Inappropriate social networking activity — even outside of the workplace — can lead to serious discipline for employees and, lawyers say, financial advisors could face particularly harsh punishments in this area.

A handful of recent legal decisions have shown that employers have the right to terminate employees for posting comments on blogs or social-networking websites such as Facebook, in cases in which the comments expose confidential information or have an impact on the employer’s reputation or work environment.

In late October, the British Columbia Labour Relations Board upheld an employer’s decision to terminate two employees of an automotive detailing and accessory shop for posting inappropriate work-related comments on their personal Facebook profiles. In West Coast Mazda (d.b.a. West Coast Detail & Accessory Centre) and UFCW Local 1518, the Facebook comments included negative remarks about the quality of products sold at the shop and degrading and derogatory remarks about the employees’ supervisors and co-workers.

As one of the first cases in Canada in which employees have been fired for Facebook activity outside of the workplace, this case sets a precedent for future disputes, says James Heeney, partner with Toronto-based employment-law firm Rubin Thomlinson LLP.: “If you use social-networking sites and the result is that it causes some damage or potential damage to your employer, there’s going to be consequences in your workplace.”

The decision in Mazda is not the only example of employers finding support from the law when it comes to firing employees for inappropriate use of the Internet. In an Ontario decision from 2007, an arbitrator upheld the termination of a personal caregiver who had posted confidential information about her work on a personal blog. And in 2009, an Alberta arbitrator backed an employer that had fired a woman for using her personal blog to post contemptuous comments about her co-workers and managers.

Although similar cases haven’t yet emerged in the financial services industry, Heeney says, financial advisors who post inappropriate information on social media websites could be subject to even harsher sanctions than employees in other industries: “Investment advisors or accountants or lawyers are held to a higher standard because of the obligations of confidentiality and the policies relating to acting in the best interest of [their] clients. In cases [in which] there’s a breach from an investment advisor, it’s likely that the discipline imposed could be more severe than it would be for any other employee.”@page_break@Heeney says advisors should avoid posting any comments on their personal social-networking profiles relating to clients or any potentially sensitive information about their jobs or their firms: “Anything that would breach confidential information is one area in which the court is paying attention.”

Many users of social media don’t realize that information they post online can be copied, forwarded and quickly circulated among a much larger audience than they had anticipated, Heeney warns. In the recent case in B.C., the Labour Relations Board determined that there’s no reasonable expectation of privacy when comments are published on Facebook. The board ruled that the employees’ Facebook comments were damaging to the employer’s business and reputation, and had led to a hostile working environment.

As a rule of thumb, Heeney suggests, financial advisors should post online only information that they’d be willing to include in a formal letter.

In some cases, firms have policies that outline the scope of allowable use of social media by employees. Lawyers highly recommend that firms develop such policies, actively communicate them to employees and enforce them.

These policies should include concrete examples of information that is or is not acceptable for employees to post online and consequences for employees who don’t follow the rules.

Having this type of policy in place makes it easier for employers to take disciplinary action against employees who break the rules, Heeney says: “By articulating to people the standard that you’re asking them to uphold, then if people breach that policy, it’s going to be far easier to discipline them.”

However, most financial services firms have yet to develop a policy on social media. Winnipeg-based Investors Group Inc., for instance, does not have a specific policy but urges advisors to follow certain best practices in their online activity. For example, the firm encourages advisors who are active on social media websites to keep separate profiles for personal use and business purposes.

“The best practice is that you have a separate business web page for talking about work-related matters and for promoting your business,” says Neil Taylor, vice president of national and area marketing and community affairs with Investors Group. “We suggest people follow that best practice.”

Investors Group also reminds advisors to use common sense when posting information online. Says Taylor: “We just suggest that they are thoughtful about it, and use good judgment.”

Firms that don’t have a policy on social media can still pursue disciplinary action against employees who engage in inappropriate online activity. Heeney explains that employees have an implied obligation under the law to act in the best interest of their employer, even outside of the workplace. IE