The federal government’s National Labor Relations Board continues to probe the pitfalls of social media in the workplace.

The limits of workplace rules and of employee behavior are “a ‘hot topic’ among practitioners, human resource professions, the media, and the public,” noted acting general counsel Lafe Solomon in a recent report.

Business Ethics previously examined the NLRB’s social media approach last August.

The NLRB’s new year-end survey of 14 recent unfair labor practice cases cited several instances where employers adopted “overly broad” policies in attempting to police use of social media at work or online, even though, in some cases the discipline or discharge of an employee was legal.

Several cases arose from employee rants and protests posted on Facebook, where disciplinary steps were upheld because the worker’s behavior wasn’t considered “protected concerted conduct,” a common issue in NLRB cases.  Employees, the latest memo noted, have a “right to discuss their wages and other terms and conditions of employment, both among themselves and with non-employees.”

“Overbroad social media policies are high on the NLRB’s current enforcement agenda,” says global law firm Ropes and Gray.  The firm’s analysis said “employers who wish to restrict their employees’ use of social media must take care to specify the precise types of communications that will violate their social media policy, and avoid using broad, generic terms that could be understood to reach protected communication and activity.  This includes such commonplace terms as ‘inappropriate’ or ‘defamatory’ ……”

Just blowing off steam via Facebook doesn’t get much sympathy at the NLRB.  Consider:

--a bartender complained on Facebook that another bartender was “screwing over” customers by substituting a pre-made mix for more expensive premium liquor, and fretted that the practice could lose business.  Eventually, the complainer was discharged for using “unprofessional communication” on Facebook.  The NLRB legal staff didn’t think the behavior was linked closely enough to working conditions for the discharge to be illegal.

--a respiratory therapist at a children’s hospital, riding in an ambulance with a paramedic coworker, posted  via cell phone a Facebook message “indicating that it was driving her nuts that her coworker was sucking her teeth.”  After two Facebook ‘friends’ commiserated online, the therapist said “she was about to beat him with a ventilator,” the NLRB summary said.

The coworker complained to the company, and the therapist was eventually disciplined for that and other behavior.  The NLRB legal staff found labor laws didn’t offer her protection because “it did not concern terms and conditions of employment. She was merely complaining about the sounds her coworker was making, and was not even suggesting that the Employer could do anything about it.”

--a warehouse worker who was feeling ill was told by his supervisor that he could leave but he would be charged an attendance point; the worker completed his shift, but, from his car in the parking lot, posted a Facebook comment saying it was too bad when your boss doesn’t care about your health.  And he told a ‘friend’ who expressed support that he (the worker) thought the company was, in the NLRB’s words, “just trying to give him a reason to be fired because he was about ‘a hair away from setting it off.’ "

He was subsequently suspended without pay and later discharged for inappropriate, threatening, and violent remarks.  An HR manager said she interpreted the ‘setting it off’ remark as a threat to bring a gun to the warehouse and shoot everyone in it.  The NLRB concluded the employee wasn’t trying to initiate group action over sick leave policies and noted he had “characterized his conduct as ‘just venting.’ "

On the other hand, some Facebook discussions do fall under protection of the labor laws:

--workers at a popcorn packaging plant commented on Facebook about the behavior of an operations manager.  One said she hated the place and couldn’t wait to get out of there; eventually, one of the workers was discharged for the comments about the manager.  But the NLRB reviewers said the comments were “part of a discussion of employees’ shared concerns about terms and conditions of employment.”  The memo noted “it is well established that employee complaints and criticism about a supervisor’s attitude and performance may be protected” by the labor laws.

--a nurse at a hospital where a discharged employee had killed one supervisor and critically wounded another posted a series of critical messages online during a seven-month period.  He also criticized the hospital’s “management style” in a local newspaper and in other forums, and made a critical presentation to a borough assembly.  He was terminated. The NLRB staff found that many of the nurse’s remarks amounted to the sort of “rhetorical hyperbole” that is protected under labor laws.

And the NLRB memo criticized a number of rules for 30,000 employees at a large clinical testing laboratory, labeling the provisions “overbroad.”  Among them:

--Language that prohibited prohibited employees from disclosing or communicating sensitive, confidential or non-public information about the company without prior approval of senior management or the law department.

--A provision prohibiting use of the company’s name or service marks outside the course of business without prior approval of the law department.

--A prohibition against publishing any representation about the company without prior approval by senior management and the law department, including statements to the media, ads, weblogs and voice mail.

--A requirement that social networking site communications be made in an honest, professional and appropriate manner.

--A provision saying employees needed approval to identify themselves as the employer’s employees and that that social media comments must expressly be labeled as personal opinions that don’t necessarily reflect the employer’s opinions.

The road map keeping track of social media charges and complaints at the National Labor Relations Board is getting more interesting and complicated.

The agency’s interest in legal issues posed by comments on websites such as Facebook and Twitter first drew wide attention last year. An NLRB regional office said it planned to file an unfair labor practice complaint against an ambulance company for firing an employee who posted negative Facebook comments about her supervisor.  (The case was settled early this year when the company agreed to revise its rules to ensure it didn’t improperly restrict employees from discussing wages, hours and working conditions with co-workers and others while not at work.  The dismissal was handled in a separate private agreement.)

Now, a new report from the NLRB’s Acting General Counsel, and a survey of NLRB cases by the U.S. Chamber of Commerce disclose a much broader range of social media situations being examined at the agency.

The Chamber’s report, based on a Freedom of Information Act request, turned up more than 129 cases “involving social media in some way. While most of these cases are at the very initial stage, and may not be meritorious at all, some are more advanced,” the Chamber said.

