The NLRB recently issued a decision in the first "social media case" that the Office of the General Counsel, Division of Advice processed under the NLRB's Acting General Counsel’s mandatory submissions to the NLRB's Division of Advice. It is the second NLRB decision concerning employees' use of social media (see Legal Update, NLRB Invalidates Electronic Posting Rule in First Published Opinion Concerning Employers Limiting How Employees Use Social Media). In Karl Knauz Motors, Inc., the key litigated issues were whether the employer:

The employer, Karl Knauz Motors, Inc., which owns several car dealerships in Illinois, issued an employee handbook with a rule that reminded employees of their duty to be courteous to others, stating, “Courtesy is the responsibility of every employee. Everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as to their fellow employees. No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership."

One of Knauz's employees, Becker, was a salesperson at a Knauz BMW dealership who attended a promotional sales event and posted photos of it on his Facebook page. The sales event was organized by the BMW dealership, and several of the dealership's salespersons voiced criticisms of the inexpensive food that was offered to attendees, including hot dogs and chips. Some of them believed that a better offering should have been made at such an important event. On his Facebook page, Becker posted photos of dealership personnel eating the food at the event, and underneath the photos he posted comments that mocked the inexpensive food offered there.

Shortly thereafter, at a Land Rover dealership owned by Knauz, a display vehicle was accidentally driven into a nearby pond by a customer. Becker posted photos of that episode on Facebook, along with a sarcastic written description of the event. Eventually, other Knauz employees posted sarcastic comments underneath Becker's descriptions of both events.

When Becker's supervisors learned of these Facebook postings, they questioned Becker about his actions. Becker allegedly showed no remorse for his actions. His supervisors told him that other dealerships saw the postings, which hurt Knauz's image. Knauz terminated Becker for the Land Rover posting. Knauz later stated, in response to questions from the NLRB's regional office, that Becker was not terminated for the posting about the BMW event.

Becker filed an unfair labor practice charge with the NLRB, alleging that he was terminated for engaging in concerted activities protected by the NLRA. The charge was submitted to the Division of Advice in the Office of the NLRB's General Counsel. The Division of Advice instructed that the regional office of the NLRB issue a complaint alleging that Knauz committed unfair labor practices (ULP) by terminating Becker for Section 7 activity and for maintaining several policies, including the courtesy rule, that could chill employees' Section 7 activity. NLRB General Counsel then amended Becker's complaint, alleging that certain portions of Knauz's employee handbook, including the courtesy rule, violate the NLRA.

An NLRB administrative law judge (ALJ) held that Becker's Facebook posting about the BMW event was protected concerted activity under the NLRA because his criticisms of the food offering were shared by co-workers, and there was a possibility that their criticisms were connected to the dealership's image, which could affect sales. Since lower sales could hurt their commissions, Becker's posting was connected to the terms and conditions of employment. The ALJ also concluded that Becker did not disparage his employer to a degree that remove the NLRA's protections.

However, the ALJ held that Becker's Land Rover posting was clearly not protected concerted activity, because it was posted solely by Becker, without discussion with any other employee, and it had no connection to the terms and conditions of employment at Knauz.

Most importantly, the ALJ found that Becker was terminated for his Land Rover posting.

Finally, the ALJ found that the courtesy rule, as well as a rule prohibiting employees from participating in "unauthorized interviews" and a rule about "outside inquiries concerning employees" were unlawful restrictions on Section 7 activity. However, the ALJ found that a rule discouraging employees from having a bad attitude was lawful.

The employer and the counsel for the NLRB's General Counsel (CGC) filed exceptions and cross-exceptions appealing different parts of the ALJ's decision to the four-member panel (Board) heading the NLRB's judicial functions. The employer did not appeal the ALJ's determinations about the unauthorized interviews or outside inquiries policies. The CGC did not appeal the ALJ's determinations about the "bad attitude" policy.

On September 28, 2012, a three-member panel of the Board issued a decision in Karl Knauz Motors, Inc., affirming the ALJ's holding that Becker was lawfully terminated solely for his Land Rover posting. The Board declined to address the ALJ's conclusions that Becker's Facebook post about the BMW event constituted concerted protected activity, having found that Knauz lawfully terminated Becker for his unprotected conduct.

A two-member majority (Member Hayes dissented) held that Knauz's courtesy rule was unlawful because it could be construed as prohibiting employees from discussing and criticizing with other employees their terms and conditions of employment, an activity protected under Section 7 of the NLRA. The majority found that the policy was ambiguous as to whether it prohibited Section 7 activity because it did expressly exempt Section 7 activity from the prohibitions on disrespectful or reputation damaging statements.

The majority held that in similar circumstances, it has construed ambiguous employer rules against the employer (Flex Frac Logistics, LLC).

In his dissenting opinion, Member Hayes asserted that the majority departed from Board precedent by:

Karl Knauz Motors, Inc. confirms that employers must avoid ambiguous rules that could be construed against them, including rules requiring certain standards in employees' speech. If an employer issues a rule regulating employee speech, including social media posts, the rule should exempt speech regarding the terms and conditions of employment (see Standard Clause, Policy Disclaimer of Restrictions on Employees' NLRA Rights). The Board falls short of finding that a disclaimer of restrictions of Section 7 activity immunizes vague policy language, but the analyses in this case and in Costco Wholesale Corp., suggest that a disclaimer would certainly reduce the chance that an employee would reasonably construe the policy as restricting Section 7 rights. The Board in Knauz used traditional tests for evaluating the employer's restriction on employee speech as it did in Costco Wholesale Corp. (see Legal Update, NLRB Invalidates Electronic Posting Rule in First Published Opinion Concerning Employers Limiting How Employees Use Social Media).

Because the Board declined to address the ALJ's conclusions that Becker's Facebook post about the BMW event constituted concerted protected activity, the ALJ's findings on that issue are not precedential. Likewise, because no exceptions were filed to challenge the ALJ's determinations about the unauthorized interviews, outside inquiries concerning employees and bad attitude policies, the Board had no basis for, and did not review them to make them precedential.