Everyone at the office thought that using the company e-mail system to share jokes and funny stories was great fun. That is, until one offended employee decided to sue his employer for having helped to create a hostile work environment.

Employee access to E-mail and the Internet can help to streamline communication among employees, and between employees and customers. But, just like conversations or information communicated on paper, E-mail messages have the power to create significant liability issues for employers who fail to adequately supervise how the medium is being used.

Here are just a few of the risks that unregulated access to E-mail and the Internet can create:

Loss Of Proprietary Company Information: Most business owners are extremely careful about the distribution of hard copies of company confidential information, and take great pains to ensure that such materials are kept secure. But, an ill-intentioned employee can easily attach electronic copies of confidential materials to outgoing e-mails, all from the comfort and convenience of their own computer terminal.

Wrongful Access To Proprietary Information Of Others: Just as your proprietary information can easily slip into the hands of others, so too can employees tap into the confidential information of other companies, or misuse their copyrighted or trademarked properties. Such actions can place your company in the direct path of charges of corporate spying or of infringement of intellectual property rights.

Creation Of An Evidence Trail: As the Microsoft antitrust cases clearly demonstrate, copies of E-mails are increasingly being subpoenaed as evidence in legal cases. Seduced by the ease of E-mail communication, many users become surprisingly candid and may openly discuss business strategies and tactics that may come back to haunt your company.

Contribution To A Hostile Work Environment: As we noted above, offensive E-mail messages sent to other employees can be just as problematic as the employee who begins every conversation with an inappropriate joke. Unmonitored use of the corporate E-mail system to circulate such material can land employers in hot water for contributing to the creation of a hostile work environment.

Potential To Alienate Customers: Employees using the company's E-mail system to solicit for a favorite political cause or to proselytize personal religious beliefs place the company in the position of unknowingly supporting those positions. Such unwitting support can jeopardize relationships with customers, prospects and vendors.

Increased Risk To Company's Computer Infrastructure: E-mail is the distribution method of choice for computer viruses that can cripple your computer network. Less devastating but no less taxing on your computer resources are the scores of junk e-mail messages received by employees that participate in Internet chat rooms and discussion groups that are unrelated to their work responsibilities.

Lost Productivity: Although E-mail and Internet access can improve communications, they can also serve as diversions from an employee's work responsibilities for all of the reasons noted above.

The best defense against such exposure? A policy that makes clear the restrictions on the use of the company's E-mail system and Internet access can go a long way to help your employees understand the power, and the danger, inherent in E-mail communications. And, while having a company E-mail policy won't insulate you completely from possible legal exposure, it can help to support your claims of having taken reasonable efforts to minimize such risks.

William von Achen is president of Strategic Management Resources, an executive coaching and management consulting firm offering advice and counsel to business owners and senior executives. For more information visit our web site at http://www.smrweb.com