The survey found two Board decisions involving social media, as well as two decisions by administrative law judges.  The Board’s general counsel has issued complaints in four other cases, as well as ten memoranda on social media.

The NLRB’s Acting General Counsel, in mid-August, released a report reviewing the outcome of investigations into 14 cases involving use of social media as well as employers’ media policies.

In four cases, the NLRB’s Division of Advice found that employees using Facebook were engaged in “protected concerted activity” in discussing terms and conditions of employment; in five other cases, the activity wasn’t protected.

Employers aren’t the only subject of Board inquiries. “In one case, it was determined that a union engaged in unlawful coercive conduct when it videotaped interviews with employees at a nonunion jobsite about their immigration status and posted an edited version on YouTube and the Local Union’s Facebook page.”

The Chamber’s report was first brought to our attention via an article by Michael C. Schmidt, a member of the law firm Cozen O’Connor.  Mr. Schmidt says the survey raises five important points:

-- Issues before the NLRB aren’t limited to union facilities

-- Overbroad employer policies “apparently have been problematic for the NLRB.  Not everything is inappropriate for a social media policy, and the NLRB will not deem every social media policy to be violative of the law.”

-- “How you handle and seek to resolve whatever action you take will go a long way in determining the outcome of an NLRB complaint.”

-- Firms need appropriate monitoring policies and practices. “There is a big difference between public postings and surreptitious discovery.”

-- “No quick triggers” in reacting to social media events. “Companies still appear to be more sensitive to (and, therefore, more likely to react more quickly to) social media activity.”

The Chamber report summary found the most common social media issues at the NLRB involve “overbroad policies restricting employee use of social media or that an employer unlawfully discharged or disciplined one or more employees over contents of social media posts.”

In addition, the NLRB has examined whether an employer bargained with an existing union over social media policy, as well as union communications involving social media.

The Chamber report noted that the Division of Advice has found in at least six cases that social media posts weren’t protected activities protected by the National Labor Relations Act.   One case involved “mere griping.” In another, “an employee was demoted after posting that he expressed his desire for the employer’s building to collapse during an earthquake while members of management were inside. The region determined that the comments could reasonably be considered to be disloyal and were unrelated to working conditions.”

Eric B. Meyer, an attorney with the law firm Dilworth Paxson LLP, reviewed the NLRB report and concluded, among other things:

-- Except in very limited circumstances, you can’t discipline employees who discuss workplace responsibilities and performance together online.

-- You can’t discipline any employee who seeks input online from a co-worker about a dispute at work.

-- You can’t discipline an employee for clicking the “Like” button on Facebook.

-- You can’t discipline an employee who continues the course of concerted activity that began in the workplace by vocalizing the sentiments of his co-workers online.

We First: How Brands & Consumers Use Social Media to Build a Better World by Simon Mainwaring

Reviewed by Michael Connor

The only thing hotter than social media these days may be the business of writing about it, with pundits by the Google-load now relentlessly analyzing the impact on everyday life of technology platforms like Twitter, Facebook, YouTube and dozens of new social apps that promise to connect us all in ways that we’ve never before imagined.

The same might also be said of corporate social responsibility (CSR), with observers and analysts of that movement sometimes seeming to outnumber true practitioners in the field, speculating on how the world could be a much better place if only companies would try harder.

Combining the two – CSR and social media – can lead one to believe a revolution is just around the corner. The theory seems to be that if one could hit a CSR “reset” button on traditional corporate attitudes toward environmental and social issues – while at the same time inspiring consumer action through millions of tweets and status updates – we’d be well on our way to solving many of the world’s pesky and complicated problems.

We First: How Brands & Consumers Use Social Media to Build a Better World is not the first book to suggest a linkage between digital media and social change.  But author and advertising executive Simon Mainwaring is more forceful than many, making a powerful argument to “temper the excesses of free-market capitalism” before proceeding to outline nothing less than a consumer-driven “comprehensive system to build a better world.”

“The application of We First means that corporations must recognize that they are part of society and have a responsibility to create something more than profit,” Mainwaring writes.  “As for consumers, they, too, need to understand that they play a role in preserving the Earth and helping a better form of capitalism take root by requiring the businesses they deal with to become responsible corporate citizens.”

The We First plan for building a better world has two specific elements.  The first, which builds on fundraising precursors such as 1% For the Planet, is what Mainwaring calls “contributory capitalism,” in which every single consumer transaction for products and services globally “would include a contribution toward building a better world.”  The second element is what he calls the Global Brand Initiative, an association of hundreds or thousands of leading corporate brands working together to put their “collective power and resources” to work addressing some of society’s most difficult problems.

Simon Mainwaring

It’s difficult to imagine this becoming reality.   Then again, CSR was a nascent movement only 10 years ago; WalMart embracing sustainability would have been impossible to imagine in 2001.  And the modern Internet was still being born only 20 years ago, before web browsers were introduced.  Who would have imagined then that democratic movements in countries like Egypt and Tunisia could harness the power of status updates and tweets to help overthrow entrenched dictators?

Social media has its limitations, and Mainwaring acknowledges a phenomenon that critics of these new platforms call “slactivism” – slacker activism – wherein “it is easy to sign up on a fan page for a cause and do almost nothing.”  But Mainwaring says the future will be more complex than that, and he outlines six levels of engagement offered by social media which provide “a complex and rich infrastructure for the activist processes of social transformation.”

The hope, of course, is that such “social transformation” will be positive.  It’s also possible that new forms of media could be employed more nefariously for less desirable social outcomes.

