Social Media Policies under Attack by the NLRB

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In its first-ever decision on an employer's social media policy, the National Labor Relations Board (NLRB) has found Costco Wholesale Corp.'s policy to be overly broad and unenforceable in the case Costco Wholesale Corporation, 34-CA-012421 (September 7, 2012). The facets of this case provide a clear signal from the NLRB that it will follow the lead of its General Counsel in scrutinizing social media policies even when they have not been applied to thwart union organizing.

Faced with the soaring use of social media, many employers have adopted policies to address how social media is used by their employees. Employers do so for a variety of reasons, including efforts to provide guidance to employees as to the appropriate use of social media, to address expectations of privacy, to educate employees as to proper etiquette, to protect the company's confidential and trade secret information, and to mitigate the risk of social media use to both employees and the employer.

The NLRB has taken direct aim at those social media policies. Before the Costco decision, the NLRB's General Counsel published three extensive memoranda explaining how the National Labor Relations Act (NLRA), and particularly Section 7 of the act, which deals with an employee's right to engage in concerted activity, applies to employer-enacted social media policies. While the General Counsel's memoranda provided only enforcement guidance—not binding precedent that the NLRB was required to follow—many of the policies reviewed were found to be overly broad because they "chilled" or impeded the right of employees to engage in concerted activity protected by the NLRA.

The General Counsel reviewed many policies that recently had faced challenges by employees who were disciplined by their employers for making posts on social media that were found to be in violation of what the employees believed to be the employers' overly broad social media policies. For example, in one dispute, the General Counsel concluded that statements made by an employee regarding the treatment of her co-workers were protected activity, and that the employer's termination of that employee was unlawful. In a number of other cases, however, the General Counsel signaled that the agency would scrutinize closely employer social media policies that actually or potentially chill an employee's right to engage in protected concerted activity by restricting social media use. The approach taken by the NLRB itself in Costco reinforces those previous advisory opinions by the General Counsel and, significantly, unlike the General Counsel's memoranda, the NLRB's decision in Costco establishes binding precedent for matters arising at the agency level.

Costco Decision

In Costco, the policy at issue prohibited, in part, employees from posting statements online that damaged the company's reputation or the reputation of anyone else. The NLRB reviewed this prohibition to determine whether it reasonably would tend to chill employees in the exercise of their Section 7 rights and therefore violate the NLRA. In finding the restriction overly broad and in violation of the NLRA, the NLRB concluded that even though the rule did not explicitly reference the right to engage in concerted activity, which is included among Section 7 activities, "by its terms, the broad prohibition against making statements that 'damage the Company, defame any individual or damage any person's reputation' clearly encompasses concerted communications protesting [Costco's] treatment of its employees." The NLRB reasoned that the potential to chill Section 7 rights existed because the policy contained nothing to suggest that its restrictions would not apply to employees' concerted activity protected by the NLRA. Ultimately, because an employee reasonably could believe the prohibition would restrict his or her ability to post statements critical of Costco's treatment of its employees, Costco's payment of appropriate wages, or Costco's working conditions, the NLRB found the restriction unlawful. It reached this conclusion even though there was no evidence that Costco actually did use the policy in that fashion.

Costco underscores that the NLRB, at least as presently constituted, has adopted an expansive view of what constitutes protected employee speech or activity, and that employer policies (be they stated in a social media policy, handbook, or another type of communication) that restrict or chill employee-protected speech or activity will be found to be unlawful as a violation of the NLRA. The NLRB struck down the Costco prohibition at issue as overly broad despite the fact that the company had not disciplined any employee for violating the rule. Therefore, the NLRB is staking out its position that an overbroad social media policy may be found unlawful even if the employer has not disciplined an employee for violating the policy and even where there is no actual dispute over the application of the policy to any particular social media post by an employee.

Lessons Learned

While Costco leaves many questions unanswered as to when a social media policy's restrictions will violate the NLRA, it does provide employers with some guidance as to what social media policy restrictions might pass muster. Employer takeaways from the decision include the following:

  1. Generic Social Media Policies Are Out: By siding with the General Counsel's previously issued reports, the NLRB has signaled that it intends to scrutinize carefully social media policies and other company rules that purport to limit employee speech in the social media context. While many employers use form social media policies, these forms can no longer be adopted wholesale without revision and need to be customized to address the specifics of the employer's operations. Consequently, every employer with a social media policy should carefully review it to ensure that it (and any other policies restricting speech or activity) can withstand NLRB scrutiny.
  2. Policies Don't Need to Be Enforced for the NLRB to Find Them Overly Broad: In Costco, the NLRB has made clear that a policy can be challenged and found to be unlawful even if the employer has not disciplined any employee for violating the policy. While Costco specifically addresses a social media policy, the NLRB's stance likely applies to other company policies that restrict employee speech or activities in a similar way, including confidentiality policies, codes of conduct, and policies contained in employee handbooks.
  3. A Savings Clause May or May Not Help Save Otherwise Problematic Policy Language: The NLRB seemed to criticize Costco's policy because it did not contain any language or provision making clear that the policy restrictions did not apply to protected employee speech or activity. This may suggest that if Costco's policy included such language (stating, for example, that nothing within the policy is intended to interfere with an employee's exercise of his or her rights under the NLRA), the policy might have survived the NLRB's scrutiny. However, the agency's General Counsel has on more than one occasion stated his view that such a clause will not save an otherwise unlawful policy, and Costco does not directly address that question. So while it is advisable to include a savings clause in a social media policy or other company policies, the jury is still out as to whether it will save a policy restriction that upon careful analysis appears to chill otherwise protected speech or activity.
  4. Specific Language Is Important: The General Counsel's memoranda included an analysis of a number of social media policy provisions that were found to be overbroad, including blanket prohibitions on defamatory language (as appeared in Costco), statements prohibiting information-sharing about co-workers, and prohibitions on the use of the company's logo or materials. To avoid having a policy appear overly broad, employers should be specific in the prohibitions contained in their policies. For example, a policy that specifies that employees may not post "inflammatory or defamatory statements regarding co-workers" likely will be considered overly broad. Conversely, an acceptable policy would include a statement that employees may not post information about co-workers that may be considered "vulgar, obscene, threatening, intimidating, harassing, or a violation of the company's policies against discrimination, harassment, or hostility on account of race, age, religion, sex, ethnicity, nationality, disability, or other protected class, status, or characteristic." Policies that are specific with respect to prohibited conduct are more likely to withstand scrutiny than those policies that do not contain such specificity.

Wilson Sonsini Goodrich & Rosati is following developments around the country with respect to social media policies actively, including assessing how the NLRB's actions affect these developments. Attorneys in the firm's employment and trade secrets litigation practice are available to review, or help draft, enforceable social media policies and other employment policies. For more information, please contact Fred Alvarez, Rico Rosales, Marina Tsatalis, Laura Merritt, Charles Tait Graves, or another member of the firm's employment and trade secrets litigation practice.