NLRB Slams Costco On Social Media Use Policy: What It Means For Your Business

By Mikal E. Belicove|For Forbes Magazine website|September 28, 2012

A ruling by the National Labor Relations Board (NLRB) in a case involving Costco earlier this month makes it clear that employers who want to avoid labor disputes would be well served to schedule a sit-down with their legal counsel and take a close look at their existing social media use policies.

What prompts this suggestion is a Sept. 7 ruling by the NLRB that essentially invalidates Costco Wholesale Corp’s employee policies covering the use of the Internet and in particular, social media. The decision comes nearly two years after Local 371 of the United Food and Commercial Workers filed charges against Costco for perceived violations of the National Labor Relations Act.

The three-person NLRB panel deemed that the third largest retailer in the U.S. has employee policies in place that are “too broad” when it comes to the use of the Internet and social media. In fact, the panel ruled that policies outlined in the Costco Employee Agreement could effectively stifle its employees’ right to free speech under the Act.

Specifically, the electronic posting rule found in Costco’s employee handbook advises that company employees, “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.”

And while that statement might sound reasonable on the surface (in fact, an administrative law judge ruled it so), the NLRB decided on appeal that employees could interpret the Costco policy as prohibiting Section 7 activity under the labor act.

And Section 7 is pretty much the heart of the labor relations act. It protects employees who choose to take part in grievances, on-the-job protests, picketing and strikes. It enables employees to organize, join unions and engage in “other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

As such, the board’s ruling determined that Costco’s edict regarding electronically posted materials by employees was too broad and didn’t exclude protected communications among workers. In addition, the panel struck down other Costco policies that are found in many corporate employee policy guidelines these days. Among those were…

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