In an interview, Mainwaring admits the challenges are huge. “In the context of being realistic, if consumers do not shift their behavior sufficiently, none of this will happen,” he says. “At the same time, we should not underestimate the engagement of consumers both with social technology and with their responsibility to improve the world that they want in the way that they want.”

“Still, the world we want will not be built by fiber optics, cell-phone towers, or social media platforms,” Mainwaring writes. “It will be created choice by choice, in our hearts and minds, and with our hands.” The process could take many years, he says.  At the moment, “we're at about 3 o'clock on Day One.”

by Jesse Eisinger, ProPublica

Over the weekend, the popular rapper 50 Cent urged his 3.8 million Twitter followers to buy the stock of a microscopic company in Florida. The penny stock jumped 290 percent on Monday. The rapper, who owns 7.5 million shares and warrants for 22.5 million more in the company, had a paper profit that was briefly worth almost $5.2 million on paper.

50 Cent

The company, H&H Imports, sounds like it might be related to the famed maker of New York bagels. No such luck. H&H is a Clearwater, Fla., company that distributes headphones favored by Curtis Jackson, the real name of rapper 50 Cent. It's the parent company of TV Goods Inc., which markets its products through infomercials and the QVC channel, has virtually no revenue ($293,000 in its most recent quarter), and loses money.

"HNHI is the stock symbol for TVG there launching 15 different products. they are no joke get in now," went one promotional tweet from the rapper.

As the Twitter hype (Twype?) wore off, the stock fell from 39 cents to 30 cents a share on Tuesday and a further 4 cents Wednesday morning, meaning 50 Cent gave back just over 290 million cents ($2.9 million dollars). The company has a miniscule market capitalization of $63 million. It traded for 10 cents last week.

Strip away the involvement of a celebrity and the use of social networking and this story bears some resemblance to one of the oldest stock market games around: The pump and dump.

In their classical form, such schemes work this way: Insiders talk up the attributes of a worthless stock (the pump) and then sell when its price jumps (the dump). So far, 50 Cent appears to have avoided violating laws against this sort of behavior because he has not sold H&H stock.

A spokesman for the rapper pointed out that the 7.5 million shares are restricted -- meaning they can't be sold until certain conditions are met. The warrants allow him to buy up to 22.5 million shares, which gives 50 Cent a powerful incentive to talk up the stock. They can only be profitable if the price of H&H rises above certain thresholds. He paid $750,000 for the shares and warrants.

"This kind of stuff has given the SEC headaches for a long time," says Rick Sauer, a former Securities and Exchange Commission attorney who wrote a book about fighting stock fraud at the agency called "Selling America Short." "It's probably OK unless he knew the stock was bad and touted it anyway, which is hard to prove."

An amateur boxer and drug dealer who turned to music after a stint in prison, 50 Cent's most famous record is entitled "Get Rich or Die Tryin'." He is known for his muscular physique and for surviving an attack in which he was shot nine times at close range.

But 50 Cent apparently has little taste for a fight with securities regulators.

Several hours after his first tweet about H&H, 50 Cent tweeted some suspiciously sober cautionary notes. I'm taking a wild guess that they were suggested, though not copy-edited, by a worried lawyer. And the initial promotional tweets were wiped from Twitter, though they live on forever on the web.

Celebrities, often off the B and C lists, seem particularly attracted to penny stock promotions. Or, perhaps more accurately, they are particularly susceptible to offers to shill for stock promoters.

Carmen Electra, the Playboy model turned actress, has made a habit of pitching bulletin board stocks. A few months ago, the SEC sued the guy who played the blond partner of Erik Estrada in the 1970s cop-show ChiPs, charging him with securities fraud. Even Shaquille O'Neal, the NBA star with a massive Twitter following, has promoted a microcap stock that he owned, which subsequently plummeted.

And yes, it's amazing that the penny stock market, a Petri dish of fraud, exists at all. It's caveat emptor all the way.

But is what 50 Cent did really that different from what happens all day long on CNBC when professional money managers take to the airwaves to praise the stocks of companies they already own?

Back in the days of the Internet bubble, the SEC charged a 15-year-old kid, Jonathan Lebed, with engaging in a serial pump-and-dump operation, which netted him hundreds of thousands of dollars.

Michael Lewis, in a famous piece in the New York Times Magazine, argued at the time that there was little distinction between Lebed and the Merrill Lynches of the world. Indeed, a few years later, then-New York Attorney General Eliot Spitzer wrung a $1.4 billion global settlement out of Wall Street for promoting stocks that they privately didn't believe in.

The blurry line between "respectable" money manager and celebrity shill was blurred last Friday, when 50 Cent himself appeared on CNBC. Dutifully, the CNBC host asked 50 Cent for an investment idea. The hip-hop star replied that he was putting his money into Gunnar Optiks, a company that makes glasses that protect eyes from the strain of looking at computer monitors.

Thankfully, Gunnar isn't publicly traded.

ProPublica is an independent, non-profit newsroom that produces investigative journalism in the public interest.   This article is republished with permission under a Creative Commons license.

by James Hyatt

So your company hasn't had an OMG moment over Facebook ethics?

As they say, Good Luck With That.

It has been almost a decade since Congress passed the Sarbanes-Oxley Act in the wake of the Enron, Tyco and WorldCom scandals, seeking to put in place a variety of measures to protect investors and address standards of behavior. Over the years, once-controversial practices about disclosure and ethics have become generally accepted standards.

But the social media explosion - from email and Facebook to blogs and Twitter – is making a hash of once-resolved issues and creating all kinds of new dilemmas.

--Businesses have less and less control over how they communicate with the public, while 24-7 bloggers feel free to snipe away.

--Job seekers find their private lives may no longer be private and employees worry that the boss is electronically looking over their shoulders.

