Editor’s Note: This post is a joint submission to BakerHostetler’s Media Law Bytes & Pieces blog.

Since June 2011, the Acting General Counsel (GC) of the National Labor Relations Board has issued three reports outlining the position of his office on the applicability of the National Labor Relations Act (NLRA) to employee policies that set rules for permissible social media use. The positions taken by the GC were considered by some to have been overprotective of employees and advanced without considering the unique issues associated with social media (e.g. the GC’s contention that a provision prohibiting disclosure of confidential information was unlawful). Other than identifying the social media policy of one retailer that was deemed acceptable, the three GC reports focused mostly on identifying what provisions were unlawful rather than providing guidance on creating a compliant policy. Review our prior coverage of the GC reports.

The GC’s reports caused some employers to modify their social media policies while others waited to see if the GC’s arguments were accepted by the NLRB. Until the NLRB issued a decision in the Costco Wholesale Corp. matter on September 7, 2012, however, the NLRB had not addressed any of the positions taken by the GC in a published decision. In the Costco decision, the NLRB found that provisions in an employment agreement that regulated employee use of social media violated the NLRA. The decision has been widely reported as adopting much of the reasoning from the GC reports. Although such reports may be overstated, like the GC, the NLRB’s analysis in Costco applied precedent developed to address traditional workplace rules to find broad rules directed at defining impermissible use of social media to be unlawful instead of developing standards specific to the unique nature of social media. Specifically, the NLRB found that the following employee rules that often appear in social media policies violated the NLRA because they could reasonably be seen as chilling employees’ exercise of their rights under Section 7: (1) a prohibition on electronically posting statements that damage the company or any person’s reputation; (2) prohibiting unauthorized posting, removal or alteration of material on company property; and (3) prohibiting discussing, disclosing or sharing private employee matters or confidential information.

One area where the NLRB and the GC may differ is over the impact of including a “savings” clause. Some social media policies contain a provision stating that the policy will not be construed or applied in a manner that would violate the NLRA. The GC contends that this type of “savings” clause does not save overly broad provisions from violating the NLRA. But the NLRB noted the absence of such a provision as part of its basis for finding policy language to be unlawful.

In the wake of Costco, employers should review their employee handbooks and social media policies to look for issues. We have listed below the specific policy language that was found to violate the NLRA and the NLRB’s supporting rationale. When revising or implementing new social media policies, we recommend that employers consider the following:

  1. Include an introductory paragraph that provides an explanation of the nature of issues and business risks unique to social media that the policy is designed to address to provide context for the prohibitions that will follow;
  2. Create separate segments of the policy for different forms of social media use (e.g. personal use, employer-owned) so the prohibitions can be appropriately tailored;
  3. Provide examples of prohibited conduct associated with actions not protected by the NLRA (e.g. prohibiting “verbal abuse” or “abusive and profane language”); and
  4. Include a “savings” clause stating that protected activity is excluded from the scope of the policy.

For more tips on crafting a social media policy, see the following BakerHostetler publications:

Below is a list of the specific policy language and the NLRB’s explanation for why it was unlawful:

  • “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 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.”

    The NLRB found that this “broad prohibition against making statements that ‘damage the Company, defame any individual or damage any person’s reputation’ clearly encompasses concerted communications protecting [Costco's] treatment of its employees.” The Board was particularly critical of Costco’s failure to explicitly exclude from its policy protected activity under the NLRA. Without any exclusion, the Board found that employees would reasonably conclude that the restriction applies to protected communications, such as those critical of Costco.

  • “Sensitive information such as membership, payroll, confidential financial, credit card numbers, social security numbers, or employee personal health information may not be shared, transmitted, or stored for personal or public use without prior management approval. Additionally, unauthorized removal of confidential material from Company premise[s] is prohibited.”

    NLRB found that the prohibition against sharing “payroll” information violated the Act. It rejected Costco’s argument that the term “payroll” referred only to the “confidential business information component of payroll” (which Costco did not want to share with its competitors). Instead, the NLRB found that the term payroll reasonably referred to the wages and working conditions of its employees, and therefore, violated the Act.

  • “All Costco employees shall refrain from discussing private matters of members and other employees. This includes topics such as, but not limited to, sick calls, leaves of absences, FMLA call outs, ADA accommodations, workers’ comp injuries, personal health information, etc.”

    The NLRB found that this rule explicitly prohibits protected activity. “Private matters” as defined by the rule, such as sick calls and accommodations, are terms and conditions of employment. Costco’s explicit prohibition of employees discussing these matters with anyone — which the NLRB found would include other employees or union representatives — is overly broad. The NLRB was not persuaded by Costco’s argument that the rule simply tried to avoid the disclosure of medical issues. Instead, the NLRB found that if Costco “intended to prohibit only discussion of private medical information in its files, it could have easily done so.”

  • Cause for termination of employment for “Unauthorized posting, distribution, removal, or alteration of any material on Company property.”

    The NLRB found that this rule explicitly prohibits protected activity. It rejected Costco’s argument that the rule intended to permit distribution in non-working areas during nonworking time.

  • “In the course of our business, we collect from our members and employees a substantial amount of personal information (such as name, address, phone number, e-mail address, social security number, membership numbers and credit card numbers). All of this information must be held strictly confidential and cannot be disclosed to any third party for any reason, unless (1) we have the person’s prior consent or (2) a special exception is allowed that has been approved by the legal department.”

    In striking this provision, the NLRB found that Costco’s definition of “confidential” was overbroad because it included employees’ names, addresses, phone numbers and email addresses, which they otherwise have a protected right to share with others, such as unions. Costco’s provision did not distinguish between information obtained in the normal course of work versus information obtained from Costco’s private or confidential files. The NLRB further criticized the provision because it failed to distinguish between information obtained by employees from contact with or discussion with other employees.