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In its First Ruling on a Social Media Policy, the NLRB Rules a Portion of Costco’s Policy Unlawful

Posted by Attorney Roger L. Pettit in Human Resources, Technology / Comments

On September 7th the NLRB, in Costco Wholesale Corporation and United Food and Commercial Workers Union, Local 371, Case 34–CA–012421, upheld the administrative judge’s ruling that some of Costco’s employee handbook policies violated Section 8(a)(1) of the National Labor Relations Act (“Act”) but disagreed with the judge that Costco's social media policy was lawful.

Among the rules the NLRB, in agreement with the judge, found unlawful were the following:

(a) “unauthorized posting, distribution, removal or alteration of any material on Company property” is prohibited;

(b) employees are prohibited from discussing “private matters of members and other employees. . . includ[ing] topics such as, but not limited to, sick calls, leaves of absence, FMLA call-outs, ADA accommodations, workers’ compensation injuries, personal health information, etc.”;

(c) “[s]ensitive information such as membership, payroll, confidential financial, credit card numbers, social security number or employee personal health information may not be shared, transmitted, or stored for personal or public use without prior management approval”; and

(d) employees are prohibited from sharing “confidential” information such as employees’ names, addresses, telephone numbers, and email addresses.

Contrary to the judge, however, the NLRB found that Costco’s social media policy violated the Act.  A provision in the policy read, “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 [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.”

While the NLRB wrote that while Costco’s policy doesn’t specifically reference any Section 7 protected activity, a blanket prohibition against “making statements that ‘damage the Company, defame any individual or damage any person’s reputation’” may include employees’ communications that protest Costco’s treatment of its employees.  The NLRB wrote that the social media policy didn’t include a statement explaining that Costco’s policy didn’t prohibit certain protected communications and as such, Costco’s employees could reasonably construe that the rule forbade Section 7 protected communications amongst employees.  As a result, the rule was in violation of Section 8(a)(1) of the Act.  The Board noted that if the rule was accompanied by certain language that would restrict its application perhaps it wouldn’t be a violation of the Act.

Employers must make sure that their social media policies are not overbroad and do not unlawfully prohibit employees from conducting protected activities under the Act.  If employers are thinking about implementing a policy, it’s best to seek legal counsel to ensure compliance with the NLRB’s guidance.  See here and here for previous posts about the issued guidance.



Attorney Roger L. Pettit
Attorney Roger L. Pettit

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