--Consumers can't be sure their account information remains safe and have no way to tell whether favorable on-line comments about products and businesses are legitimate.

--Professionals of all sorts -- psychiatrists, attorneys, school teachers, reporters, and even NFL players – are learning to live with new, often controversial, social media rules. A customer's irate blog can undo months and years of corporate image work. A careless email can sabotage delicate contract talks or M&A negotiations. Failure to protect customer information can result in years of costly litigation. An old party-hearty photo may block a chance at a new job. Hitting “send” without thinking can torpedo an executive’s career.

In just one recent week:

--an email circulating among male employees at the PricewaterhouseCoopers Dublin offices – rating the ‘top 10’ new female recruits, with headshots – quickly went “viral” and drew widespread criticism. (Some tut-tutting newspapers, however, also saw fit to run the headshots as news.)

--an executive at Pacific Gas & Electric in California was put on paid leave after seeking to join, under an assumed name, an online discussion group critical of the utility’s plans to install “smart meters.”

--labor lawyers across the country warned clients that a  National Labor Relations Board (NLRB) office planned an unfair labor practice complaint against an ambulance company for firing an employee who posted negative Facebook comments about her supervisor.

--Britain’s financial regulator, seeking to address insider trading, ordered financial services firm to keep records of employee cellphone calls.

No wonder companies are rushing to build new defenses and adopt new policies to reinforce ethical behaviors and learning how to use social media to react to real-time problems. At the same time, individuals are rethinking their casual attitude about exposing personal information on the Web. And in Washington, government agencies are adopting new guidelines defining acceptable social media behavior.

Defining social media behavior is clearly a work in progress

A year ago, the Society of Corporate Compliance and Ethics and the Health Care Compliance Association looked at what organizations are doing about social media issues. Twenty-four percent of those surveyed said an employee had been disciplined in their organization for activities on Facebook, Twitter or LinkedIn, more often in the not-for-profit sector. But half of the respondents said their organization had no policy regarding employee online activity outside of work.

Technology search firm Robert Half in April asked chief information officers about social networking policies; 38% said their companies have tightened social networking policies, while 17% say the policies have eased. And 55% reported “no change”.

A recent survey by Deloitte of about 1,700 companies found that 26% said they had no social media policy which 34% answered “not applicable/don’t know” even though 84% thought every company should have a social media policy in place.

Your Social Media Profile Can Affect Your Job Prospects

A survey commissioned by Microsoft in December 2009 found that 79% of hiring managers and job recruiters reviewed online information about job applicants, and 70% of U.S. hiring managers surveyed said they’d rejected candidates based on what they found online. “Chances are you already have a reputation online, even if you don’t want one,” Microsoft says.  And three-fourths of the U.S. recruiters and HR professionals said their companies have formal policies requiring hiring personnel to research applicants online.

The survey firm declared that “Now, recruiters can easily and anonymously collect information that they would not be permitted to ask in an interview, and the survey found that recruiters are doing just that.”

Corporate and union attorneys went on alert early in November 2010 when word spread of the NLRB’s unfair labor practices complaint involving the Facebook posting. The NLRB said the company’s social media policies were “overly broad.”  The LegalTimes blog quoted the company as saying “although the NLRB’s press release made it sound as if the employee was discharged solely due to negative comments posted on Facebook, the termination decision was actually based on multiple, serious issues.”

Although an administrative law judge will have to rule in the case, Philadelphia-based law firm Morgan, Lewis & Bockius LLP declared that “all private sector employers should take note of this issue, regardless of whether their workforce is represented by a union.”

You Need a Social Media Policy

Social media behavior “can have real legal and economic consequences for businesses,” writes attorney Michelle Sherman in a Social Media Law Update Blog for law firm Sheppard Mullin Richter & Hampton LLP.

“A post may seem as innocent as an employee expressing a personal opinion.  However, if the person describes herself as working for a particular company, and then speaks on a highly controversial subject, her post could damage the ‘good will’ of the company. Or, the poster may be recommending a product to all of her Facebook friends without sharing that she happens to work for the product manufacturer in violation of fair advertising practices.”

Sherman says adopting a social media policy can show compliance with Federal Trade Commission guidelines about endorsements, and can better protect brand value “by ensuring that employees do not post unflattering material in association with the business.”

One of the most remarkable studies is the 130-plus-page Social Media White Paper, now in its second edition, prepared by Reed Smith LLP.  The paper review 13 areas where social media is impacting business – from advertising and marketing to trademarks – and declares “the key lesson is that rather trying to control, companies must adopt an altered set of rules of engagement.” Well worth a visit.

It has become increasingly common for major companies to issue specific directives on social media behavior.  While most encourage employee efforts to put companies in a positive light, they also spell out acceptable conduct. For example:

(Wells Fargo): “By posting content on this Blog, you expressly grant Wells Fargo (and its affiliates) the right to use or distribute the posted content in any form, worldwide, and in perpetuity.”

(Kaiser Permanente): “Be mindful of the world’s longer memory – Everything you say is likely to be indexed and stored forever, either via search engines or through bloggers that reference your posts.”

(FedEx): By posting to the FexEx Citizenship Blog “you agree not to post or transmit anything unlawful, threatening, libelous, defamatory, obscene, inflammatory or pornographic, or anything that infringes upon the copyright, trademark, publicity rights or other rights of a third party.”

(Mayo Clinic): “Where your connection to Mayo Clinic is apparent, make it clear that you are speaking for yourself and not on behalf of Mayo Clinic. In those circumstances, you may want to include this disclaimer: ‘The views expressed on this [blog; website] are my own and do not reflect the views of my employer.”

