Michael C. Schmidt and Jason A. Cabrera ()
Social media has changed nearly everything about the world around us, often bringing people closer together, and (perhaps predictably) spawning a host of new legal questions. Some issues are new in this social media and technology era, such as the commercial use of location-based cellphone data or the rules for searches of electronic devices. In the employment context, however, social media has not necessarily created new claims but instead acted as a new platform for existing claims. As social media continues to grow, both employers and employees alike are being forced to take a fresh look at claims that have existed for years.
One of the newest trends in the practice of employment law is the impact of social media on restrictive covenants: noncompetition, nonsolicitation and strict confidentiality agreements that attempt to restrict how employees and former employees can act. Pennsylvania, along with most states, has long required that noncompetition agreements be reasonable in duration and extent and be reasonably necessary for the protection of the employer’s interests, per Hess v. Gebhard & Co., 808 A.2d 912, 917 (Pa. 2002). Although existing case law is fairly well developed to handle the issues that typically arise, the widespread use of social media has raised an entirely new slate of legal questions that are now confronting courts nationwide.
Consider an employee (with a valid restrictive covenant) who leaves her job and posts new job information on her personal Facebook page. Has she violated the nonsolicitation provision in her agreement? What about an employee who similarly updates his new job status but posts the update on his LinkedIn profile—a service specifically designed as a forum for business and professional networking—instead of Facebook? Is the answer the same?
The whole premise of social media is to quickly and easily get a message out to a mass audience, often quite informally. What happens when an employee’s informal use of social media is incongruent with an employer’s interest, in the same way that an employer would not want a resigning employee to pick up a phone and call the employer’s customers?
In a case between two companies in Indiana, an appellate court addressed whether Company B’s posting of a job opening on LinkedIn was a violation of its agreement not to solicit the employees of Company A, in Enhanced Network Solutions Group v. Hypersonic Technologies, 951 N.E.2d 265 (Ind. Ct. App. 2011). The posting made by Hypersonic was to a public group that included employees from Enhanced Network Solutions. After an employee from Enhanced Network Solutions saw the post, he contacted Hypersonic and eventually received and accepted an offer of employment. The court held that the job posting was made to the general public area on LinkedIn and did not violate the ordinary meaning of (a targeted) solicitation; therefore, it was outside the existing agreement and the parties should have specified otherwise if they intended their agreement to cover those sorts of communications.
Perhaps that holding is logical, but a slight change in the definition of “solicit” would have forced the court to answer a number of questions it was able to avoid. Did Hypersonic know that its posting was likely to be seen by members of Enhanced Network Solutions? How large was the public group to which the posting was made? Questions like these could have helped the court determine if the posting was truly targeted to a class of people Hypersonic was prohibited from reaching individually.
In Oklahoma, a more traditional noncompete case was again permeated by social media questions, in Pre-Paid Legal Services v. Cahill, 924 F. Supp. 2d 1281 (E.D. Okla. 2013). In Cahill, an employer sued its former employee for breach of his nonsolicitation agreement and for misappropriation of trade secrets. The employee had abruptly resigned his position only after he called a meeting of his subordinates to announce his resignation and to recruit them to join his new firm. The employee then posted on his Facebook page about the benefits of his new company’s products and about his satisfaction with his new employer. The former employer sought an injunction to prevent further posts, and claimed that the employee’s Facebook posts were evidence of his ongoing solicitation of his former employer’s employees and agents.
The court highlighted the impact of the modern era in its opinion: “The rather novel issue, then, is whether defendant’s Facebook posts on his public, personal account constitute solicitations under the terms of the nonsolicitation agreement.” Yet the court refused an injunction. The court said the Facebook posts were simply about the employee’s satisfaction with his new employer and its new products and that there was no evidence the posts had caused an employee to quit or that the employee was targeting his former colleagues using Facebook. Thus, the court concluded the employer was not likely to prove that the Facebook posts were a breach of the nonsolicitation provision. Cahill is another example of a court avoiding the underlying social media questions. This time the court focused on the definition of “nonsolicitation” in the agreement and the stringent requirements for an injunction.
Massachusetts recently faced a case at the intersection of social media and restrictive covenants. In Invidia LLC v. DiFonzo, 30 Mass. L. Rptr. 390 (Super. Ct. 2012), a hair salon sued its former stylist for breach of her noncompete and nonsolicitation agreement arising from postings on social media. The stylist’s new employer (a salon only two miles away) posted on her Facebook wall about her new job and the employee herself updated her employment status on LinkedIn. The employer also had evidence that one of its customers, a client of the stylist, posted a Facebook comment (“See you tomorrow”) to the stylist’s announcement post, and then that customer canceled her originally scheduled appointment at the former employer’s salon.
Nevertheless, even in this case, the Massachusetts Superior Court concluded that the new employer’s posting of an announcement on Facebook about the stylist’s hiring did not constitute solicitation. The court did caution, however, that “it would be a very different matter” if the employee had contacted the client to inform her of the move to the new employer. Although the former employer emphasized that the stylist was Facebook friends with eight customers, it failed to present any evidence that there was any targeted solicitation of those customers. Thus, “so long as [other customers] reached out to [the defendant] and not vice versa, there is no violation of the nonsolicitation [clause].”
It is difficult to form any real conclusions just yet, and this subject deserves ongoing monitoring and analysis. Still, these cases reflect a trend, however slight, of judges not being willing to extend the equitable power of the courts to social media activity in the area of restrictive covenants, unless the allegedly offending activity is direct and violative of the specific provisions in the agreement at issue.
Some questions to consider at this point: First, should employers start crafting more specific restrictive covenant agreements that specifically address their employees’ social media accounts? At first blush, it sure sounds like a good idea. But remember that most states have a reasonableness requirement for restrictive covenants to be enforceable. Is a covenant that an employee may not include the name of his new employer in any Facebook status for a year a reasonable restriction? Could an agreement on how an employee’s LinkedIn profile will be updated be reasonable or enforceable? What about a requirement to de-friend existing clients or employees when employment ends?
Second, will strict social media policies for current employees run afoul of the National Labor Relations Act? The NLRA protects the rights of all employees—union and non-union alike—to engage in concerted activity for mutual aid and protection, and the National Labor Relations Board has heavily scrutinized social media policies that apply to non-union employees. Employers with overbroad social media policies may run the risk of chilling protected activity and thus leave themselves vulnerable to an unfair labor practice charge.
Setting aside those questions, employers should consider an update to the definitions section of their employment agreements. In both Enhanced Network Solutions and Cahill, the courts avoided critical holdings on the social media questions with findings that the definitions of crucial terms (such as “solicit” or “customer”) would not cover the alleged misconduct. By reviewing the definitions used and keeping them updated, employers can take a small step to make sure their agreements reflect modern situations.
Restrictive covenants become all the more important in an interconnected world where physical barriers present fewer obstacles to the exchange of information and ideas. And given that the only constant in the realm of social media seems to be its perpetual transformation, we know that new technology will continue to present new challenges in the years ahead. But by thinking about the legal issues
that now face us all and planning a way forward to address them, we can better navigate the unknown challenges posed by social media.
Michael C. Schmidt is the vice chair of Cozen O’Connor’s labor and employment department, where he represents companies on a wide range of issues ranging from hiring to firing in court, arbitrations, and before administrative agencies. He is the author of the Social Media Employment Law Blog. He can be reached at firstname.lastname@example.org.
Jason A. Cabrera is an associate in the firm’s labor and employment department.