News & Events

Employers Beware! NLRB Strikes Down Costco's Social Media Policy

Submitted by Firm:
Cross, Gunter, Witherspoon & Galchus, P.C.
Firm Contacts:
Abtin Mehdizadegan, J. Bruce Cross, Misty Wilson Borkowski
Article Type:
Legal Update

The National Labor Relations Board has issued its first decision on an employer's social media policy, finding that Costco Wholesale Corporation's policy violated the National Labor Relations Act by restricting Costco employees from engaging in protected, concerted activity via social media. Under Section 8(a)(1), it is an unfair labor practice for an employer to "interfere with, restrain or coerce" employees in the exercise of their rights guaranteed in Section 7. Under Section 7, employees have the right to self-organize, to join unions and to engage in "other concerted activities for the purpose of collective bargaining or other mutual aid or protection." Employees do not have to work for a unionized employer to be protected by this provision. 

Costco's social media policy stated: 

"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." 

The Board concluded that, because the policy failed to provide an exception for employee statements protected by Section 7, employees could assume that the policy restricted those rights. In other words, since the policy prohibited employees from making statements "that damage the company, defame any individual or damage any person's reputation," the Board ruled that the policy might keep Costco's employees from certain concerted activity, such as protesting Costco's treatment of employees. 

This decision confirms what employers have feared for months: that the NLRB will blindly protect employees' right to criticize their employers via social media. The NLRB has hinted at this outcome with three memorandums previously issued by NLRB Acting General Counsel Lafe Solomon, all of which indicated the Board's willingness to expand the definition of protected concerted activity to include social media. 

While it is unclear how Costco will respond, it is worth noting that facing an investigation (and possible prosecution) by a federal agency can be very costly and damaging to a company's brand. Employers should re-examine their social media policies in light of this NLRB decision, and consult the attorneys at CGWG before drafting and implementing such a policy. As this case makes clear, a well-meaning, but broadly worded social media policy can lead to charges filed by the NLRB, even if no union is present at your workplace.