(Microsoft): “As a general rule, Microsoft does not review, edit, censor, or, obviously, endorse individual posts. You should ‘be smart’ and, as an employee of the company, you should not only think about how your blog reflects on you as an individual, but also about how your blog affects Microsoft as a whole.”

Concerns go well beyond defining proper behavior and move into legal areas. FINRA, the successor to the National Association of Securities Dealers Inc., stresses that social media postings can violate industry rules about promoting investments and soliciting customers. FINRA says securities firms should take steps to be sure that employees using social media sites for business are “appropriately supervised” and “do not present undue risks to investors.”

The Social Media Business Council, a group of large companies that explore social media issues, posts a free “Disclosure Best Practices Toolkit” online suggesting checklists to help companies and employees “learn the appropriate and transparent ways to interact with blogs, bloggers, and the people who interact with them.”

It makes recommendations on how to deal with bloggers, on how employees should handle personal and unofficial blogging, on how to be transparent in providing rewards or incentives to bloggers, on best practices for third parties acting on behalf of a company, and on best practices for “artistic/entertainment situations where temporarily obscuring the sponsor of a site is necessary and appropriate.” For instance, it is okay to use a pretend blog where someone writes that they may have discovered aliens in their house to promote a science fiction movie. But it is not okay to create “a fake customer blog where the ‘author’ writes: ‘I’d love to go see this movie.’ “

This is the first of a two-part series.   The second part is available here.

James Hyatt, a retired reporter and editor for The Wall Street Journal, has been writing about business ethics and social responsibility issues since 2005.

In this second-part of a two-part series, James Hyatt surveys some of the approaches toward social media challenges being pursued by government, corporations and a wide variety of business professionals.  The first part of the series is available here.

by James Hyatt

While businesses sort out their social media policies, many federal agencies are wading in to referee the online world.

--The Obama Administration, through the Commerce Department’s National Telecommunications and Information Administration, is drafting what it calls “Internet Policy 3.0,” to address several issues including privacy and cybersecurity.  One proposal: Fair Information Practice Principles, which an official says would be “the information privacy framework in the United States to clarify how personal data on the Internet is protected.”

--The Federal Trade Commission in April moved up its review of the Children’s Online Privacy Protection Rule to see if changes are needed; the rule requires operators of Web sites and online services that target children under age 13 to obtain verifiable parental consent before they collect, use, or disclose personal information from children.

--The Food and Drug Administration’s division of Drug Marketing, Advertising, and Communications expects to begin issuing as early as December 2010 guidance on a series of social media issues faced by the pharmaceutical industry, such as how manufacturers can address misinformation listed on a third-party site.

-- Last December, the Federal Trade Commission revised its guidelines on use of endorsements and testimonials in advertising. Among other changes, the revisions declare that celebrities should disclose their relationships with advertisers “when making endorsements outside the context of traditional ads, such as on talk shows or in social media.”

--The Defense Department in February took steps to open up social media links to members of the armed forces, and notes thousands of Facebook, Twitter and other page have been registered. Failing to obtain the “chain of command’s approval, well that’s not good – plain and simple,” the DOD says.

--The Securities and Exchange Commission has encouraged public companies to expand shareholder and public communication through use of the Internet; the policy has led to some controversy over how a company goes about releasing financial information promptly and widely.

Microsoft in October said it would begin using its Investor Relations Web site as the “authoritative portal” for financial and other information, and no longer use financial newswires.  The move prompted Business Wire, owned by Berkshire Hathaway Co., to label the move “a textbook example of ‘worst practices’ investor relations.”  Business Wire, of course, derives much of its revenue from disseminating corporate press releases. Business Wire Chairman and CEO Cathy Baron Tamraz pointedly concluded: “There’s a large investor in Omaha who doesn’t want to be checking hundreds of websites minute-by-minute throughout the day.  But then again, who would?”

Can I buy a social media fix?

As might be expected, the social media commotion has prompted a wave of products and services intended to help businesses cope with the challenges – much like the trend I chronicled five years ago in the wake of Sarbanes-Oxley.

Cisco Systems Inc. in early November unveiled Cisco SocialMiner, software designed to monitor in real time “status updates, forum posts, or blogs from customers…alerting enterprises of conversations related to their brand.” Cisco said with 34% of online Americans having used Facebook, Twitter “or other social media to rant or rave about a product, company or brand,” businesses need to be aware of what customers are saying and “respond to general inquiries or rectify customer service issues so as to enhance and protect brand reputation.”

And Cisco introduced a “rich media capture platform that supports the recording, playback, live streaming and storage of media, including audio and video” to capture, preserve and mine conversations for business intelligence.

(Cisco’s Facebook page in mid-November had 113,862 “friends”.)

Or consider ReputationDefender, a service that “controls how you look when someone Googles you or your business.” The MyEdge Pro product is “proven to increase positive content and actively combat false, misleading or irrelevant Google results for businesses and business owners including doctors, lawyers, executives, contractors, real estate agents – anyone whose business depents on their reputation.”

For $9.95 a month, another of the company’s products, MyPrivacy, will remove personal information from the web, monitor the Internet, and create a “do not track” list for you at over 100 online networks.

TextGuard provides a service to let businesses record telephone conversations and voicemails on company mobile devices; financial regulators increasingly are requiring that companies keep a record of such communications.

And companies with a long history of document storage and research services are expanding into the wired world. Xerox Litigation Services, which hosts more than two billion pages of data for 20,000 clients, last year added its “E-mail Analytics” service to help aid investigations and help companies respond to requests in legal cases. Xerox said more than 70% of the data it hosts is in email.

