPA Australia.
Using Social Media – Know your legal risks – Sydney Morning Herald, 18 January 2012
Further information
Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
T: +61 7 3221 0013 (preferred)
M: +61 419 726 535
E: mburrows@dundaslawyers.com.au
Disclaimer
This article contains general commentary only. You should not rely on the commentary as legal advice. Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.
