More often than not, employers these days have incorporated social media policies into their employee handbooks to regulate employees’ use of social media.  But after the National Labor Relations Board’s (NLRB) September 7, 2012, decision dealing with employer rules about employees’ use of social media (the first such decision by the NLRB), employers will need to be more careful when crafting rules governing social media use.  In the Costco Wholesale Corp. decision, the NLRB held that Costco’s policy designed to prevent defamation by prohibiting employees from electronically posting statements that “damage the Company, defame any individual or damage any person’s reputation,” is an overly broad and unlawful restriction.  Specifically, Costco’s handbook policy stated:  

“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 [employee handbook], may be subject to discipline, up to and including termination of employment.”

According to the NLRB, which disagreed with the Administrative Law Judge on this issue, this rule violates Section 8(a)(1) of the National Labor Relations Act (“NLRA”) because Costco employees could reasonably construe the rule as one that prohibits Section 7 activity; that is, it would “tend to chill” employees from exercising their rights under Section 7 of the NLRA to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  In general terms, Section 7 allows employees–whether or not they are members of a unionized workforce–the right to act with, or as authorized by, other employees to gripe about the terms and conditions of their employment without fear of retaliation.

The NLRB held that while Costo’s rule did not explicitly restrict Section 7 rights (in which case it automatically would be unlawful), the rule is nonetheless overbroad and unlawful because employees could reasonably interpret the rule against making electronic posts that “damage the Company, defame any individual or damage any person’s reputation” as preventing them from engaging in communications protesting Costco’s “treatment of its employees” or communications that “are critical of” the company.  The NLRB also noted that nothing in Costco’s rule “even arguably suggests that protected communications are excluded from the broad parameters of the rule.”  Nor does it “present any accompanying language that would tend to restrict its application.”  It has yet to be seen whether the dicta in this opinion indicates that a statement with “accompanying language” that protected communications are excluded, when added to an equally broad rule, would protect that rule from the fate of Costco’s handbook policy.

What is clear is that context is key.  In reaching its conclusion, the NLRB distinguished cases relied on by the Administrative Law Judge because most of them involved rules related to conduct that is, for example, “malicious, abusive, or unlawful” and therefore falls outside the protection of the NLRA.  In fact, one of those cases involved a rule very similar to Costco’s (prohibiting “statements which are slanderous or detrimental to the company or any of the company’s employees”) – but, because that rule was one in a list of 19 rules prohibiting egregious conduct, such as “sabotage and sexual or racial harassment,” the NLRB found it to be lawful when viewed in context of the list of rules.