QUERY: Can our company be held liable for an employee’s email communications?

RESPONSE: The following material is found in Ceridian's HR Compliance Reference System:

Online Defamation, Slander, and Trade Libel

The advent of electronic communication via email and voice mail has increased the potential for defamation, slander, and trade libel or disparagement of co-workers, customers, vendors, and competitors.  Electronic communications tend to be more casual, more subject to misinterpretation, and distributed to a much wider audience than other modes of communication.  In addition, there is also often a stored record of the message, making it much easier to establish the existence of the statement.

In light of the inherent dangers associated with electronic communications, the potential for defamation liability arising out of such communication cannot be ignored.  To succeed in a claim of defamation, a plaintiff must normally prove that the defendant made a false statement, published it to a third party, negligently failed to ascertain the truth of the statement, and caused injury to the plaintiff’s reputation.  An employer may be liable for defamatory statements made by its employees if the statements were made within the scope of employment.  Given this broad standard, it is easy to imagine scenarios in which email communications may give rise to defamation lawsuits.

Electronic communication may also expose an employer to potential liability for trade libel or disparagement, which is unlawful in most states.  Trade libel or product disparagement has been defined as “an injurious falsehood that demeans the plaintiff’s goods or the character of his business.”  The risk of liability for trade libel or product disparagement is especially great if employees transmit email messages concerning customers, vendors, and competitors through public email networks.  If a poorly drafted message falls into the wrong hands, the employer may well face substantial liability for trade libel or product disparagement.  Thus, employers should strictly limit the use of email and voice mail systems and train employees to recognize the risks associated with such forms of communication.