Business 10th Edition by Ferrell,Geoffrey Hirt,Linda Ferrell

Exercise 28

Employee Privacy or Employer Vulnerability: The Role of Social Media in the Financial Industry
Since the advent of social media in the workplace, many states have begun passing legislation to prevent employers from monitoring their employees' social media activities. This is done to protect employee privacy. However, the Financial Industry Regulatory Authority and Wall Street are asking regulators to make an exception for employees in the financial industry. Worries of insider trading, potential Ponzi schemes, and influencing stock activity on the market are at the heart of this request. For instance, one CFO was fired after venting on social media using confidential financial information. Such information could negatively affect the firm if released early.
Regulators allow financial firms to communicate information through social media outlets as long as they disclose to the investor where, when, and how they plan to divulge this information. This could lead employees to believe it is also all right to discuss nonpublic information on social media. Financial firms are concerned that by protecting employee's privacy on social media, they become vulnerable to potential scandals involving the misappropriation of financial information, which could harm investors. While the requested amendment to the privacy laws will only be put to use if an employee is suspected of releasing unwarranted information, critics believe that such an exception will erode employee privacy altogether. 46
What are disadvantages of laws forbidding employers from accessing employees' social media activities?