What started off as a digital means of staying in touch with friends has grown into a mainstream and effective method of developing and maintaining business relationships.

In fact, just about every business is somehow connected through social media. Proper use of social media provides essentially unlimited opportunities for contractors to generate business exposure, generate new leads and potential clients, and connect with their existing customers. Despite the vast opportunities for business success that social media provides, it is not without its own set of challenges. The prolific use of social media in business has spawned an entirely new category of legal risks.

This article is by no means an exhaustive list of all legal issues surrounding social media; rather, it focuses only on two prevalent issues facing contractors: the use of social media for employee screening and online client feedback. It is important to note that the laws concerning social media are developing so rapidly that they must be reviewed regularly to ensure compliance.

WHAT IS SOCIAL MEDIA?

Social media, with respect to business, is a term used to describe digital tools that create and foster interactions and discussions between people and businesses. Some of the most common social media forums include Facebook, Twitter, YouTube, LinkedIn and Google+. The beauty of social media is that contractors can reach large numbers of potential customers or existing clients immediately, inexpensively and automatically. For example, when a contractor sends out a “tweet” about a new project the company is working on, the message is immediately distributed, at no cost, to all of the businesses and individuals who “follow” that particular contractor.

However, the things that businesses love about social media are the same things they loathe. For example, social media is immediate–meaning that what is sent out immediately reaches thousands of people. Once it is out there, even if it is later deleted, there is no way to take it back or stop others from seeing it.

The failure to have a company-wide social media policy, to control the privacy of a corporate social media account or poor decision-making concerning a marketing strategy are essentially inherent risks of using social media as a way to promote and market a construction business. These legal pitfalls can destroy a contractor’s reputation and result in massive monetary fines and penalties.

SOCIAL MEDIA AND EMPLOYEE SCREENING

A number of states, including New Jersey, California, Illinois, Maryland, Michigan and Delaware, have enacted laws that make it illegal for an employer or hiring agent to request a job applicant’s social media login information. While it may seem like common sense, prior to the enactment of these laws, employers in these states were making the production of login information mandatory. It is expected that most other states will pass similar laws during the next 12 months.

Obviously, an employer can learn a great deal more from an applicant’s Facebook page than he could during an interview. So, is it illegal for an employer to “Google” an applicant or search Facebook for an employee? The answer is that while it is illegal in some states and frowned upon in others to require login information, it is not illegal to conduct a regular Internet search for applicants or employees. Often, people fail to maintain adequate privacy settings and so a “snooping” employer may have access to photos or posts that provide greater insight in to a person’s character and lifestyle. It is not illegal to look at this public information. However, it is illegal to refuse to hire or to terminate an employee for a discriminatory reason. For example, it would be illegal for an employer who learns through public social media posts that an employee is pregnant or is a recovering alcoholic to terminate or refuse to hire that employee.

Keep in mind that traditional labor laws apply to employees and applicants despite the rapidly developing technologies. For example, social media background checks, like traditional checks, are subject to the Fair Credit Reporting Act. The FCRA is a federal law that protects privacy of a consumer’s credit report.

ONLINE AND SOCIAL MEDIA ENDORSEMENTS AND TESTIMONIALS

With clients, project managers and developers spending more and more time looking for contractors and construction companies online, quality client testimonials can be the deciding factor in a client’s decision to choose one contractor over another. Additionally, online endorsements can have the added benefit of improving search rankings that lead to increased web traffic.

It can be difficult to ask former clients for a written testimonial. If the contractor knows that the client was very satisfied with the company’s work, is there any harm in the contractor creating a testimonial on behalf of the client? In fact, it is actually quite easy to create bogus testimonials online and the temptation to do so can be great.

Unfortunately, doing so has far more than moral consequences. In fact, the Federal Trade Commission has written a complete guide concerning the use of testimonials in advertising. According to the FTC, all endorsements must be:

• truthful and not misleading;

• a disclaimer concerning generally expected results from using their products or services; and

• disclosure of any connection between the endorser and the business displaying the testimonial.

These guidelines cover any advertising messages on any social media site. The FTC regularly investigates claims of false testimonials and endorsements and are quick to access penalties and fines. For example, in 2011, a construction company and its owner, individually, were fined $250,000 for paying people to provide online reviews and endorsements.

Contractors should not shy away from social media. It is arguably a critical component of business success in today’s world. However, contractors need to understand the risks of the improper use of social media and be familiar with the laws and requirements surrounding its usage.

If you would like more information about social media for business use, please don't hesitate to contact us. The Law Offices of Peter J. Lamont & Associates is a business, personal law and real estate law firm. We regularly handle business matters throughout New Jersey and New York.

Tel. (973) 949-3770 E-Mail. pl@pjlesq.com

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