EMPLOYEES' PRIVACY VERSUS WALL STREET

Recently, several states have begun to enact laws that prohibit companies from monitoring their employees' personal social media accounts.  The impetus of this spate of legislation was to protect an individuals' privacy and to stop companies from asking for an employee's social media passwords.    

Last year, California, Illinois, Maryland, and Michigan adopted social media privacy laws.  Utah's social media privacy law took effect this month.  Thirty-five other states have similar privacy laws at various stage of the process.  Those who support these social media privacy laws say that the laws are necessary to protect employees--even when the employer may be the subject of social media messages made using an employee's personal account.  They say that giving employer's access to an employee's social media accounts is akin to asking to review the employee's photo albums on a regular basis, or listening in to his/her conversations. 

Securities regulators are seeking to create exemptions to state laws that allow certain financial firms to sidestep bans on looking at personal social media accounts of employees.  According to the Financial Industry Regulation Authority (the Wall Street authority that regulates Wall Street), financial firms need to follow up on "red flags" indicating that an employee is misusing his/her personal account.   Apparently, FIRA fears that employees will provide financial advice on Facebook or Twitter which would lead to an unregulated and unchecked avenue for these employees to create Ponzi schemes and other frauds.  Of course, the SEC recently issued a new guidance that allows companies to use social media to disseminate market information.  The privacy right protection laws promulgated by the states would prohibit or hinder efforts to monitor and regulate those schemes. 

The legislation does provide an exception when the company may be under an investigation for alleged employee misconduct.  There is also a question as to whether the Federal regulations allowing for monitoring of communications by securities sellers and the like preempts the state privacy laws.  Whatever the ultimate outcome between these competing interests, it is clear that the state of the law will be unclear for quite a while.