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TIP FOR MARCH - AVOID DISASTROUS E-MAIL GAFFES

Tip of the Month

March 2004

TIP FOR MARCH - AVOID DISASTROUS E-MAIL GAFFES

It has been said that smart business people learn from their mistakes-even smarter ones learn from the errors of others. Last year’s spate of high profile lawsuits and embarrassing public disclosures provided a clear demonstration of the disastrous - and costly--consequences of sloppy e-mail policies. Here are some lessons we can learn from the mistakes of big business:
  1. Establish a written e-mail policy with e-mail rules clearly outlined, and regularly train/educate all staff members on your company’s e-mail policies. If your staff and/or colleagues are inclined to dash off "off-the cuff" e-mails containing inappropriate jokes or crude commentary, they might be providing ammunition for a lawsuit. Casual e-mails can easily trigger claims of work place sexual harassment or discrimination. Conduct e-mail etiquette/policy training classes and provide a written document outlining the rules for employees e-mail correspondence. Make sure everyone in your firm understands that e-mails are admissible in court as evidence. Each e-mail should be written and distributed with the same care as any other piece of business correspondence. Employees should ask themselves "Would there be a problem if this e-mail fell into the hands of a competitor, a reporter or someone who had a grudge against our firm?"


  2. Monitor employees’ e-mail use and make sure to include inter-organizational correspondence, as well as outgoing and incoming e-mails. Let your staff know that network administrators and others are monitoring e-mails and materials downloaded from the Internet. Most companies have some means of checking incoming and outgoing e-mails but neglect internal e-mail between employees. Omitting inter-organizational communication from your review can create some costly human resource issues that may culminate in litigation (see above).


  3. Have written policies regarding the retention of e-mails. E-mails are considered legally binding communications. Firms need to make sure that their employees follow appropriate guidelines for managing and retaining information contained in e-mails. Also, it is illegal to destroy e-mail evidence once legal investigations or any regulatory inquiries commence. Despite the wealth of publicity surrounding some notorious cases, businesses remain slow to implement appropriate e-mail retention policies. And this has cost some high profile firms dearly. In 2003, several Wall Street brokerage firms that were remiss in this area received fines totaling more than $8 million for failing to retain e-mail correspondence in line with SEC regulations.


  4. Keep personal e-mail separate from business e-mail; and have appropriate clean-up policies for the personal communications.
    Other investigations in the spotlight-notably the Enron debacle last year-- show that deletion policies for personal e-mail correspondence are important, too. Not only is it wise to keep personal e-mails separate from business e-mail correspondence, but also it is important that employees regularly purge personal e-mails that do not have to be retained for legal, regulatory or other mandated business purposes. In the Enron case, the regulatory commission investigating alleged misconduct posted Enron employees’ private e-mails as well as confidential human resources information along with corporate business communications online. The commission eventually removed this cache of embarrassing personal disclosures, confidential bank records and social security numbers, but not before this mother lode was discovered by the national press and appropriated by identity thieves.
Bottom line: it pays to be savvy about email risks and to have the appropriate written policies in place to safeguard your business.
 

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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