United States: Your Social Media Policy, The FTC And The DOL

Last Updated: November 3 2015
Article by Douglas B. Mishkin and Po Yi

When your employees "speak" in social media, using their personal social media accounts, what they "say" may interest at least two different federal agencies with different agendas.  The Federal Trade Commission (FTC) regulates endorsements your employees may make related to their employment, while the Department of Labor (DOL) enforces the labor law that entitles employees to communicate with each other about terms and conditions of their employment.  To avoid potential problems with the FTC and DOL, you should have a social media policy that addresses both interests. 

The FTC

All endorsements, regardless of the speaker, are subject to the FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising (the "Endorsement Guides").  The Endorsement Guides provide, among others, that:  (1) endorsements must reflect the honest opinion, beliefs, or experience of the endorser and cannot be used to make a false or misleading claim that the marketer cannot directly make, and (2) the endorser must disclose any connection between the endorser and the marketer that consumers would not expect that would affect how consumers evaluate the endorsement (i.e., a "material connection").

The Endorsement Guides apply to any endorsements or testimonials made by employees if such endorsements or testimonials are related to their employment, even though such employees may not have received, or been promised, any payment or other consideration.  The fact that the endorser is an employee of the company whose product is being endorsed would be considered a material connection that should be disclosed in any communication that contains the endorsement – even if the employee did not work on the product or was not asked to promote or endorse the product.  In FAQs released in May 2015 related to the Endorsement Guides, the FTC confirmed that any employee who mentions a product of the employee's company in social networks or on a review site should "definitely disclose" the employment relationship when making an endorsement.  Merely listing the employer on the employee's profile page is not enough.

Employees of ad agencies or public relations firms also need to avoid endorsing products of their employers' clients without proper disclosure.  In November 2014, the FTC filed an administrative complaint against Deutsch LA, an ad agency that handled the launch of a best-selling electronic device.  Deutsch LA had encouraged its employees to promote the device through their personal Twitter accounts.  In response, several employees posted positive comments about the device without disclosing that they are employees of the agency that was hired to promote the product.  In a March 2015 consent order, Deutsch LA agreed not to misrepresent, expressly or by implication, that an endorser of a product is an independent user or ordinary consumer of the product, and to disclose any connection between the endorser and Deutsch LA or any other party manufacturing, distributing, or promoting the endorsed product.

The FTC's May 2015 FAQs echo the Deutsch LA consent order in stating that: (1) an ad agency (or any company) should not ask employees to say anything that is not true, endorse a product that they have not used, or say things they do not believe, and (2) if employees of an ad agency or a public relations firm have a connection to the advertiser, such connection should be disclosed in all social media posts, and agencies asking their employees to promote an advertiser's product must instruct the employees about their responsibilities to disclose such connection.

While the FTC has not provided guidance on specific wording of disclosures for employees, many companies are providing in their social media policies examples of disclosures that their employees may use. In social media where space is often limited, common disclosures include #iwork4[company] and #agencyclient (for agencies). In addition to having a policy that requires proper disclosure, the FTC recommends reminding employees periodically of the company's policy on endorsements, especially if the company encourages employees to share their opinions about the company's or its client's products. If you learn of a social media posting that does not comply, remind the employee of your social media policy and ask the employee either to remove the posting or to disclose the employment relationship.

The DOL

At the same time, the Department of Labor requires all employers, in and out of the advertising industry, to permit employees to communicate with each other about the terms and conditions of their employment. Section 7 of the National Labor Relations Act entitles all employees to do so, whether unionized or not.  In recent years, the National Labor Relations Board has paid special attention to whether employer social media policies infringe upon this right.

According to the NLRB, a social media policy violates the NLRA if it "would reasonably tend to chill employees" in exercising their Section 7 rights.  A policy may violate the NLRA if employees would reasonably construe the policy to limit those rights, based on its language or how the employer uses the policy.

In one recent case, the employer's social media policy prohibited employees from disclosing information about employees or customers and engaging in conduct that "potentially" may have a "negative effect" on the employer.  It also required employees to identify themselves when posting comments about the employer, the employer's business, or a policy issue.  The Board rejected this policy as violating the NLRA because "employees would reasonably construe it to cover comments about" matters protected by Section 7.

In another case, the employer's social media policy discouraged online communications involving "confidential or proprietary information about the Company" and "inappropriate discussions about the company, management, and/or co-workers." Again, the NLRB nixed the policy because employees could reasonably interpret it as "proscribing any discussions about their terms and conditions of employment [that the employer] deemed 'inappropriate.'"

In a third case, the Board found unlawful an employer's social media policy that warned of discipline if employees publicly shared information relating to the company or any of its employees or customers because employees could interpret this as restricting their Section 7 rights.

The line between permissible and impermissible social media policies sometimes may be hard to discern, but it is not invisible.  Employers should specify the types of confidential information that employees may not share (e.g., non-public information about client campaigns, media strategy, and other information specifically related to an agency's clients).  Don't try curing an overbroad restriction with a "savings clause" ("this policy has no force or effect to the extent precluded by law").  Courts generally reject such efforts.

Getting both prongs of your policy right – and without having one undercut the other – is essential to keeping both the FTC and the DOL at bay.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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