Privacy Rights of Companies: Trade Secrets and Social Media

Alex Trebek:   “To protect valuable trade secrets.”

Mike:   “Give me a good reason why employers should monitor social media activity?”

Trebek:  “Sorry, you didn’t phrase it in the form of a question.”

Mike:   “Ok, what is ‘give me a good reason why employers should monitor social media activity?”

Trebek:   “Sorry, too late.”

But that was the right answer, whether I move on to Final Jeopardy or not.   In fact, we spend a lot of time discussing the perils involved with employers monitoring social media activity.   But there are reasons why employers do want to monitor.

Houston-based specialty retailer Francesca’s Holdings Corporation issued a press release on Monday that it terminated the employment of its Chief Financial Officer – for cause.    According to the release, he was terminated because he “improperly communicated Company information through social media.”  Francesca’s did not identify the exact nature of the company information disclosed, nor did it specify which social media account was used.   It did note that the disclosure was discovered on May 11^th, after which an investigation was immediately commenced by the Board of Directors.

According to the Board’s Chairman:

“Francesca’s has delivered consistent, high quality results for customers and public investors.  We are disappointed by this situation but we expect our executives to comply with all Company policies.”

Employer Take Away:   What should you as an employer take away from this development?   

While you certainly want to make sure you comply with all applicable laws, regulations and rules, your company does have a right to ensure that its legitimate and valuable business interests are protected.   So, if you want to monitor:

• Establish lawful protocols to monitor what is being said about your company, particularly from the microphones held by your own employees; and

• Be crystal clear in your lawful policies and training about what is considered by the company to be protected information, and what cannot be disclosed to outsiders.    It should go without saying by now that your confidential information policy should include references to social media use.

About Michael Schmidt

Michael C. Schmidt is the vice chair of the firm’s Labor & Employment Department, and the office managing partner, vice chair, of the New York Midtown office, where he is resident. For more than two decades, Mike has concentrated his practice on representing companies and management in all facets of employment law, such as: (i) defense in litigation involving wage and hour (overtime and unpaid compensation), discrimination, harassment, retaliation and whistle-blowing, non-competes and trade secrets, and disability and other leave-related issues; (ii) day-to-day counseling and in-house training on issues from hiring to firing, and other questions unique to his client’s industries and business; and (iii) drafting and reviewing employment agreements, termination and severance agreements, confidentiality and non-competes, and employment policies and manuals.