Social media policies under continued NLRB scrutiny but insurance impact minimal

Ann Longmore likes to play a game during seminars and conference panels she’s invited to be on.

Longmore, managing director of Multinational FINPRO North America at Marsh & McLennan, enjoys asking her audience to predict the outcome of social media-related opinions from the National Labor Relations Board.

“I’ve yet to find anyone who can predict these cases,” she said. “But the good news is, at least [the NLRB] are pretty transparent.”

The NLRB periodically releases opinions, providing examples of permissible and unlawful employer policies but the “line is very fine,” added Longmore.

As an example, the NLRB said it was unlawful for an employer to terminate an employee who posted a vulgar, obscenity-laced statement about his supervisor and his supervisor’s family on social media since it is not a violation of the company’s harassment policy because it did not expressly prohibit vulgar or offensive language.

Though the NLRB’s opinions are difficult to forecast, the independent agency of the government “owns this space right now,” Longmore said of cases related to social media policies.

“Courts are relying on the NLRB rulings and companies are changing internal policies and procedures depending on how they come down on a case,” Longmore said.

Though social media policies are clearly on the NLRB’s radar, the insurance industry has yet to absorb losses from Employment Practices Liability Insurance (EPLI) claims related to social media even though some insurers are offering social media endorsements.

Such action would typically indicate enough losses to warrant an extraction of coverage from the EPLI policy in favor of separate endorsements. However, there has yet to be a barrage of claims stemming from alleged social-media offenses. Severity has yet to be an issue because claims are one-offs, not class-actions seeking punitive damages.

Bennett Pine, a shareholder in the Newark and New York offices of law firm Anderson Kill, said his office has fielded a number of cases in which employees made alleged disparaging remarks about their employer on social media, and the firm was in the process of examining an EPLI coverage extension for wrongful Internet activity.

Social media, he said, is “increasingly part of any EPLI claim, as it is increasingly a part of anyone’s life.”

Phil Norton, national managing director for the Management Liability Practice at Arthur J. Gallagher said he has seen some claims but nothing significant. “There is no trend,” he said, adding that the social-media endorsements “are real but it’s hard to the measure the value.”

Sources including Laura Zaroski, vice president of Management & Employment Practices Liability at Socius Insurance Services, said some endorsements offered in the market are sublimited—meaning policyholder may have less coverage than many think is already available in the EPLI policy.

Yes, sources unanimously said claims related to social-media are already covered. Harassment, discrimination, retaliation, libel, defamation, and violation of privacy are covered no matter the medium.

“EPLI does not care is if these are verbal, written, faxed…it doesn’t matter,” said Richard Betterley, president of Betterley Risk Consultants.

The fact is, sometimes carriers like to trumpet a “shiny new thing” and are eager to get a perceived leg up on the competition—even though “everyone knows it doesn’t really matter” in terms of differentiating coverage. After all, EPLI is now a mature, well-understood coverage without a whole lot of evolution, he said.

Longmore said EPLI policies are silent on the issue, are beginning to clarify exactly what is covered, or offer endorsements with sublimits. She called these endorsements “troublesome” and does not recommend them.

Norton said some carriers have started to expand its list of perils to include cyber bullying.

Whether or not social media has generated the types of insurance claims to warrant attention, employers are interested in avoiding action from the NLRB and are watching and carefully reviewing employee handbooks based on recent opinions. Unlawful policies may violate the National Labor Relations Act and any action an employer might take against an employee who has supposedly violated company policy needs to think twice.