M ost businesses know by now that a huge and increasing volume of communications is moving via electronic media... including E-mail messages, chats on the Internet and voice mail on the telephone.

What business owners often fail to appreciate is that it's very difficult to erase a record of these communications once they've been made. Even when an employee believes he/she has erased a message by entering a delete command in the computer, the electronic record is still likely to remain.

Many types of Internet communications -- such as messages that are sent to a "chat room" -- sometimes can be retrieved.

Danger: People are usually much less cautious when they communicate electronically than when they write on paper or speak personally to each other.

But -- easily intercepted electronic messages may contain information about new products or marketing strategy... and some offhand remarks could put the company in a bad light if they were made public.

Result: A treasure trove of confidential and embarrassing communications that may wind up not being confidential at all.

Key legal risks...

If the company is involved in a lawsuit, it can be forced -- as Microsoft Corp. was in its recent antitrust case -- to give the court significant parts of its electronic communications. In fact, any message you send electronically may be read in a courtroom one day.

Employees who are disgruntled or planning to leave, as well as those who have been or are about to be terminated, have been known to use E-mail and other electronic media to send proprietary information outside the company.

Seemingly harmless jokes that allude to race, religion or any other legally protected category can be powerful legal weapons in the hands of an employee who charges discrimination against the company.

Jokes that have sexual content can become evidence for an employee who claims sexual harassment based on the existence of a hostile work environment.

Electronically transmitted personally disparaging remarks can be the basis of a libel or defamation suit.

Employees may violate copyright laws if they distribute text or pictures downloaded from the Internet. Today, in fact, a rising percentage of libel, discrimination and copyright cases involves electronic evidence.

Employees may use the company's equipment to disseminate pornography or other offensive material or even in the commission of a crime.

FIRST LINE OF DEFENSE...

A policy that clearly tells employees what they can and can't do with electronic media.

Most employees are honest and will follow the rules... especially if they are told that the policy also protects them. And by enforcing the policy, a company puts less-than-honest employees on notice that violations will result in discipline that can include dismissal.

POLICY BASICS...

Prohibit the use of electronic media for illegal activities. You may think employees don't need to be told that use of company-based E-mail or Internet services for illegal activities is off-limits. But -- some employees may not realize that such things as sending racially oriented or sexually hostile jokes to coworkers via E-mail are unlawful.

Bar the use of company computers to access Internet sites that contain discriminatory or sexually explicit material. These typically include Web sites run by hate groups and pornographers.

Prohibit the types of personal use of company E-mail and Internet service that waste time or skirt the law. It is impossible to ban all forms of personal use of electronic media. Therefore, if personal business is allowed to be conducted over the company's computers, it's best to list examples of the specific types of communication that could result in legal consequences for the company.

Examples: Selling an employee's own merchandise, circulating chain letters and conducting a part-time business.

Explain to employees that the electronic media and everything stored on them are the property of the company. Inform them that the company reserves the right to access and monitor employees' electronic communications -- and then actually do it. How a company does this, and its frequency, depends on the nature of its business and its corporate culture.

But before accessing or monitoring communications, consult an attorney. The federal Electronic Communications Privacy Act prohibits the interception of employee messages in certain situations. Some states also have laws in this area.

To reduce the risk of a lawsuit, consider asking workers -- as a condition of employment -- to sign a statement giving their consent to monitoring by the company.

State clearly in the policy that violators will be subject to the company's disciplinary procedures. Then follow through in each instance of violation.

Key: Instead of spelling out the discipline, say in the policy only that "violators will be subject to discipline up to and including termination." That type of wording gives management flexibility. Some types of violation may require harsher discipline than others.

Since electronic media policies involve some tricky points of law, retain an attorney to draw up a policy for your specific business.

Typical cost: Less than $1,000 for most small companies.

And -- since laws, technology and the nature of most businesses are changing rapidly, ask an attorney to review the policy once a year.

To make sure employees understand the policy, don't just post it on a bulletin board. Instead, give it to employees when they're first hired... and, of course, each time the policy is updated.

Helpful: Purge files of electronic communications periodically, depending on the company's actual need for them.

As much as possible, separate personal messages from important documents.

It's best to consult an attorney about this because the frequency and thoroughness of purging will be influenced by statutes of limitations and by laws that may require companies to retain employment and other types of records for a certain period of time.