On September 7, 2012, the National Labor Relations Board (NLRB or the Board) issued a decision in which it found several provisions of an employer’s handbook, including its social media policy, unlawful. The Board’s decision in Costco Wholesale Corporation & UFCW Local 371, Case No. 34-CA-012421, is its first regarding employer social media policies.

Previous Board guidance regarding employer social media policies has come from two sources: decisions from NLRB Administrative Law Judges (ALJ) and memoranda from the Board’s General Counsel. Neither ALJ decisions nor the General Counsel’s memoranda possess the precedential value that a Board decision does.

The Board’s decision in Costco involved several provisions of the employer’s handbook. The handbook prohibited unauthorized postings on company property; discussion of “private matters of [Costco] members and other employees,” including sick leave and workers’ compensation issues; discussion of “sensitive information,” including payroll information; discussing “confidential information” including other employees’ names and e-mail addresses; and electronic postings that “damage the Company . . . or damage any person’s reputation.”

The NLRB found that all of the above provisions were unlawful under the National Labor Relations Act (NLRA). The NLRA gives employees the right to engage in protected concerted activity. Such activity can include discussing wages or other terms and conditions of employment with coworkers, unions or the government. Workplace rules that employees would reasonably read to chill the exercise of their rights under the NLRA are unlawful.

The provisions listed above were found unlawful because they would reasonably be read to chill protected concerted activity:

• The Board agreed with the ALJ that prohibiting unauthorized posting on company property was unlawful on its face because it prohibited posting in nonworking areas. Under current Board law, restrictions on distribution or posting must be confined to “work areas.” 

• The Board also found that prohibiting employees from discussing “private matters” was facially unlawful. As defined in the handbook, “private matters” includes terms and conditions of employment, which employees have a right to discuss amongst themselves and union representatives. 

• The prohibitions related to discussing “sensitive” information included information relating to employees’ terms and conditions of employment, which the Board held the employer could not bar employees from discussing. Specifically, the policy defined “sensitive” information to include payroll information. The Board agreed with the ALJ that a reasonable employee would read that term as encompassing their wages.

• The Board found the prohibitions related to discussing “confidential” information unlawful as well. The Board agreed with the ALJ that because a distinction was not made between “confidential” information obtained from the employer’s files (which an employer can protect against disclosure) and information that comes to employees’ attention in the normal course of their work activity or even from a cowoker (which the employer cannot protect against disclosure), the rule was overbroad and would be read to chill protected concerted activity.

• Prohibiting employees from making statements that damage the company’s reputation was held unlawful because it would reasonably be read to prohibit employees from complaining about the company’s treatment of them.

The Board, however, upheld two challenged provisions of the employer’s handbook. First, the employer was allowed to require employees to observe “appropriate business decorum” when communicating with others. This was permissible because it would not reasonably be read as inhibiting protected conduct, but rather would be understood as requiring general workplace civility. Second, the Board upheld a provision that prohibited employees from leaving company premises during their shift without management permission. The Board concluded that this would not be reasonably read as requiring employees to get management permission to go on strike.

The Costco decision is not surprising. It is consistent with the guidance found in the General Counsel’s memoranda. Although the Board didn’t explicitly rely on those memoranda, it cited many of the same cases found in those memoranda, and used many of the same interpretive principles that the General Counsel used. More than anything, the Board’s Costco decision is important because it has the force of law.

Now that the Board has officially weighed in on social media policies, employers should revisit their policies and review them with counsel. Additionally, because the Board’s Costco decision reached employee handbook policies unrelated to social media, employers should review their employee handbooks with counsel as well. Conducting a handbook or policy review before receiving a Board charge is worthwhile because many provisions that may be unlawful under Costco could be lawful if appropriately tailored. Employers should consult with counsel to determine the best way to balance their business interests and employees’ labor rights when drafting employee handbooks and social media policies.