From an employment law perspective it must be borne in mind that an employer may be held vicariously liable for the conduct of its employees, if such conduct is committed in the course and scope of employment.

The case Otomewo v Carphone Warehouse Ltd, is an example of employee conduct on social media resulting in vicarious liability. As a prank, employees of Carphone got hold of their manager’s cellular phone. As it was not locked, they accessed his Facebook page and posted a new status update on his wall “finally came out of the closet. I am gay and proud of it.”

The employee was subsequently dismissed, for unrelated reasons. During the ensuing dismissal dispute, he raised this issue against Carphone. The commissioner was of the view that the conduct amounted to sexual harassment on the grounds of sexual orientation and that Carphone could be held vicariously liable for the conduct of the employees in this regard, as the status update was posted on the employee’s Facebook page, without his permission,  it was posted during office hours and involved dealings between staff and a manager.

Also of concern is possible brand damage that an employer may suffer as a consequence of ill-advised posts by its employees. Unfortunately, in the age of the internet, it is all too easy to identify where someone works. Google a person and his or her LinkedIn profile is likely to pop up identifying where he or she is employed and in what capacity. This immediately links the employer to any unpleasant online interaction in which she is involved or for which she is responsible.

The more senior an employee, the more of an impact a statement he or she makes is likely to have on the employer’s brand, regardless of whether the communication took place in the course and scope of employment or not.

A memorable example highlighting the risk of brand damage was when a certain FHM model made racist remarks on twitter. The IOLnews and Mail & Guardian headlines (among others) read “FHM model’s racist tweets”. Those articles that did not refer to FHM in the headlines certainly mentioned FHM in the narrative.

Social media use also has implications for fiduciaries. Directors and employees have a fiduciary duty to act in the interests of the employer, even where their interests conflict with those of the employer and fiduciaries are prohibited from placing themselves in positions where their interests conflict with their duties to their employers.

Using social media carelessly may result in a breach of this fiduciary duty if, for example, confidential information is unwittingly revealed in a social media post. The ease with which this can happen, although not relating to fiduciary duties, is illustrated by the following example. During the height of the Iraqi war, one of the US bases received a consignment of new apache helicopters. One of the soldiers, excited about the delivery, took a photo of the helicopters and posted the photo on a social media site.

Unfortunately, the Iraqi army was monitoring social media posts and saw the picture. The Iraqi army was able to extract, from the meta data of the photograph, the exact location of the helicopters and, needless to say, bombed them as they sat on the tarmac. Employees also owe a fiduciary duty to their employers.

An actual case involving the breach of a fiduciary duty was determined in Louisiana. In this case, owners of a magazine filed for bankruptcy. One of the owners started up his own magazine and, using the Facebook page of the original magazine, invited those who “liked the page” to instead “like the page” of the new magazine.

The court found that his conduct amounted to a breach of his fiduciary duty. In this regard the court was of the view that as social media is an important marketing tool, taking followers from the old magazine and directing them to the Facebook page of the new magazine constituted an unfair trade practice.

If inside information of a listed company is unwittingly disseminated on social media, this could have a material effect on the share price of the company. An employee’s opinion about a listed company, may affect the share price of the company. Thus tweets and blogs that refer to confidential information or express an opinion that affects the share price of the company may well fall foul of insider trading rules, even when innocently made.

In South Africa, insider trading is an offence and may result in criminal liability and/or administrative sanction.  This may sound far-fetched but it happened in the US when the CEO of a company tweeted the following: “Congrats to [the team] monthly viewing exceeded 1 billion hours for the first time ever … When [these shows} debut, we’ll blow these records away.” This tweet was, by all accounts congratulatory in nature and was not meant to reveal inside information.

However, the US Securities and Exchange Commission conducted an investigation into the tweet to determine whether or not it amounted to insider trading. Although the Commission ultimately decided not to lay charges against the CEO, this example highlights the risks associated with such statements on social media. Then the unfortunate CFO of another listed company who tweeted “Board meeting. Good numbers = Happy Board” was fired for releasing confidential information which could also have sparked an investigation into insider trading.

Social media allow employees to foster trade connections with their employers’ key customers and suppliers. This is great whilst the employees remain employed by the employer, but what is the effect if the employee leaves for a competitor.

Does requiring your employee to delete her contacts of LinkedIn, for example, constitute a restraint? And if so, is the restraint enforceable. The answers to both of these questions will depend on the facts of each case, but conducting business in the age of social media means that we all need to be alive to these questions so that we can adequately protect our business and the business of our clients.

In Hays Specialist Recruitment v Ions, the UK court held the opinion that LinkedIn contacts gathered by an employee during the course and scope of his or her employment, belonged to the employer. In a South African case pertaining to the enforcement of a restraint of trade, the High Court was of the view that the employee’s LinkedIn contacts were relevant to the determination of the restraint of trade dispute. In this regard, the Court was of the view that the restraint should be enforced because the LinkedIn connections indicated that the employees integrally connected with the business of the former employer and thus the employer had a proprietary interest worthy of protection.

Key to protecting the marketing interests and confidential information is regulating the ownership of social media accounts, content and followers. It is essential there be certainty as to who owns these accounts, content and followers.

Probably the most publicized case dealt with the ownership of a Twitter account and the followers that went with it (PhoneDog vs Kravitz).  Noah Kravitz was employed by a company called PhoneDog to promote PhoneDog’s services. To this end, he set up a Twitter account to disseminate information about PhoneDog and to promote its services. His twitter handle was @phonedog_kravitz. During his tenure at PhoneDog, he built up a following of about 17 000 people. He then resigned from PhoneDog and went to work at a competitor. When he resigned he changed the Twitter handle to @noahkravitz and continued to tweet on his own behalf to the same followers.

Understandably, PhoneDog immediately demanded that Kravitz hand the Twitter account over to them. Kravitz refused to do so and a highly publicized and controversial court case ensued regarding the ownership of the Twitter account and its followers.

In the end, the parties reached a confidential settlement but this may have been avoided if there had been an agreement upfront regarding ownership of the account and the followers.

Written by Rosalind Davey, Employment & Benefits Practice, partner, Bowman Gilfillan Africa