The securities industry in California is up in arms over a bill that would ban employers from requiring employees to hand over their social media passwords.
California could be the latest state to ban employer access to employee's pages on social-media sites — a prospect that has the investment industry worried about limits on oversight.
The bill, passed by the California Legislature last month, awaits the signature of Gov. Jerry Brown. Mr. Brown has until the end of the month to act.
The proposed law would prohibit an employer from requiring that an employee or job applicant disclose passwords for personal social-media sites.
The Securities Industry and Financial Markets Association this month asked Mr. Brown to veto the legislation.
“The bill, while well-intended, conflicts with the duty of securities firms to supervise, record and maintain business-related communications” under Financial Industry Regulatory Authority Inc. rules, SIFMA said in a letter to the governor.
“The securities industry has absolutely no interest in accessing employee accounts that are used exclusively for personal use,” SIFMA wrote. “The problem, however, is that many people use the same account for both personal and business activity.”
Many brokerage firms ask their representatives to certify that they don't use social media for business purposes.
“The question comes down to, what if a representative is not honest about their business use of social media?” SIFMA associate general counsel Kim Chamberlain said last week during a meeting with state regulators.
In May, Maryland became the first state to ban employers from asking for social-media passwords. Maryland's law goes into effect next month. A similar law is set to go into effect in Illinois next year.
New York, Delaware, Massachusetts and Minnesota are among other states that have similar bills pending.
