The Electronic Wake Employees Leave Behind

Posted by on May 21, 2013 in Data Security, Employment and Labor

Employer sues ex-employee for not updating his LinkedIn profileJefferson Audio Visual Systems, Inc. v. Light, 2013 WL 1947625 (W.D. Ky. May 9, 2013).

What would you do if your ex-employee told everybody he still works for you?  One company’s response was to sue.  In the first case of its kind, the company decided to sue its former employee for fraud for not updating his LinkedIn profile.

Jefferson Audio Visual Systems, Inc. (JAVS) fired its sales director, Gunnar Light, after he mishandled a potentially lucrative deal and made defamatory statements about JAVS to a prospective customer.  Shortly afterwards, JAVS filed a lawsuit against Light alleging various claims, including fraud.  JAVS argued that Light was fraudulent in failing to update his LinkedIn profile to reflect that he was no longer a JAVS employee.  A Kentucky federal court dismissed the fraud claim because JAVS failed to show that it was defrauded by Light’s LinkedIn profile.  At most, JAVS alleged that the profile tricked others.  Under Kentucky law, a party claiming fraud must itself have relied on the fraudulent statements.

LegalTXTS Lesson: JAVS’ actions against its ex-employee might have been rather extreme, but the case is a reminder that ex-employees can leave behind an electronic wake that is damaging.  Because computer technology is an integral part of work life, management needs to be intentional in disengaging ex-employees from the electronic systems and online persona of the organization.  Each organization must determine for itself what measures for dealing with such post-termination issues are feasible, effective, and consistent with its objectives, but here are some suggestions:

1.  Promptly update the organization’s website, social media profiles, and any other official online presence to reflect that the former employee no longer works for the organization.

2.  Specify who owns Internet accounts handled by the ex-employee for the organization’s  benefit and the information stored in the accounts.  This includes social media accounts and cloud storage accounts (e.g., DropBox, Google Drive, SkyDrive) to the extent they contain proprietary data.  As part of this measure, be sure to obtain the information needed to access the accounts, including any updates to login credentials.

3.  Restrict the amount of access to which former employees, as well as current employees whose departure is imminent, have to workstations, databases, and networks of the organization.  Limiting access helps to prevent theft of trade secrets and proprietary information.  Many CFAA lawsuits have been spawned by a failure to take this precaution.

4.  Check if the employee left behind anything that would enable him or her to gain unauthorized access to company systems, like malware, viruses, or “back doors.”

5.  Enable systems that allow of erasure of the organization’s data from electronic devices used by the ex-employee to remotely access the work network, such as smartphones, laptops, and tablet computers.

6.  Establish guidelines on employee use of the company’s intellectual property on personal internet profiles (e.g., Facebook, Twitter, LinkedIn), including trademarks and trade names.
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Attorney Is Disciplined For Posting Confidential Client Information Online

Posted by on May 16, 2013 in Advertising and Marketing, Social Media

Disclosure of confidential client information on the Internet by attorney violates Rule 1.6 of the Rules of Professional ConductIn re Skinner, 740 S.E.2d 171 (Ga. Mar. 18, 2013)

A Georgia attorney recently learned the hard way that the Internet is no place to vent about a client.  The attorney (Skinner) received negative comments from a client on consumer review websites.  In response, Skinner posted personal and confidential information about the client on the Internet.  After a formal complaint was filed against Skinner by the State Bar of Georgia, Skinner filed a petition for voluntary discipline admitting that she violated Rule 1.6 of the Georgia Rules of Professional Conduct.  Rule 1.6 requires a lawyer to maintain the confidentiality of all information gained in the professional relationship with a client unless the client consents to disclosure after consultation.  The client obviously did not consent to Skinner sharing her private information on cyberspace.

Skinner filed a motion for voluntary discipline in the form of a reprimand, which is the mildest form of discipline authorized for Rule 1.6 violations.  The Georgia Supreme Court rejected Skinner’s petition despite recommendations by the Office of General Counsel of the State Bar and a special master to accept it.  As a result, Skinner could face stricter disciplinary measures for her violations.

LegalTXT Lesson: Posting confidential information on the Internet is generally a bad idea.  Especially if the information concerns somebody else.  And you’re a lawyer.  If you’re a professional who has an ethical duty to preserve confidences, like a lawyer, sharing confidential information about a client online is an invitation for trouble.

On a related note, responding to negative online comments with more criticism or hurtful actions (like revealing personal information about the commenter) is rarely an effective means of repairing reputation.  The meltdown on the Facebook page of Amy’s Baking Company is an extreme example (although the owners claim the page was hacked).   As the adage goes, don’t fight fire with fire.

