Social networking sites, such as Facebook and MySpace, started as online forums for individuals to connect on a social level. Today, however, these kinds of sites are valuable tools used by businesses to market products and services, attract and retain clients, and establish credibility in the marketplace. But, as with anything, there are potential pitfalls associated with using social media that you should be aware of and avoid if possible.

Every piece of data posted online is likely saved, searchable and retrievable. Everything you say can potentially be held against you. In the context of litigation, this means it might be discoverable and actionable even years down the road. Thus, a good rule of thumb is: Don’t say anything online that you wouldn’t say if your grandmother was sitting next to you. This simple advice may be the most valuable part of this article.

Businesses Liable for Employee Behavior
The beauty of social networking is that information can be disseminated quickly to wide audiences. If it’s positive information that’s great. If it’s negative, potentially defamatory or confidential information, that’s not so great – and it could spark a lawsuit.

Business owners can be held liable for what their employees say and do online. Students at Canterbury’s University of Kent created a Facebook group named “For Those Who Hate the Little Fat Library Man” to harass a librarian they disliked. In the United States, if a company’s employees were to use corporate IT resources for a similar purpose, the company might be liable for defamation if litigation ensued. At the very least, the cost of discovery to determine if the posting was actionable could be very high.

A company can also be held responsible for employee claims about the company’s products and services. Let’s say that an employee for a mattress manufacturer Tweets that the company’s signature memory foam mattress can heal or prevent lower back problems, even though the company has and would never make such a claim. This seemingly innocent comment by an employee could result in a potential product liability case against the company.

Leaking Information, Secrets is a Real Risk
There are also disclosure and confidentiality issues to keep in mind. If you’re an employer, you should closely monitor what is posted online about your business and maybe even your clients’ and competitors’ businesses. Sharing confidential company information, even inadvertently by you or your employees, can cause great damage-not just because of the legal ramifications but because it can harm your reputation. Blog posts and Tweets have led to disclosure of trade secrets, insider trading, wrongful termination and harassment suits.

A few years ago, it came to light that 10 workers at the Ministry of Defence in the United Kingdom were disciplined for leaking sensitive information and secrets on Twitter and Facebook. This is alarming when you consider that these workers could have been employed in any area within the organization, including the military.

Online Badmouthing May Be Protected Speech
News outlets have reported on employees who have been fired or reprimanded for posting derogatory comments about company owners and other supervising executives. A recent settlement involving a worker fired for complaining about her boss on Facebook suggests that an employee’s Facebook posts represent speech protected by the First Amendment, especially if the posts are done from a personal computer on the employee’s own time.

Dawnmarie Souza sued her employer after she used “psychiatric patient” and other offensive terms to describe her boss on Facebook. As cause, the company cited its policy prohibiting employees from saying anything at all about the company on social media sites. The National Labor Relations Board stepped in to aid Souza’s lawsuit, which reached an undisclosed settlement on Feb. 7, 2011. As a result of the settlement, Souza’s former employer lifted its Internet policy that banned employees from participating in “online badmouthing” about work-related topics.

The lesson for employers is two-fold: 1) check your social media policies and make sure they only restrict allowable offenses, like disclosing confidential information; and 2) modify your policies if they are overly broad.

Conclusion
Social media is a business tool that’s here to stay. If used responsibly, social media offer a host of advantages for companies. If used haphazardly and without a full understanding of the risks, these sites could lead to the inside of a courtroom.