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NLRB Invalidates Costco’s Social Media Policy

NLRB Invalidates Costco’s Social Media Policy

A recent decision by the National Labor Relations Board may pose significant challenges to Costco and other employers, large and small, who want to manage their employees’ social media communications.

In my recent series on Social Media Law, I wrote about the National Labor Relations Board (NLRB) and their aggressive stance towards employer social media policies. To review a core point from that post:

Generally speaking, social media policies limiting or banning employees from discussing the employer/company are unlawful when they “reasonably tend to chill” non-union employees in the exercise of their rights to engage in concerted, protected activity. Concerted activity occurs when employees act jointly for the purpose of union or organization, collective bargaining, or other mutual aid or protection with regards to their working conditions (discussing wages, hours, and other conditions).

These protected activities are generally referred to in connection with Section 7 of the National Labor Relations Act. The important point is that the NLRB adopts a broad definition of what types of policies will tend to interfere with employees’ legal rights.

The NLRB singled out the following language in Costco’s employee handbook:

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.

This language was held to be in violation of the law (here’s a link to the NLRB’s decision). Taken individually, many employers would see nothing objectionable in Costco’s wording – employees are often disciplined for statements that may damage the company, defame someone, or violate company policies. But the NLRB appears to have taken the stance that otherwise-reasonable restrictions, if they leave any room for an interpretation that might affect an employee’s rights under the National Labor Relations Act, are to be completely prohibited.

The NLRB ruling did contain one faint bright spot for Costco and other employers who want to comply with the law while still imposing reasonable restrictions that are necessary for the conduct of business and to shield against liability. The ruling stated:

Indeed, there is nothing in the rule [in Costco’s employee handbook] that even arguably suggests that protected communications are excluded from the broad parameters of the rule [Section 7]. In these circumstances, employees would reasonably conclude that the rule requires them to refrain from engaging in certain protected communications (i.e., those that are critical of [Costco]).

One possible translation of this language is that if Costco were to have included language stating that their social media policy is not intended to violate or override the employees’ right to legally communicate about work-related matters, the NLRB may have allowed the policy to stand. This is referred to as a “savings clause” – essentially a clause that cures any deficiencies by stating that it doesn’t apply to any legal rights the employee may enjoy.

However, the NLRB has previously articulated a policy that savings clauses will not be sufficient if the language otherwise violates employees’ speech rights (here’s a link to the previous NLRB memo on the topic of savings clauses). Until the NLRB provides further clarification, employers should not assume that a savings clause will allow otherwise-questionable language to stand.

One final note that seems to have gone generally unreported: not only was Costco’s social media policy struck down, but the NLRB further required Costco to distribute a notice to employees – in English and Spanish, online and in a variety of physical locations – starting with the following:


The National Labor Relations Board has found that we violated Federal labor law and has ordered us to post and obey this notice.

…and continuing in detail about how Costco has violated the law and what changes they are required to make. Surely no employer wants to have to distribute such a notice to their employees.

I am now operating on the assumption that almost all U.S. employers’ social media policies are in violation of the National Labor Relations Act until the NLRB provides further clarification. Employers should be very careful when drafting such policies. Do not may any assumptions that if a certain clause seems reasonable, it must be legal. This is often not the case. Seek qualified legal counsel, and be prepared to be told that there is no perfect answer, and we don’t really know for sure exactly what types of language the NLRB will find legal at this point.

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