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NLRB Mandates Wholesale Changes to Costco's Social Media Policy

By David M. Katz

There is no denying that the NLRB has recently devoted significant attention to employee’s use of social media.  Since August 2011, the Board's Acting General Counsel, Lafe Solomon, issued three reports outlining his view of how the NLRA applies to employers’ social media policies and employees’ social media postings.  Click here and here for our commentary on those GC reports and for links to the reports themselves.  Until earlier this month, however, the Board itself had not weighed in on social media policies.

On September 7, the NLRB issued a Decision and Order (which you can access here) invalidating Costco Wholesale Corporation’s electronic posting rule, found in its employee handbook, that prohibited employees from making statements that “damage the Company, defame any individual or damage any person’s reputation.”  With little analysis, the Board found Costco’s policy overly broad, concluding that “the rule would reasonably tend to chill employees in the exercise of their [NLRA] Section 7 rights,” as employees would “reasonably construe the language to prohibit Section 7 activity.”  Section 7 of the NLRA provides to all employees—unionized and non-unionized—the right to engage in protected “concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  Such protected concerted activity includes, for example, the right to protest an employer’s treatment of its employees or other working conditions.

The Costco decision adopts the legal reasoning set forth in the three GC reports, much of which is based upon traditional principles developed prior to the advent of social media as we know it.  And, similar to the three GC reports, the Board’s decision in Costco fails to articulate any social media-specific criteria to assist employers in crafting policies that do not inhibit employee rights under the NLRA,  although it does offer a couple of hints.

First, the Board distinguished prior cases addressing rules prohibiting employee “conduct that is malicious, abusive or unlawful,” including rules concerning employees’ “verbal abuse,” “profane language,” “harassment,” and “conduct which is injurious, offensive, threatening, intimidating, coercing, or interfering with” other employees. Criticizing Costco’s electronic posting rule, the Board stated that its social media policy “does not present accompanying language that would tend to restrict its application.”  If Costco had been more specific, then, by providing examples of prohibited conduct, its policy may have passed muster.  .  In doing so, employers should focus on the types of electronic postings that they truly seek to prohibit, such as defamatory, harassing or other egregious comments, or disclosure of employer trade secrets, proprietary information, or co-workers’ private information.

The second hint dropped by the Board in Costco is the suggestion that an employer’s inclusion of a savings clause or disclaimer may protect the employer from allegations that a social media policy inhibits employees’ protected concerted activities.  The Board concluded that Costco’s “broad” prohibition against making statements that “damage the Company” or “damage any person’s reputation” “clearly encompasses concerted communications,” but continued by noting that “there is nothing in the rule that even arguably suggests that protected communications are excluded from the broad parameters of the rule.”  This statement signals that the Board may have found Costco’s electronic posting rule acceptable had the rule included language specifically exempting protected concerted activities under the NLRA, which is in contrast to the GC’s position on such savings clauses.

As we noted in our previous postings on the subject, in light of the Board’s clear stance on social media policies (now confirmed in its Costco decision), and its application to both unionized and non-unionized employers, we recommend that all employers rigorously review their social media policies to ensure that they do not contain “broad” prohibitions that would not survive NLRB scrutiny.

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Martha Zackin