Employees, Social Media, and Apparent Authority

Posted September 23, 2010 in Internet Law by Arthur Buono

Like Mashable, we’re completely down with unleashing employees’ social media potential. We’re employees, we use social media to get jobs done, we hate leashes, we want to be HEROes. We need to be mindful though that social media as business tool has some unplumbed implications for at least a few legal concepts, including actual, apparent, and implied authority.

     
  • Social media making employees more productive, creative
  • More employees interact with more third parties via social media
  • Social media may lend apparent authority to unauthorized acts of employees

 

Apparent Authority Conferred by Social Media

Actual authority is just what it says. It’s the authority the company has in fact granted an employee (or other agent). An employee has actual authority to bind the company to a promise or obligation that’s within the scope of that authority. This is also called express authority. Implied authority is a legal conclusion. This is the authority to do things incidental to the express authority an employee has. Usually everybody understands and agrees what these incidental, customary, or reasonable powers are. Occasionally a company can be unpleasantly surprised by implied authority’s reach. So far though, everything’s pretty cool.

Apparent authority is also legal conclusion, a conclusion that’s almost always bad for the company. A company is also bound by an employee acting with apparent authority. An employee gets apparent authority two ways. One is purposefully, which is usually a function of fraud and is not our concern here. A company can also confer apparent authority on an employee negligently, and this is what business counsel must keep an eye out for.

Social media lets so many more of your employees become customer, client, or prospect-facing. Most third parties understand that a lower-level employee can’t bind the company by what the employee says or does. This holds true whether dealings are face-to-face or via social media generally. What happens though when a company has a specific, purposeful policy of unleashing and empowering its employees via social media? What if the social media platforms it uses are company-sanctioned and/or controlled? What if the company has let itself be bound in the past by the actions of some of its employees in social media? Won’t then the action of an unauthorized employee on that platform be equally binding on the company?

The answers to some of these questions are yet to be written. Businesspeople and their counsel should be thinking about them. A lot’s been made already about the reputational risk employee social media activities run. Now’s the time to get out in front of the legal risk employee social media use entails.

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