Hello Sweetheart, Get Me Twitter

Journalism is awash in hand-wringing over social media issues. Reporters debate using Facebook and Twitter in chasing down story ideas; editors worry about how to link online material to other web sites; and readers wonder about how reliable “news” they see on the web really is.  (A photo of a tornado passing the Statue of Liberty, widely circulated in September when a storm hit the New York City area, turned out to be from 1976.)

Washington Post managing editor Raju Narisetti in October reminded newsroom employees not to use social media accounts to “answer critics and speak on behalf of the Post.” The reminder came after a staffer apparently fired back at critics of a piece the paper had published.

Many major media organizations have revised and reissued their ethical codes to address the concerns.

For example, Reuters’ guidelines on “Reporting from the Internet” stress that “discovering information publicly available on the web is fair game. Defeating passwords or other security methods is going too far.”  And, “do not use anything from the Internet that is not sourced in such a way that you can verify where it came from.”  Wikipedia “can be a good starting point for research, but it should not be used as an attributable source,” Reuters declares.

National Public Radio in October reminded news staff members that “NPR journalists may not participate in marches and rallies involving causes or issues that NPR covers,” and pointedly noted the restriction included the Jon Stewart and Stephen Colbert rallies in Washington. And, the memo added, “you must not advocate for political or other polarizing issues online.”

Doctors have their own social media issues; some have abandoned use of Facebook and other venues, deciding the risks of give-and-take with and about patients is too great a threat to privacy. A California psychologist writes that “casual viewing of clients’ online content outside of the therapy hour can create confusion in regard to whether it’s being done as a part of your treatment or to satisfy my personal curiosity.”

Dr. Arthur R. Derse of the Medical College of Wisconsin, in a recent AMA Ethics Forum column, writes “an online consultation using social networks can go wrong in myriad ways. The dissemination of patient information in an electronic form to an open forum is fraught with risk.”

And medical students can be just as thoughtless as other students in their social media use. The Journal of the American Medical Association last year surveyed medical schools and found and 47 out of 78 schools reported “incidents of students posting unprofessional online content,” including violations of patient confidentiality, use of profanity, discriminatory language, depiction of intoxication and sexually suggestive material.  And the survey found 30 schools had informally warned students and three had dismissed students.  But only 28 out of 73 deans queried said their schools had policies about student-posted online content.

Co-eds Google Their Dates. What about Lawyers and Litigants?

The answer seems obvious: somebody sues you – see what they’ve been up to online. Not so fast.

Legal ethics committees in New York and Pennsylvania have addressed the question. In Pennsylvania, an attorney wondered whether a third party could “friend” a witness.  The committee said no, calling such a step deception by not revealing the purpose to obtain information for use in a lawsuit.

In New York, the question was whether a lawyer could access a public website.  The committee said okay, so long as the profile is generally available and the lawyer doesn’t “friend” the other party.

Currently, there are challenges to trial decisions because a juror tweeted during the trial, and debates over letting reporters tweet from the courtroom (some states permit it, federal courts generally oppose). A North Carolina judge was reprimanded for “friending” defense counsel and discussing a pending case with the judge (considered improper ex-parte communications).  And many states are instructing jurors against using social media while hearing cases. “The information you are accessing is not evidence,” declares a model jury charge in New Jersey.

“Let’s Go to the Videotape!” – Not So Fast

The sports business presents a particularly curious set of ethical issues over social media.

Networks, which pay huge sums for exclusive rights to broadcast sporting events, are finding it hard to keep control over the broadcasting of live sporting events. They don’t want sportswriters using their content via the Internet and cellphones.

The New York Yankees ban fans from bringing video cameras and laptop computers into Yankee Stadium.  The Washington Redskins have banned writers from tweeting or blogging while watching practices.  The National Football League bans players and coaches from using social media such as tweeting for 90 minutes before, during, or some a time after a game.

Sports broadaster ESPN last year temporarily suspended popular “Sports Guy” columnist Bill Simmons for criticizing an ESPN radio station partner on Twitter. ESPN earlier had issued a policy prohibiting reporters and writers from discussing sports on social-networking sites.

The NCAA tries to keep coaches and schools from using social media outlets in recruiting.  While they can advertise their programs online, they’re prohibited from using a site “for direct person-to-person contact with an individual potential student-athlete.”  However, signing on as a “friend” doesn’t count as direct contact, the NCAA says. (Indiscrete Facebook entries by partying athlete recruits this year has led to legal investigations.)

This is the second part of a two-part series.   The first part is available here.

James Hyatt, a retired reporter and editor for The Wall Street Journal, has been writing about business ethics and social responsibility issues since 2005.

Imagine that you're the CEO of a Fortune 500 company, running a multi-billion dollar organization with its many moving parts. One day your Google alert shows an article stating that your company's operations in Asia are employing child labor, with young children working long days in harsh conditions. By the next morning there are 62 articles and 305 mentions of this story. By afternoon there's a Facebook boycott with 10,000 fans. The Twittersphere has lit up with Tweets and hashtags like #slavelabor, #boycott, and #savethechildren--terms that are now unfortunately tied to your brand. You've been "Inter.outed," a term used to describe how a company is "outed" on the Internet for doing very bad things.

We've all heard the horror stories about how brands can be derailed through negative social media. Remember the Domino's Pizza nose-picking YouTube video, and "Motrin Mommies" digital disaster? Recently, The Gap was caught with its khakis down in a logo design backlash. In less than 48 hours of social pressure, the Gap withdrew its new logo. There are also more serious examples. Whole Foods suffered a Facebook, Twitter, Flickr, and YouTube boycott as well as bloggers who labeled them "A-Hole Foods" after the CEO stated that not everybody deserves health care. BP now has a worldwide Facebook boycott of more than 600,000.

