NLRB Strikes Down Overbroad Rules, Nixes Social Media Policy

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A recent decision from the NLRB illustrates the importance of carefully reviewing your work rules and policies to assure that the mere maintenance of a rule does not end up being an unfair labor practice.  In Costco Wholesale Corporation, 358 NLRB No. 106 (2012), the NLRB reviewed several rules and policies in Costco’s employee handbook.  It found that Costco violated Section 8(a)(1) of the National Labor Relations Act (the “Act”) by maintaining rules stating that:
(a) “unauthorized posting, distribution, removal or alteration of any material on Company property” is prohibited;
(b) employees are prohibited from discussing “private matters of members and other employees . . .
includ[ing] topics such as, but not limited to, sick calls, leaves of absence, FMLA call-outs, ADA accommodations, workers’ compensation injuries, personal health information, etc.”;
(c) “[s]ensitive information such as membership, payroll, confidential financial, credit card numbers, social security number or employee personal health information may not be shared, transmitted, or stored for personal or public use without prior management approval”; and
(d) employees are prohibited from sharing “confidential” information such as employees’ names, addresses, telephone numbers, and e-mail addresses.  
It was held that these rules were overbroad since they directly restrict employees from engaging in concerted activities under Section 7 of the Act.
In its first decision on a social media policy, the NLRB found that Costco’s social media policy also violated Section 8(a)(1). This policy stated:
Any communication transmitted, stored or displayed electronically must comply with the policies outlined in the Costco Employee Agreement. Employees should be aware that statements posted electronically (such as [to] online message boards or discussion groups) that damage the Company, defame any individual or damage any person’s reputation, or violate the policies outlined in the Costco Employee Agreement, may be subject to discipline, up to and including discharge.  
While the policy did not explicitly reference Section 7 activity, the NLRB felt that, by its terms, the broad prohibition against making statements that “damage the Company, defame any individual or damage any person’s reputation” clearly encompassed concerted communications protesting Costco’s treatment of its employees. The NLRB noted that there is nothing in the policy that even arguably suggests that protected communications are excluded from its broad parameters. Accordingly, employees could reasonably conclude that the policy required them to refrain from engaging in certain protected communications (i.e., those that are critical of the Company or its agents).  Since Costco’s policy did not present accompanying language that would tend to restrict its application, employees could reasonably assume that it pertained to -- among other things -- certain protected concerted activities, such as communications that are critical of Costco’s treatment of its employees. The  maintenance of this policy thus had a reasonable tendency to inhibit employees’ protected activity and, as such, violated Section 8(a)(1). 
The NLRB did find, however, that a rule requiring employees to use “appropriate business decorum” in communicating with others did not violate the Act. Nor did Costco violate the Act by maintaining a rule prohibiting employees from “[l]eaving Company premises during a working shift without permission of management.” This particular rule was lawful, because it did not prohibit employees from “walking off” the job without permission, a rule that has been deemed unlawful in past NLRB decisions because “walking off” is too similar to the term “walk out,” a synonym for a strike. 
This case clearly shows that the current NLRB accepts many of the Acting General Counsel’s recently published legal theories relating to how employers’ social media policies that are broadly written inhibit employees in the exercise of their Section 7 rights. It also shows that the NLRB is willing to interpret work rules in a way that will protect employees who complain to others, either inside or outside the workplace, about working conditions.
One ray of hope in this decision is the NLRB’s references to the lack of a disclaimer in Costco’s social media policy to let employees know that the Company did not intend to prohibit protected activities through this policy. (The NLRB’s Acting General Counsel has asserted in other litigation that such disclaimers are ineffective to save an overly broad rule, such that they should not be viewed as a way for employers to avoid taking appropriate care in otherwise designing social media policies which are not worded so broadly as to unlawfully restrict employees’ Section 7 rights.)
In light of this and other recent NLRB decisions reported in previous alerts, we are currently assisting employers daily in designing social media and other employee handbook policies in such a way as to make them compliant with the Act as well as other applicable state and federal laws.
Please feel free to contact Bill Trumpeter, David Whitlock or any other member of our Labor & Employment law Practice Group for a template social media policy that you can customize for your business or for any other assistance reviewing your current or planned employee handbooks or other policies. 
The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations.  As always, readers should consult a qualified attorney for specific legal guidance.  Should you need assistance from a Miller & Martin attorney, please call 1-800-275-7303.