Social networking sites have made it easier for disgruntled customers to bash a company’s reputation online. And, as recent court cases show, it’s getting tough for employers to protect themselves.

According to a recent survey by Deloitte, 74% of employees say it’s easy to damage an employer’s reputation using social networking sites (Facebook, MySpace, Twitter, etc.).

But just because employees are aware of the damage social networking slander can cause, it doesn’t mean they care.

In fact, the Deloitte study found that 61% of employees said they wouldn’t change what they do online — even if their activity was monitored by their employers. And half say an official company ban on negative comments wouldn’t change their behavior.

As these recent court decisions show, companies may have little recourse to respond after the damage is done:

1. Online comment wasn’t defamation

The owner of several restaurants was interviewed by his local newspaper, and the article appeared on the paper’s Web site. In response to one of the questions, the owner mentioned that he treats employees “with dignity and respect.”

Apparently the father of a former employee disagreed with him. He left a comment claiming his daughter was sexually harassed, and that the behavior was condoned by the owner. The company sued the commenter for defamation, but the case was thrown out. The judged ruled the comment was a matter of opinion and not subject to defamation laws.

2. Boss can’t read private forum

A group of employees had set up a private, invite-only group on Myspace. The purpose: “To vent about any BS” they had to deal with at work. Eventually, their boss got wind of the group, and needless to say, he wasn’t happy.

He asked an employee for the password, and she complied, afraid for her job. When he went to the site, the boss found disparaging comments directed at him and other managers. The two employees who started the group were fired.

They sued, claiming the company invaded their privacy. The court agreed — since the page was password-protected, the employees had a reasonable expectation that their comments would remain private. And company had no right to read the comments.

3. Confidential docs allowed to stay public

After a bank vice president was let go, he posted confidential company documents to a Web site. Allegedly, the documents exposed illegal activities.

The bank sued the owners of the Web site to force the removal of the documents. But the court ruled in favor of the site’s owners, saying they had a First Amendment right to keep the documents online. Also, the judge said taking them down would do little good, because they could have been copied and re-posted by other sites.

What can HR do?

That doesn’t mean you can’t fire any employee whose online activities hurt the company. Firing is OK in many cases — removing the damaging material is the hard part.

Your best bet? In your computer use policy, include a part banning conduct that damages the company’s reputation. Then monitor activity and discipline accordingly.

Legal experts recommend that every every employer start the year with an six-part legal check up to ensure compliance with current employment laws.

Here’s the list from the law firm of Moore & Van Allen:

1. Do a quick review of your company’s written vacation policy. Take a look  to ensure that the policy provides proper notice of forfeiture, carryover, and accrual of vacation. Do a check-up to see that you’re in compliance with state laws.  For instance, some special rules apply in states like California regarding forfeiture of accrued vacation.
2. Update your company confidentiality agreement. First, make sure your agreement is tight and covers appropriate employees. A lot of law firms report that laid-off employees are taking revenge — or looking for an edge in finding a new job — by handing out confidential info from former employers. If you don’t have an up-to-date agreement, you leave your company open to such attacks. Second, review your agreements and policies to ensure they don’t prohibit employees from discussing their wages or terms and conditions of employment with their fellow employees. The  National Labor Relations Board views such prohibitions as illegal interference with concerted activity, even if your company is not unionized.
3. Get FMLA compliant. If your company has 50 or more employees, make sure that you post the FMLA poster that the US Department of Labor issued in 2009. Update your FMLA forms and policies, if you have not done so already. (To see if you’re in  compliance with FMLA and other federal posting requirements, use the DOL compliance advisor.
4. Get your managers up to speed on harassment policies. Review the policies with the bosses, and get them to schedule beginning-of-the-year meeting with their departments to review the policies.
5. Get FLSA compliant.  Review the company’s classification of employees as exempt from overtime under federal and state wage and hour laws. Lawsuits and investigations based on improper classifications of employees continue to be a hot area of the law and can result in significant awards against employers.
6. Conduct an internal I-9 audit. U.S. Immigration and Customs Enforcement  announced new I-9 audits for employers. Make sure your bases are covered.

A recent court case illustrates one more quirk to be aware of when classifying employees as exempt or nonexempt under the Fair Labor Standards Act.

A loan underwriter for a New York bank sued under the FLSA, saying he should be paid for the overtime he regularly worked.

His employer argued that he qualified as exempt, since he was an “administrative” employee.

Under the FLSA, an employee qualifies for the administrative exemption if he or she does work that’s “directly related to management policies or general business operations” and “regularly exercises discretion and independent judgment.”

No discretion involved
The man claimed he reviewed loan applications using the bank’s Credit Guide – a detailed document setting strict parameters for lending. He simply followed procedures to come up with a yes-or-no decision. No discretion was exercised.

The judge sided with the employee. The man was engaged in the “production” of loans – the fundamental product offered by the bank. Thus, he wasn’t an exempt employee.

Cite: Davis v. J.P. Morgan Chase

If employees send text messages on the company’s dime, the company should be able to monitor them, right? Maybe not, according to recent court decisions.

An employer gave cell phones to a group of employees so they could communicate via text messages. The contract with the wireless provider said the company would be charged an overage fee if any phone sent more than a certain number of words in a given month. Employees had to reimburse the company for those charges.

After one employee went over his limit four times, the company obtained copies of his messages from the wireless provider. The transcripts revealed the employee was sending a lot of personal messages — in fact, many of them were sexually explicit.

The employee was disciplined, but sued, claiming his privacy was violated when the vendor provided — and the company read — his personal messages.

A jury ruled in favor of the company, before an appeals court reversed the decision. The reason: The messages weren’t the company’s property because they were stored by a third-party vendor (unlike company e-mail, which is often held on the company’s own network).

Now, the Supreme Court has agreed to hear the case. We’ll keep you posted on the outcome.

Cite: Quon v. Arch Wireless