While these boycotts can damage a brand, until now business has not yet experienced the full force of Internet vengeance. There exists certain lawlessness on the Web, and individuals are only starting to understand the mighty influence they wield when they mass together in groups. Internet communities are still in their infancy, and users have yet to grasp the full depth of the power they have on the Web.

The New York Times reported on "cyberposses" in China, who dole out online vigilante justice by hunting down and punishing people. Internet vigilantism is often activated not for illegal behavior, but for socially reprehensible behavior. "The Kitten Killer of Hangzhou," for example, became the target of cyber sleuths who tracked her down and outed her. She lost her job, her apartment, and was made to leave town.

It's not much of a stretch to imagine that Internet vigilantism will soon cross over from individuals to organizations. Social activists use every media channel available to express disapproval for unfair or dishonest business practices. Users could easily turn to online vigilantism to punish companies that have attracted their wrath. The web is a great repository for track records, and has a long memory. If resentment over exorbitant Wall Street bonuses juxtaposed against illegal housing foreclosures ever boils over, vigilante groups could easily launch cyber-attacks on the banks they deem responsible. If a company employs sweatshop labor, is toxic to the planet, or mistreats its employees, tech-savvy users can crash servers, take down websites, and disrupt e-commerce business. Moreover, they can wage a ferocious battle for the hearts and minds of consumers to damage brand reputations.

So what is a CEO to do?

In this brave new world, CEOs need to prepare for the era of total transparency. Here are five steps a company can take to protect itself by strengthening its relationship with stakeholders:

• Clean house. Make sure your company is acting in good faith with customers, partners, and suppliers.

• Examine the supply chain, and make sure you are in compliance with all environmental and employee issues.

• Elevate your corporate social responsibility (CSR) programs to front and center. Integrate socially responsible initiatives directly into the core DNA of your company.

• Humanize your brand. Use Twitter, LinkedIn, and blogging to address issues directly, take user concerns seriously, and respond quickly and thoughtfully with no marketing spin.

• Always tell the truth.

On the web, all transgressions are trackable, and no corporate misdeed will ever be forgotten. Companies must embrace the new culture of transparency for survival, since Netizens are willing to fight hard for anything they believe in--even if it's just a logo.

Ann Charles is CEO of BRANDfog, offering social media and Corporate Social Responsibility strategy for CEOs, and founder of The Great Leaders Conference, celebrating Great Leaders in CSR, Social Advocacy and Sustainability.

by Deanna Zandt

Reviewed by Michael Connor

On Tuesday of last week, U.S. basketball superstar LeBron James opened a Twitter account in anticipation of his wildly-hyped announcement regarding which NBA team he’d be playing for in coming years.  By noon Wednesday, James reportedly had 235,000 followers on Twitter.

James did well, but he’s still a far cry from basketball’s Shaquille O’Neal, who is nearing the 3-million mark in terms of Twitter followers.  And both ballplayers trail entertainers Britney Spears (with 5.28 million Twitter followers), Ashton Kutcher (5.21 million), Ellen DeGeneres (4.28 million) and Lady Gaga (4.81 million).

To Deanna Zandt, a media technologist and consultant to progressive media organizations, while huge numbers like that may constitute success for mass media icons and idols, they mask the real potential of social media networks like Twitter and Facebook to change the world.

“So-called popularity does not make these folks automatically interesting or relevant,” she writes in her new book, Share This! How You Will Change the World with Social Networking. “Bigger used to be better, but now effective is better.”

Whether it be parents of students in Palm Beach County, Florida, successfully organizing a Facebook page to protest new academic programs, or the 2008 Obama campaign’s masterful use of social media to organize and fundraise, Zandt says the point is the same: “How we share information, find community, and both connect and disconnect will give us unprecedented influence over our place in the world.”

Facebook now claims more than 400 million active users, with more than 50 percent of those users logging in on any given day.  Earlier this year Twitter was estimated to have 75 million accounts, though reports indicated a slowing in growth of new accounts.

By connecting disparate individuals across great distances, social media networks represent a dramatic change for institutional authority.  “It’s turning a whole lot of institutions – businesses, legislative bodies, traditional media – upside down,” Zandt  says.

And while she acknowledges an important ongoing role for old-fashioned newsgathering, Zandt argues that social networkers have a hard time “tolerating the old demands of one-to-many messaging – ‘This is what’s good for you, and you’ll just have to trust us.’”

But the social media revolution hasn’t yet arrived for millions of Americans, Zandt notes, largely because high-speed Internet is not available to them.   While 63 percent of all Americans now have broadband Internet service, for example, only 46 percent of African-American homes do.

And that disparity highlights a critical danger for social media. “Diversity in the social network sphere is critical for generating fresh perspectives on old problems, to help us avoid replicating on the Internet what we’ve done for hundreds of years – marginalizing or otherwise ignoring voices that can share ideas for systemic change,” Zandt writes.

If you’re a skeptic who wonders why there’s so much noise these days about Facebook and Twitter, this book will challenge your thinking. While Zandt explains upfront that she does not mean it to be “the End-All-Be-All Activist’s Guide to Fixing Everything with Social Networking,” she does a good job of explaining enough of the nuts-and-bolts to make you appreciate the current reality as well as the potential of social media networks for achieving social justice (as well as spreading the news that LeBron James is headed to the Miami Heat).

“The commitment to sharing our experiences with one another supports and strengthens our bonds,” Zandt says, “and we are our own best hope for changing the world.”

There’s no “I’m feeling lucky” button to hit in the escalating Google-China dispute.

