New FTC Guidelines Require Employers To Strengthen Social Networking Policies

The revised guidelines on endorsements and testimonials in advertising, codified at 16 C.F.R. § 255, threaten liability under the Federal Trade Commission Act for both employees and employers if an employee fails to clearly and conspicuously disclose the employer/employee relationship when touting a product or service of the employer, including on a blog, online messaging board, or other social networking platform like Facebook or MySpace. These guidelines target "deceptive" advertising by employees whose endorsements are affected by the "material connections" that exist with their employers but who fail to disclose that such relationships exist.

The FTC suggested in answers to FAQs about the guidelines that it is unlikely to pursue a company for the conduct of a "rogue" employee who has violated a company's adequate policy regarding employee social networking. The numerous employers that have yet to create such a policy, however, are more likely to be found liable for the deceptive actions of "rogue" employees.

Employers should review their social networking/blogging policies to ensure they adequately address employee endorsements. The policies should:

• Require employees to disclose their relationship with the employer clearly and conspicuously whenever they plug the company's products or services, whether it be on a social networking site, blog or any other forum.
• Require employees to include a statement that they are not a spokesperson for the company, but instead are expressing their own opinions, whenever they plug the company's products or services, whether it be on a social networking site, blog or any other forum.

Employers without an employee social networking/blogging policy should create a comprehensive policy as soon as possible. Employers are cautioned to carefully craft their policies so as not to run afoul of the National Labor Relations Act or Railway Labor Act provisions against curtailing concerted activity by employees or certain state laws (e.g., California Labor Code section 96(k)) which prohibit employers from retaliating against employees for their legal off-duty conduct.

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