In the classic nursery rhyme, “Hey Diddle Diddle,” we find it amusing when the dish ran away with the spoon. Business owners, however, do not find it amusing when a former employee runs away with your business’s username(s) and password(s) to its social media account(s) and/or the business’s website. The creation of an online presence is necessary for success. An online presence not only makes it easier for customers to find your business, but it also helps you gain more customers, and thus, grow your business.
How the business’s online presence is created, whether through the formation of a website and/or social media account(s), is at the discretion of the business owners. Creating an online presence for your company through a social media site such as Facebook, Twitter or LinkedIn, or creating your own website effectively advertises your business before a large audience. As such, your social media account(s) are assets potentially bringing more of business to your company. At least one bankruptcy court in Texas classified a social media account as an asset.
So, what happens when your ex-employee, who created the social media account(s), leaves your employment with the username(s) and password(s)? Are the username(s) and password(s) of the account(s) made for your company your property, or the former employee? What about if the account taken was an employee’s work profile? This does not seem like a big issue, right? After all, even though your employee made the account(s), username(s) and password(s); it is your company’s name on the account. Therefore, the account is company property, right? Maybe not. The answer is not that easy, nor is it straightforward, especially if it was the former employee who created the website and/or social media account(s).
This issue can become a massive headache and nightmare for business owners. The company’s social media account(s) represents your company. Quite often today, this account is the first impression a potential customer gets of your company. The mere notion of a vindictive employee holding your website and/or account(s) hostage and doing who knows what to it is frightening.
Although this issue has been litigated in some federal courts, there is no case law in North Carolina on the issue. The federal court decisions, however, may give North Carolina business owners some tips and guidance on how to possibly avoid this headache.
The cases of PhoneDog v. Kravitz and Eagle v. Morgan have demonstrated that costly and long litigation may be avoided if the business owner had included a social media policy clause in the employment contract. In the case of PhoneDog, Mr. Kravitz left his former employer, PhoneDog, with the Twitter account that had been created for the company. This case was later settled allowing Mr. Kravitz’s to retain his Twitter account and followers; however, this issue could have been avoided if PhoneDog had the former employee sign a modification to his employment agreement with a social media clause supported by new consideration.
In the case of Eagle, Dr. Linda Eagle was the president of Edcomm until she was fired. Almost immediately after she was fired, her LinkedIn account was accessed by Edcomm, whereupon, Edcomm changed her password, and replaced her photo and name with that of the new president of Edcomm. Dr. Eagle sued under several claims, including: unauthorized use of name, invaision of privacy by misappropriation of identity, and misappropriation of identity. While she was able to prove the elements of each of the claims listed above, she could prove no monetary damages.
The bright-side is that there are some steps that your company can take now to possibly avoid some of the issues in PhoneDog and Eagle. The most important step is to create a clause in a written agreement, such as an employment agreement and/or a work product agreement, clarifying ownership of social media accounts. This clause should clearly state that the company owns the social media account and, in the event the employee is terminated, all usernames and passwords must be surrendered to the company. This clause should cover any business and personal accounts you require your employees to create. As we can see from the case of Ardis Health, LLC v. Nankivell , this approach to avoiding long and costly litigation really does work. In the case of Ardis Health, the court ordered the defendant, who was hired as a video and social media producer, to return any login information, including passwords, required for the plaintiff’s websites and social media accounts. Here, there was a signed work product agreement, which stated any websites and social media accounts were the property of the plaintiff. You must remember; however, that your employees have a contract between the individual and the social media site he/she uses.
Another possible step companies should consider is registering social media accounts in the company’s name and providing approved usernames and passwords to employees for these accounts. The company should actively maintain and monitor the employee’s social media accounts, which were created and distributed by the employer. These usernames and passwords should be available to more than one person within the company. The common-sense reason behind this is that creation, active monitoring, and maintenance may be useful in demonstrating ownership if one of the situations listed above occurs, however, continual access to these accounts is necessary for this to occur. It would be prudent to have both the owner of the company and someone else, in a position of authority at the company, or better yet, the person who monitors all employee social media accounts, to have a written copy of all the passwords and usernames. If only one person had the list, the employer would be in a bind when that employee left with all the social media access information or demanded a promotion or pay raise holding this access information hostage. The same is not true if more than one person has access.
We hope this article has helped you. If you have any questions, the attorneys at Vann Attorneys will be more than happy to answer your questions and assist you with the creation of such policies and contracts as your business requires.
1 In re CTLI, LLC, No. 14-33564, mem. Opinion (Bankr. S.D. Tex., Apr. 3, 2015).
2 PhoneDog LLC v. Kravitz, 2011 U.S. Dist. LEXIS 129229 (N.D. Cal., Nov. 8, 2011). 3 Eagle v. Morgan, 2013 U.S. Dist. LEXIS 34220 (E.D. Pa. March 12, 2013).