Employee Influencer Trend Raises New Legal Risks for Companies Over Pay, Content and Intellectual Property

Companies across several sectors are tapping employees with strong social media followings to promote products, a workplace trend that is creating potential legal liability, Bloomberg Law reported.

 

This summer alone, Starbucks Corp announced a partnership with TikTok to boost “employee-driven storytelling”, while Gap Inc expanded its creative affiliate and social media programmes to include employees.

 

Employment lawyers, however, are advising companies looking to embrace the employee-creator trend that such programmes can raise untested legal issues if they are not properly organised and vetted. Questions include when employee posts become compensable work and who owns content shared on personal social media platforms.

 

“Anything that’s new at the intersection of law and the creator economy, there will be more mistakes in the beginning because the law is really far behind,” said Kameron Buckner, an attorney for content creators who also provides marketing consultancy. Much of employment law, she said, has developed around traditional employment relationships.

 

Employees have a direct understanding of their employers’ products, workplace culture and customer base, allowing them to generate content ranging from unscripted day-in-the-life videos to product marketing. A February poll indicated that most consumers find employee-created content more compelling than posts from executives or corporate accounts.

 

“Authenticity sells,” said Breanne Gilliam, an attorney at Maddin Hauser Roth & Heller PC. “As time goes on and companies see success coming from other companies, more are going to get on board.”

 

One employee who has gone viral is “Staples Baddie”, who posts high-energy videos about the retailer’s products. Staples Inc did not respond to a request for comment on its creator practices.

 

Litigation involving employee creators remains limited. But a recently settled trademark infringement and social media ownership dispute involving bridal company JLM Couture Inc and fashion designer Hayley Paige Gutman offered a preview of the issues that can arise when a personal brand becomes a corporate marketing asset.

 

Wage Vulnerabilities

 

It is not always clear how companies compensate employee creators beyond their regular salaries. Starbucks’ TikTok partnership will provide employees with “content opportunities and ad revenue sharing”, according to its June announcement.

 

Gap’s programme is voluntary and separate from participants’ regular job responsibilities and compensation, but they may receive affiliate commissions and products “tied to their creator activity”, a spokesperson said.

 

Walmart, meanwhile, prohibits employment relationships with participants in its creator programme.

 

The fragmented nature of content creation can blur the line between personal time and working hours, making compensation for employees entitled to overtime pay one of the most difficult issues for employers, Gilliam said.

 

“Besides filming and editing videos, what if the employee’s post goes viral and they have hundreds of comments and they’re spending their evening replying to those comments?” she said. “Should they be compensated for the time that they’re sitting at home on their phone replying to comments?”

 

Many companies with creator programmes avoid traditional cash compensation and instead offer benefits such as free trips or products, in an effort to avoid complicating the initial terms of employment and employees’ baseline job descriptions, said Lia Haberman, a creator-economy consultant.

 

But employment lawyers said describing a worker’s participation as voluntary and providing perks would not necessarily eliminate potential wage liability. The US Fair Labor Standards Act requires monetary compensation for work that employers knew about or had reason to believe was being performed.

 

Violations of US federal overtime rules for work performed beyond 40 hours in a workweek can result in civil penalties, back pay, liquidated damages and legal costs for employers.

 

The risks can be greater in states such as California, which requires employers to pay for work they know, or should know, is being performed, even when it takes place off the clock or was not explicitly required. California also requires employers to reimburse workers for related business expenses, including hardware and data plans.

 

Content Ownership

 

Another emerging issue is who owns the content created by employee influencers and what happens to those rights after employment ends.

 

US copyright law generally gives employers ownership of works created by employees within the scope of their employment. But ownership can become more complicated when workers create content on their personal accounts and build an audience around their own identity.

 

In the JLM case, the company sued former employee Gutman for trademark infringement and breach of contract and sought control of the social media accounts she had created to promote her designs.

 

The US Court of Appeals for the Second Circuit in 2022 overturned a district judge’s order that had given JLM control of the accounts, which had more than 1.1 million followers. It directed the district court to reconsider the dispute and treat the accounts as property when determining their original ownership and whether rights had been legally transferred.

 

Intellectual property is a key issue that Buckner said she helps content creators navigate, particularly those who want to move to a competitor or establish their own businesses.

 

The knowledge gap between employers and employees can leave workers acting as creators “vulnerable” to contractual obligations they may later regret, she said.

 

“It’s going to take a lot of educating” for employees to capitalise on demand for their content-creation skills and negotiate favourable terms without creating a strained relationship with their employers, she said.

 

Creator-Employer Safeguards

 

Companies considering employee-created content should start with a pilot programme, allowing them to assess its impact and identify unexpected challenges on a smaller scale, Haberman said.

 

“Tapping into your most active employees on social is probably one of the good ways to get a gauge or gut-check whether this has legs,” she said.

 

Companies should also draw up agreements separate from employment contracts covering the frequency of content production, ownership and use of content, and the scope and duration of those rights both during and after employment, employment lawyers said.

 

Social media policies can also address the risks of mixing personal and company-related content and the potential impact on a company’s brand.

 

Disciplining a worker for combining potentially controversial personal posts with the company’s brand “can open the door to legal exposure, particularly where protected speech or state-specific off-duty conduct statutes apply”, Gilliam said.

 

“The best defence is preparation, not reaction,” she said. “If you’re figuring out the rules after a post goes viral for the wrong reasons, you’ve already lost.”

 

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