Social networking sites and other social media have opened new ways for people and businesses to communicate. Sites such as Facebook, Twitter and LinkedIn, along with millions of blogs and thousands of podcasts, have become extremely popular. Consequently, businesses are increasingly using social media to reach current and potential customers.
However, use of these services presents risks together with potential benefits. Employees, customers, and competitors can all create content that affects a company's reputation and legal exposure.
Potential risks from employee social media use
- Employees making posts might make inaccurate statements, particularly when not all the relevant facts of a developing situation are known.
- They might inadvertently release confidential information.
- They might make statements that embarrass the company, such as negative remarks about racial or ethnic groups.
- They might make statements that violate a person's privacy.
- Disparaging statements might provoke others to sue the company for libel.
- Blog posts offering advice might expose the employer to lawsuits if others rely on that advice and suffer losses.
- Disgruntled customers, employees or competitors might post disparaging comments about the company.
- Any of these situations can harm the company's reputation.
What a General Liability policy may not cover
- An injury caused by or at the direction of an employee when the employee knew the action would violate a person's right to privacy.
- An injury caused by or at the direction of an employee when the employee knew that a statement was false.
- Claims that the business's products or services do not live up to statements about their quality.
- Injury arising out of statements made on Internet chat rooms or bulletin boards the business owns or controls.
- Unauthorized use of someone's name or product in a manner that misleads that company's potential customers.
The policy also generally covers only certain non‑bodily injuries and will not cover a lawsuit by someone who suffered financially after relying on advice on a company's blog.
How businesses can reduce risk
- Written procedures for employee use of social media, including:
- Who may post on the company's behalf.
- Definitions of acceptable and unacceptable behavior.
- Employees' personal sites should make clear that the employees are not speaking on behalf of the company.
- When a discussion should move offline and into the company's regular workflow (for example, when a customer has a specific complaint that should be handled out of public view).
- The consequences of non-compliance.
- Company policies regarding employees' ability to link to the company's Website on their personal social media pages and the use of the company name, logo, or other advertising.
- Company policies on the content that employees may post on blogs, both the company's blogs and other blogs where employees post on the company's behalf.
- Purchasing special insurance to fill gaps left by General Liability coverage.
Social media offers opportunities for businesses to build relationships with customers, but companies need to approach it with care and planning to reduce risk.
If your business stores or distributes digital content, consider coverage options such as Magnetic and Optical Recording Media Coverage.
Service-oriented businesses that rely on frequent outreach may also review options like Telemarketing Services Insurance.
For tailored guidance on how these issues affect your business, talk to an agent.
Frequently Asked Questions
Can an employer be held liable for an employee's personal social media posts?
It depends on the circumstances, including whether the employee was acting on the company's behalf or violating company policy; employers should have clear social media rules.
Will my General Liability policy cover defamation claims made online?
General Liability may cover some reputational harms but often has exclusions for knowing false statements and certain non‑bodily financial losses, so coverage can be limited.
What steps should a small business take first to limit social media risk?
Start with written social media policies, staff training, and consider targeted insurance to address gaps in General Liability coverage.