Articles - Employee / Labor Relations

Most of us can vividly recall the popular television advertising campaign in which the individual proudly proclaims to not only be the organization's president, but also one of its clients. Such "endorsements" are not only memorable, they can also be highly effective.

Employers should know that the Federal Trade Commission (FTC) recently amended its guidelines regarding the use of endorsements and testimonials in advertising. Among other things, the revised guidelines clarify that an employee posting comments online about his or her employer's products or services could potentially violate the law by misleading consumers.

The guidelines further confirm that both the employee and the employer could be held liable for any such deception to the extent the employment relationship is not properly disclosed. In light of this development, employers should revise their policies to clearly define when, and how, employees are permitted to post comments regarding the employer's products and services online.

With respect to television and radio commercials, it can be safely assumed that the content was paid for by the advertising business, and that the on-air "talent" has been compensated for their efforts. In the age of Web 2.0, however, where individuals can contribute, post, and share their own content online, it can be more difficult to discern whether a given piece of information (e.g., a Tweet or a Facebook status update) is the individual's legitimate opinion regarding a product or service, or the result of a payment or other benefit they received. To protect consumers against potentially unfair or deceptive advertising practices, the FTC recently amended its regulatory guidelines.

According to these guidelines, a business that pays an individual to endorse its product, or that has an ongoing relationship with that individual, can be held liable for the individual's false or misleading statements regarding the product, or the individual's failure to disclose the relationship between the individual and the business.

This is true even if the business has no control over the content of the individual's statements as, for example, when they are made through emerging social media channels like Facebook, Twitter, and blogs. This creates an incentive for both the "advertiser" and the "endorser" to ensure that the advertisement is clear and accurate and that their relationship is fully disclosed.

For purposes of the guidelines, an "endorsement" is broadly defined as any advertising message that consumers are likely to believe represents the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser. The guidelines further confirm that even an employment relationship between the advertiser and the endorser can have a material effect on the general public requiring full and proper disclosure. In fact, one of the FTC's examples confirms that the private, online conduct of an employee can run afoul of the law.

To avoid potential liability, employers should revise their electronic communications policies to regulate employee statements regarding their products or services through social media-whether by prohibiting such statements outright, or requiring full and proper disclosure of the employment relationship.

This represents yet another area for employers to consider when drafting an effective electronic communications policy.

Among other things, such policies should

1. encompass all information created, received, or stored on the employer's network, and equipment provided, supported, or paid for by the employer;
2. clearly identify all prohibited activities;
3. clearly identify when, why, and how employee communications may be monitored;
4. incorporate other employment policies such as those prohibiting discrimination, harassment, and the disclosure of confidential information; and 
5. be consistently enforced.

Also, although the FTC expressly declined to "spell out the procedures that companies should put in place to monitor compliance with the principles" set forth in the guidelines, policies should regulate when and how employees will be permitted to generate online content regarding the employer's products or services through social media, regardless of whether they are using the employer's network and equipment, and regardless of whether they are doing so while at work.

If you have any questions regarding this or any other employment or labor law matter, contact Krukowski & Costello, S.C.'s educational services department at (414) 423-1330.

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BIOGRAPHY

Keith E. Kopplin

E-mail: kek@kclegal.com

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Keith E. Kopplin joined the firm Krukowski & Costello in 2006.  His practice focuses on employment litigation and general employment law matters. 

Keith has assisted clients in resolving wage and hour class action lawsuits. He advises clients in the areas of wage and hour, discipline and discharge, the Wisconsin and federal Family and Medical Leave Acts, reductions in force, waiver and release agreements, and affirmative action. He is also a presenter for the firm, and has recently given presentations on the new COBRA subsidy regulations, and the impact of H1N1 in the workplace. Keith also presents customized audio programs for employers.

He is admitted to practice in all Wisconsin State Courts, the U.S. District Court for the Eastern District of Wisconsin and the U.S. Court of Appeals for the Seventh Circuit.