At noon March 22, Google posted on its Official Blog an update about “A new approach to China,” indicating that China’s behavior toward human rights activists and other efforts “to further limit free speech on the web in China” had led Google to stop censoring its search services on the Google.cn site. and instead redirect traffic to its Hong Kong-based servers.

“Users visiting Google.cn are now being redirected to Google.com.hk, where we are offering uncensored search in simplified Chinese, specifically designed for users in mainland China.”

Google further explained:

"Figuring out how to make good on our promise to stop censoring search on Google.cn has been hard. We want as many people in the world as possible to have access to our services, including users in mainland China, yet the Chinese government has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement. We believe this new approach of providing uncensored search in simplified Chinese from Google.com.hk is a sensible solution to the challenges we've faced—it's entirely legal and will meaningfully increase access to information for people in China. We very much hope that the Chinese government respects our decision, though we are well aware that it could at any time block access to our services. We will therefore be carefully monitoring access issues, and have created this new web page, which we will update regularly each day, so that everyone can see which Google services are available in China.”

Google's announcement followed weeks of speculation about its future course in China.   In January, the company announced that it had been the victim of cyber attacks aimed at gaining access to the email accounts of Chinese human rights activists.

The U.S. government seemed to line up squarely behind Google, with Secretary of State Hillary Clinton urging other American technology companies to make a "principled stand" on attempts at Internet censorship.  In February, U.S. Senator Dick Durbin sent letters to 30 information and communications technology companies - including Apple, Facebook, Skype and Twitter - seeking information about their human rights practices in China.

Google said it intends to continue R&D work in China and to maintain a sale presence there, though its activities would be partially dependent on the ability of mainland Chinese users to access the .hk site.

Blocking Key Words

The announcement prompted China to declare, through its Xinhua news agency, that Google has “violated its written promise” and is “totally wrong” by stopping censoring its Chinese language searching results and blaming China for alleged hacker attacks.

It quoted an official in charge of the Internet bureau under the State Council Information Office as saying: “We're uncompromisingly opposed to the politicization of commercial issues, and express our discontent and indignation to Google for its unreasonable accusations and conducts."

The official said the government had met twice recently with Google to discuss the issues and told the company “we would still welcome its operation and development in China if it was willing to abide by Chinese laws, while it would be its own affair if it was determined to withdraw its services.”

A separate signed article declared that “Google is politicalizing itself” and said “no country allows unrestricted flow on the Internet of pornographic, violent, gambling or superstitious content, or content on government subversion, ethnic separatism, religious extremism, racialism, terrorism and anti-foreign feelings.”

China deploys a vast bureaucracy to impose censorship on the nation’s nearly 400 million Internet users.  The country is able to block web transmissions containing material using key words considered offensive, unpatriotic or dangerous and block user access to web servers.

Some topics are deemed particularly sensitive. According to a 2007 analysis prepared by a Chinese technician for Reporters Without Borders and the group Chinese Human Rights Defenders, any words associated with the 1989 Tiananmen Square massacre of pro-democracy students – such as “unrest,” “rioting,” “massacre” and”uprising” and even the date “1989.6.4” have been banned from the Internet.

And the country frequently bans newspaper and web articles involving official corruption, criticism of the government, or exposes of local health and safety problems.

Google has tried to tread a fine line in its Chinese operations, seeking to tap a vast market while trying to operate under Chinese constraints.

Shares of Chinese search company Baidu have risen about 50% since Google indicated earlier this year that it might leave the country.

Chinese officials have insisted the dispute wouldn’t change the country’s policies toward Western investment.

Photo: " Illegal Flower Tribute," January 2010, by Xhacker.  Courtesy Wikimedia Commons.

Durbin’s initiative follows Google’s announcement that it had been the victim of cyber attacks aimed at gaining access to the email accounts of Chinese human rights activists. Google has said it is considering pulling out of China because of the attacks and what the company called “attempts over the past year to further limit free speech on the web.”

Only two weeks ago, U.S. Secretary of State Hilary Clinton called on American technology companies to make a “principled stand” against attempts at censorship.

Sen. Durbin, Chairman of the Judiciary Subcommittee on Human Rights and the Law, said his hearing next month will feature testimony from Google and other companies about their business practices “in internet-restricting countries,” as well as from high-ranking Obama Administration officials about the Administration’s efforts to promote internet freedom.

“I commend Google for coming to the conclusion that cooperating with the ‘Great Firewall’ of China is inconsistent with their human rights responsibilities,” Durbin said. “Google sets a strong example in standing up to the Chinese government’s continued failure to respect the fundamental human rights of free expression and privacy. I look forward to learning more about whether other American companies are willing to follow Google’s lead.”

Durbin’s letter asks each firm for details of its business in China, and what, if any, measures it will implement to ensure that its products and services do not facilitate human rights abuses by the Chinese government.

This week’s letter also follows up on a letter that Durbin sent last year, urging technology firms to join a voluntary code of conduct known as the Global Network Initiative (GNI). The code of conduct, which regulates the actions of technology firms operating in countries that restrict the internet, has been backed by Google, Microsoft, and Yahoo! and a number of leading socially responsible investment firms.

Durbin’s office said the list of companies that responded to his previous letter included Apple, AT&T, Cisco, Dell, eBay, Facebook, HP, McAfee, News Corp, Nokia, Nokia Siemens, Siemens, Skype, Sprint Nextel, Verizon, Vodafone, Websense.

According to Senator Durbin’s office, companies that did not respond to his previous letter were Acer, Juniper, Toshiba, Twitter; companies that “partially responded” to his previous letter were Fortinet, Lenovo, Motorola.