Imagine you sent one of your top sales people to close a multi-million dollar deal with a large client. However, the deal falls through and you later find out it is because your sales person made numerous disparaging remarks about the company, its service, and its products. After proper investigation and documenting of the facts, it is determined that the sales person should no longer be employed by your company. After a few weeks, you realize that the former employee has not updated any of his social media accounts to reflect the fact he no longer works for the company, and the former-employee is able to continue to contact your customers via these sites. What do you do?
This was the scenario recently faced by Jefferson Audio Visual Systems (JAVS), a Kentucky based company that tried and failed to get the courts to force the former employee to change his social media profile. JAVS claimed that fraudulent misrepresentation had occurred when the former employee failed to update his employment status on Linked-In. In Kentucky, fraudulent misrepresentation requires, among other things, that the party making the claim have relied on the misrepresentation to their detriment, which was something JAVS did not do. Instead, JAVS claimed it was asserting fraudulent misrepresentation on behalf of the general public, and it was the public’s reasonable reliance on the claim that had damaged JAVS. This novel argument failed to persuade the court, as they dismissed the claim.
Although not every state has the same requirements for proving fraudulent misrepresentation, North Carolina’s statute also requires reliance, like the Kentucky statute, and therefore, the case may result in the same decision. This raises a host of questions for employers. For example, perhaps a former-employee becomes a notorious criminal but fails to update their social media account, making it appear that they are still an employee. This would be both embarrassing and potentially damaging to the employer. Also, if a former-employee had been fired for cause, they would have an incentive to continue to misrepresent their status to increase their odds of procuring work, especially with a competitor or in a related field. Lastly, social media provides the former-employee the ability to maintain contact with clients, something that used to be impossible, as the former-employees lost access to client lists and contact information after termination.
So what can be done to protect the reputation of your company? The first step is to review severance package agreements, as well as non-compete and non-solicitation clauses in any employment contracts you use. For example, any severance agreements should include a provision that requires the employee to change their employment status on all social media sites as soon as reasonably possible after termination. Unfortunately, drafting non-compete and non-solicitation agreements to deal with social media is not easy. This is because courts have yet to address just how non-compete clauses and non-solicitation clauses mesh with many aspects of social media sites. For example, passive features, such as notifications that are automatically sent to followers alerting them that profile information has changed, have yet to be addressed by courts, and therefore, may fall outside of most non-solicitation agreements.
In sum, social media offers unique challenges for employers regarding former-employees. These challenges are likely to increase as more employees become connected through social media sites, but there are proactive steps that can be taken to try to mitigate and prevent problems. If you have any questions or concerns regarding the steps your company can take to protect itself, please feel free to contact us.
A special thank you to Rob Armstrong, our summer law clerk, for his assistance in preparing this article.
Vann Attorneys | Raleigh Law Firm