A panel of the National Labor Relations Board has found that electronic posting rules issued by Costco Wholesale Corporation violated the National Labor Relations Act. The Board panel largely followed guidance issued previously by Acting General Counsel Lafe Solomon (available here, here, and here) and found that generalized prohibitions on what employees could say online were overly broad and would unreasonably restrict employees in the exercise of their rights under the Act.

The Policy and Union Challenge

Costco's policy restricted employees from posting statements on electronic media such as online message boards and social media sites that could damage Costco or the reputation of others. The policy stated, in part, as follows:

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 [in] 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 [agreement], may be subject to discipline, up to and including termination of employment.

The policy was challenged by a union seeking to organize Costco workers at a facility where the policy applied.

The NLRB Decision

In finding that the Costco policy violated the Act, the Board panel – consisting of Chair Mark Gaston Pearce, and Members Sharon Block and Richard F. Griffin, Jr. – laid out no special criteria for analyzing whether social media rules interfered with employee rights under the Act. Instead, the Board panel simply applied longstanding, traditional principles to determine whether the policy would reasonably tend to chill employee exercise of their rights under Section 7 of the Act. Such rights include the right to complain about an employer's wages, hours, working conditions and treatment of employees. In applying traditional principles, the Board panel assessed whether employees "would reasonably construe" the language of the policy rule to prohibit protected activity.

In making its assessment, the Board panel found that the prohibitions of the Costco policy "would reasonably" be interpreted by employees to include a prohibition on complaining about their working conditions. The Board panel found that, although the Costco policy did not explicitly restrict employees from protected activities, the ambiguity in the broad language of the policy, which "could" be read to include employee activity protected by the Act, needed to be construed against the drafter, Costco. In the final analysis, the Board panel found that the policy language was overly broad because employees "would reasonably" read it as a prohibition that included a restriction on complaining about Costco's treatment of workers. The Board panel thus found the rule "would reasonably" tend to chill employees' exercise of their rights under Section 7 of the Act and violated Section 8 (a)(1) of the Act.

The Board panel distinguished the Costco policy language from other employer policies that have survived Board review, contending that those other policies had survived because they had language restricting the policies' application. The Board panel indicated that, in past decisions, policy language limiting a restriction to egregious conduct, such as "malicious, abusive or unlawful" conduct, including "verbal abuse," "harassment," or "conduct which is injurious, offensive, threatening, intimidating, coercing, or interfering with" other employees, had survived Board scrutiny.

Finally, the Board panel suggested that inclusion of a "disclaimer provision" might protect a policy from an allegation of interference, emphasizing that the Costco policy had no language that "even arguably" suggested that protected communication activity was excluded from the "broad parameters" of the policy. Thus, this suggestion about "disclaimer" language may indicate that the Board, in a future case, would find a policy acceptable if it included language clearly and expressly excluding from its application employee activity protected by the Act. This is in contrast to the opinions of the Acting General Counsel, who has indicated that disclaimers will not rescue an otherwise unlawfully overbroad policy. What position a future panel of the Board will take on disclaimers remains to be seen.

The Take-Aways

The Costco decision highlights the problem with generalized policy language restricting employees from making critical remarks about their employers in any context, in the electronic and digital world of social media or otherwise, for example, plain old paper and pen. The Board panel's decision is a reminder that the Board is not hesitant to take on employers' restrictions on employees' right to express their "beefs." Given the Board's position and its aggressive approach into non-union workplaces, all employers in the private sector, union and non-union alike, should take the time now to review their employment policies with legal counsel experienced in matters under the Act, potentially to improve the policies' chances of withstanding Board scrutiny.

Leaving in place an invalid social media policy can have serious consequencs for employers. First, the employer faces the costs associated with a losing defense of the policy at the Board's region level or in litigation. Second, the employer faces the potential costs of a settlement or a litigation-produced remedy that might (and probably would) include back pay for an employee disciplined by the employer's application of the unlawful policy. Finally, an employer with an unlawful policy in place during a union organizing campaign could win the election only to have it set aside based on objections based on the unlawful policy. A losing union is nearly certain to look closely at filing objections and arguing that the unlawful policy thwarted the union. After a winning campaign effort, the "repeat election" club is probably not a club that employer wants to join.