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NLRB Dishes Out Confusion On Social Media Policies

Posted by on May 15, 2013 in Employment and Labor, Social Media

UPDATE:  On April 30, 2013, a three-member panel of the NLRB adopted the ALJ’s decision in this case.  Read the board decision here (the ALJ decision and the Dish Network social media policy that got invalidated are attached).

The NLRB recently dealt another blow to the ability of employers to prohibit employees from engaging in disparaging speech on social media.  On November 14, 2012, an Administrative Law Judge (“ALJ”) of the NRLB issued a decision striking down two rules in Dish Network’s employee handbook dealing with social media use.  The first rule prohibited employees from making disparaging or defamatory comments about their employer.  The ALJ found that the rule could unlawfully chill employees in the exercise of their Section 7 rights to engage in concerted activity.  The second rule prohibited employees from engaging in “negative electronic discussion” during company time.  This rule could effectively ban union activities during breaks and other non-working hours at the workplace, the ALJ concluded.

This was not the first time Dish Network’s social media policy came under fire.  On May 31, 2012, the Acting General Counsel of the NLRB issued a memo criticizing provisions of actual social media policies.  Dish Network was one of the companies whose policies were scrutinized in the memo.  But while the memo was merely advisory, the latest ALJ ruling is not.

Recent NLRB rulings like this one leave behind a wake of confusion for employers.  Provisions that are commonplace in employee handbooks, like non-disparagement rules, are being invalidated when applied in the social media context.  To add to the confusion, the NLRB can seem inconsistent.  For example, the May 30 memo approved Wal-Mart’s social media policy, which includes an instruction to “refrain from using social media while on work time” or on company equipment.  However, the NLRB struck down Dish Network’s practice of banning social media activity on company time.  What’s an employer to do?  Few definitive answers are available, but here are a few ideas to help you survive in this uncertain environment:

  • Stop treating social media as a novelty.  Employers who still regard social media as a frivolous activity tend to use draconian measures (like categorical bans) to regulate it.  The reality is that social media has become part of everyday life, nearly as much as cellphones and texting has.  The point is not to restrict social media use per se, but to manage the consequences of such use.  Which leads us to . . .
  • Focus on outcomes.  Dish Network very well could have intended its non-disparagement work rule to protect its brand and reputation rather than prohibit employee discussion about their work conditions or compensation.  However, the rule did not clearly spell out its objectives.  Tell employees the outcomes you want to avoid.  If what you want to prevent are discriminatory remarks that create a hostile work environment, say so.  This was one of the features of the Wal-Mart policy that the NLRB’s May 30 memo approved.  In a section of the policy entitled “Be Respectful,” Wal-Mart states that if an employee decides to post complaints or criticism, they should ” avoid using statements, photographs, video or audio that reasonably could be viewed as malicious, obscene, threatening or intimidating, that disparage customers, members, associates or suppliers, or that might constitute harassment or bullying.”  The policy then listed examples of such conduct, such as “offensive posts meant to intentionally harm someone’s reputation or posts that could contribute to a hostile work environment on the basis of race, sex, disability,religion or any other status protected by law or company policy.”
  • Stay positive.  Rather than just banning certain kinds of conduct on social media, consider setting affirmative guidelines that employees should adhere to when communicating with others, whether on social media or other communication channels.  For example, do you want your organization to be portrayed in a certain way?  Then describe the image you would like your employees to convey to others in their communications when talking about the organization.
  • It’s not over.  The NLRB rulings are not the final word on how broadly employers may regulate social media activity of employees.  Although ALJ decisions and even those of NLRB panels are more authoritative than guidance memos, courts have yet to weigh in.
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2013 Hawaii Tech Legislation Roundup

Posted by on May 10, 2013 in Arts and Entertainment, Data Security, Evidence, Financial Services

Cyberbullying. Employer social media password requests. Crowdfunding. Those were some of the hot tech topics that the Hawai‘i State Legislature grappled with this session.  (See my post on Internet related legislative proposals in the 2013 session).    The bills addressing those topics didn’t pass, however.  In fact, none of the bills listed in my chart of Internet Related Legislative Proposals survived.  The closest to passing, perhaps, were two bills prohibiting employer requests to employees to disclose their personal social media account information, but the bills got stuck in committee.

