Employer Beware: You may be responsible for your employees’ endorsements and testimonials

For the first time in nearly thirty years, the guidelines for the use of endorsements and testimonials in advertising have been amended by the Federal Trade Commission (“FTC”). The new rules, which took effect on December 1, 2009, require that employees, who wish to endorse the products or services of their employer, must openly “disclose” the employment relationship within the text of their testimonial(s).The FTC hopes that requiring disclosure will discourage the posting of false and/or unfairly biased testimonials. Thus, if an employee publicizes an endorsement without proper disclosure, their employer could face liability under Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices in the marketplace. Fortunately, an employer can mitigate much of the risk associated with these new guidelines by taking the following, preventative measures.
First, employers can protect themselves by updating their technology usage policies to cover their employees’ use of the myriad of available online communication forums. In other words, everything from social networking sites to personal blog accounts ought to be included under the employer’s technological terms and conditions.
Second, employers should determine whether or not they want to permit their employees to openly discuss the products or services offered by the employer. This decision should be made by weighing the potential harm of “bad press” against the potential advantages that could arise from added positive exposure. Regardless of whether the employer decides to encourage or restrict public disclosure of their employees’ opinions, it is pivotal that the employees be made aware of the policy being instituted.
Third, if an employer decides to permit their employees to openly express themselves about the employer’s goods or services, the relevant policies should also inform employees about the FTC’s new disclosure requirement. Moreover, an employer can protect his or her business interests by disclaiming the endorsement of any employee opinions. Finally, by following this simple course of action, employers can reduce risk while opening up new avenues for business growth and opportunity.