The NLRB recently published its first decision touching on employer rules about employees' use of social media. In Costco Wholesale Corp., the key litigated issue was whether a company policy that prohibited employees from electronically posting messages that could "damage the Company, defame any individual or damage any person's reputation" violated the NLRA.

Costco Wholesale Corporation had several rules regulating employee speech that prohibit employees from posting or distributing materials on company property, discussing other employees' private matters (such as leaves of absence), and sharing or transmitting employees' sensitive financial and other personal information.

Costco also prohibited employees from electronically posting statements that "damage the Company, defame any individual or damage any person's reputation, or violate the policies outlined in the Costco Employee Agreement" and prohibited employees from leaving the employer's premises without permission. Employees who violated these rules could be subject to discipline, up to and including termination.

The United Food and Commercial Workers union challenged these rules by filing unfair labor practice charges. Aside from the electronic positing rule, the administrative law judge (ALJ) held that the challenged rules regulating employee communication violated Section 8(a)(1) of the NLRA because the unit employees could reasonably construe the language of the rules to prohibit protected concerted activity under Section 7 of the NLRA.

The ALJ held that the employees would not reasonably construe the electronic posting rule as regulating and thereby prohibiting Section 7 activity. Rather, the employees would reasonably infer that the purpose of the electronic posting rule was to create a "civil and decent workplace." Therefore, the ALJ dismissed that complaint allegation.

Costco and the counsel for the NLRB's General Counsel filed exceptions to the ALJ's decision with the four member panel (Board) heading the NLRB's judicial functions.

On September 7, 2012, the Board issued a decision in Costco, affirming the findings of the ALJ that most of the challenged employee communications rules violated Section 8(a)(1) of the NLRA. However, the Board reversed the ALJ regarding the electronic posting rule and held that it is unlawful because it could reasonably tend to chill employees in the exercise of their Section 7 rights.

An employer rule is unlawful if it explicitly restricts Section 7 rights. If the rule does not explicitly restrict Section 7 rights, it is still unlawful if:

(Lutheran Heritage Vill.-Livonia.)

The Board found that the electronic posting rule is overbroad. Although the rule does not explicitly restrict Section 7 rights, employees could reasonably construe it to prohibit Section 7 activity, because employee statements that criticize or protest the terms and conditions of employment could "damage the Company, defame any individual or damage any person's reputation." This overbroad rule does not provide any exception for employee statements that are protected by Section 7. Therefore, the rule could reasonably tend to chill employees in the exercise of their Section 7 rights.

The Board also confirmed that an employer's rules regarding employee communications, including electronic posts, must be considered in context. The Board reviewed the context of the rule in this case and distinguished the rules that the Board found lawful in the cases on which the ALJ relied. The rules in those cases lawfully prohibited communications and conduct that fall outside the protection of Section 7, such as sexual harassment, sabotage and other unlawful, abusive and malicious activity.

In dicta, the Board noted that the electronic posting rule did not implicate the Board's holding in Guard Publishing Co., where the Board held that:

Separately, a majority of the Board panel (Members Griffin and Block) reversed the ALJ and found that a Costco rule prohibiting employees from leaving the company's premises during their shift without permission was lawful on its face and could not be reasonably construed to prohibit concerted activity protected by Section 7, such as walking off the job to engage in a strike. The majority distinguished the policy from policies that explicitly prohibiting walking off premises or striking the Board had found unlawful. Chairman Pearce dissented, finding that the policy could reasonably be construed to inhibit Section 7 activity because it did not contain language limiting the scope of the prohibition such as prohibiting employees from leaving the premises only for unauthorized breaks.

The Board in Costco used traditional tests for evaluating whether social media use restrictions could reasonably be construed to inhibit Section 7 activity. For now, it appears that Board will not develop specialized criteria for evaluating social media policies even though social media posts have a different nature from traditional published or broadcast employee speech. It remains to be seen whether the Board will use traditional analysis or develop a specialized analysis for evaluating the lawfulness of employee discipline resulting from use of social media in pending cases (see, for example, Hispanics United of Buffalo, Inc. and Karl Knauz Motors, Inc.).

The Board distinguished Costco's electronic posting rule from a lawful limitation on employees' use of an employer's e-mail system for Section 7 activity in Guard Publishing, even though no parties submitted arguments about that case. This unsolicited distinction suggests that even if the Board creates new analysis for "social media" cases in the future, it will not consider social media akin to e-mails or e-mail systems.