That’s not to say that the 2013 session was completely devoid of tech.  I’ve prepared a chart of all the bills related to electronic, digital, and information technology that the Hawai‘i State Legislature passed this session.  (Many thanks to the Legislative Reference Bureau for providing the summaries that are incorporated into the chart).  Governor Neil Abercrombie has already signed some of the bills into law.  Others are pending a decision from the Governor.  To summarize, the legislature this year addressed:

  • Adoption of the Uniform Electronic Legal Material Act
  • Portable electronics insurance
  • Clarification of relationship between Uniform Commercial Code Article 4A and Electronic Fund Transfer Act
  • Licensing requirements for telemedicine practitioners employed by the U.S. Department of Defense
  • Duties of the State Chief Information Officer
  • Electronic posting of reports of Department of Health inspection of state licensed care facilities
  • Availability of State open data
  • Approval of broadband related permits
  • Electronic prescriptions
  • Tax credits for film and digital media industry
  • Ban on use of mobile electronic devices while operating a motor vehicle

For summaries of all the bills that passed this session, read the full LRB report.  For even more information visit the Legislature’s website for the full text of bills, committee reports, and testimony.  I’ll update the chart after the Governor’s veto deadline has passed, so check back in a while.


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A Hack By Any Other Name

Posted by on May 8, 2013 in Data Security, Employment and Labor

The Computer Fraud and Abuse Act (CFAA) criminalizes forms of “hacking” other than actually breaking into a computer system — United States v. Nosal, 2013 WL 978226 (N.D .Cal. Mar. 12, 2013)

Nosal is back.  This is the case that spawned a Ninth Circuit decision narrowing the reach of the CFAA to hacking activity.  The case returned to the trial court after the Ninth Circuit decision.  The trial court recently convicted the defendant (David Nosal) of violating the CFAA.  But before analyzing the decision, let’s take a brief look at the background.

Nosal is a former employee of Korn/Ferry, an executive search and recruiting firm.  After leaving Korn/Ferry, Nosal obtained access to Korn/Ferry’s confidential and proprietary data with help from others.  In some instances, Nosal got Korn/Ferry employees to give their passwords to outsiders to enable them to access the firm’s computer systems.  In another instance, a Korn/Ferry employee logged onto the firm’s computer system using her password and then allowed a non-employee to use the system.  Nosal used the stolen data to start his own executive search business.  Nosal and his co-conspirators were indicted for violating the CFAA by exceeding authorized access to Korn/Ferry’s computers “knowingly and with intent to defraud.”

An en banc panel of the Ninth Circuit held that the CFAA’s prohibition on accessing computers “without authorization” or “exceeding authorized access” is limited to violations of restrictions on access to information, not restrictions on its use.  The Ninth Circuit reasoned that the CFAA primarily targets hacking rather than misappropriation of information.  The Ninth Circuit returned the case to the trial court to determine if Nosal violated the CFAA under its interpretation of the statute.

Nosal tried to persuade the trial court to push the Ninth Circuit’s rationale one step further.  Nosal argued that, since the CFAA is an anti-hacking statute, it is violated only when someone circumvents technological barriers to access to a computer.  Under this narrow interpretation, not every form of unauthorized access to a computer necessarily violates the CFAA.  The trial court disagreed with Nosal’s interpretation because the Ninth Circuit did not base CFAA liability on the manner in which access is restricted.  Moreover, password protection is a form of a technological access barrier, and Nosal and his co-conspirators clearly bypassed password restrictions.

Nosal next argued that his co-conspirators did not act “without authorization” because they used a valid password issued to a Korn/Ferry employee.  The court wasn’t enamored with this argument either.  Whether an act is authorized must be viewed from the perspective of the employer who maintains the computer system.  Clearly, an employer would not authorize an employee to allow another person to use his or her password.  Nosal attempted to analogize consensual use of an employee’s computer password to consensual use of an employee’s key to gain physical access to a building, a situation that Nosal argued would not violate trespass law.  The court also rejected this argumen.

Finally, Nosal argued that the Korn/Ferry employee who engaged in “shoulder surfing” (i.e., logging into the firm’s computer system and then letting another person use the system) did not engage in unauthorized “access.”   The court found no difference between an employee who gives her password to an outsider and an employee who logs into the firm’s computer system with her password and then lets an outsider use the system.  Both situations qualify as “access” under the CFAA.

LegalTXT Lesson: The CFAA targets hacking instead of misappropriation (so the Ninth Circuit says), but hacking could take various forms.  According to the latest Nosal decision, the CFAA criminalizes at least these forms: (a) breaking into a computer system; (b) letting an outsider use your password to access a system; (c) logging into a system with your password and then letting an outsider use the system.

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