Insureon Blog

Could Your Business Be Sued over Social Media?

31. January 2013 15:38
cyber risk insurance

If you’re among the millions of small-business owners who use social media for business purposes, you’ll want to pay attention to this post.

A recent article in Investor’s Business Daily highlights how the uncharted legal waters of social media accounts are leaving business owners and employees alike exposed to risks that didn’t exist a decade ago. For example, one case currently winding through the court system involves a woman who cofounded a business that provided banking education materials.

When she left the company, it took over her personal LinkedIn account, which she had apparently used for both business and personal matters. She sued, alleging computer fraud, but the courts have not yet made a ruling in her case.

In a vastly different case, a court ruled that rules included in Costco’s employee handbook prohibiting employees from posting about certain work-related matters on social media were not legal.

Commercial vs. Private Risk Exposures

One of the key questions underlying matters of social media policy for business owners is whether these accounts are considered commercial or private. Many home-based business owners already know that their Homeowner’s Insurance is probably not adequate to protect their business assets and that their Personal Auto Insurance will not cover damage for business vehicles.

But social media accounts are so new that most business owners have not even considered whether they might be protected under existing insurance policies.

Many General Liability Insurance policies, for example, protect business owners against slander and libel claims brought by a client or third party. If allegedly slanderous or libelous comments were made on a business owner’s or employee’s personal Twitter or Facebook account, though, would General Libaility Insurance cover them?

Answer: the courts have not yet decided.

Employers’ Liability Practices Insurance and Social Media

Prior to the advent of social media platforms, Employment Practices Liability Insurance protected employers from claims of harassment, discrimination, and retaliation by disgruntled and / or fired employees.

In the era of Facebook and other networks, more court cases are emerging in which the alleged discrimination or inappropriate behavior on a business owner’s part directly ties to something an employee posted on a social network.

While some lower courts have ruled that hiring and firing decisions based on employee comments are up to “managerial discretion,” appeals courts have turned over such rulings. Translation: the important legal players in the social media field are divided on what you can and cannot do based on your employees’ behavior online.

Sources: http://www.slate.com/articles/news_and_politics/jurisprudence/2012/07/getting_fired_for_what_you_post_on_facebook.html

http://www6.lexisnexis.com/publisher/EndUser?Action=UserDisplayFullDocument&orgId=2778&docId=l:1819814752&topicId=100023899&start=26&topics=single

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