The NLRB Knocks Costco's Rule Regarding Employees' Use of Social Media Down to Size!.


[author: Jonathon T. Naples]

The National Labor Relations Board agrees with the Agency's General Counsel—blanket rules and policies that prohibit employees from making online statements that are "damaging" to their employer violate the National Labor Relations Act. In Costco Wholesale Corp., the Board held that Costco's rule prohibiting employees from electronically posting statements that "damage the Company . . . or damage any person's reputation" could reasonably be construed by employees as a prohibition from engaging in certain protected communications. The Board's decision is significant because it affirms the General Counsel's prior guidance regarding the issue.

The Administrative Law Judge determined that Costco's rule was promulgated to ensure a "civil and decent workplace" and, therefore, could not be read to inhibit conduct protected by Section 7 of the Act. The Board disagreed. Because the rule did not explicitly reference Section 7 activity, the Board held that the broad prohibition regarding statements that "damage" the Company "clearly encompasses concerted communications protesting [Costco's] treatment of its employees."

Although the Costco decision sends a loud message to employers that overbroad social media policies are a problem, the Board suggested that an appropriate disclaimer could save the day. Costco's rule did not include "accompanying language that would tend to restrict its application." As a result, the Board determined that the rule "allows employees to reasonably assume that it pertains to–among other things–certain protected concerted activities." Without expressly stating as much, however, the Board certainly implied that its decision may have been different had Costco's rule included appropriate disclaimer language.

In light of the Costco decision, employers should carefully review their policies and rules to ensure that prohibitions on employee conduct, especially online and social media activity, are sufficiently tailored to comply with the Board's view regarding the extent to which employers may properly regulate such activity.


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