On September 7, 2012, in a decision that is likely to have wide-ranging implications for companies’ social media policies, the NLRB issued a decision finding that Costco’s policy prohibiting defamatory statements about the company violates Section 8(a)(1) of the National Labor Relations Act (the Act) (Costco Wholesale Corp. and United Food and Commercial Workers Union, Local 371). As we have previously reported, Section 8(a)(1) provides that it is an unfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of their rights guaranteed in Section 7 of the Act. Section 7, in turn, states that employees are permitted to self-organize, join unions, and engage in “other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

Reversing a decision by the administrative court, the NLRB held that Costco’s social media policy ran afoul of Section 8(a)(1). The policy language at issue stated that, “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 termination of employment.” The NLRB acknowledged that the rule does not explicitly reference Section 7 activity, but concluded that it clearly extended to communications that protested Costco’s treatment of employees and made no exception for such communications. Again, as we have previously reported, employers need to take care in drafting, and perhaps review and revise, their social media policies.