It’s official! After plenty of guidance on social media policies from the National Labor Relations Board’s (NLRB or “the Board”) Acting General Counsel, we now have a decision from the Board applying that guidance.

The NLRB ruled that an employer’s policy prohibiting employees from posting on social media statements "that damage the Company, defame any individual or damage any person’s reputation" unlawfully restricted employees’ Section 7 rights under the National Labor Relations Act (NLRA) (Costco Wholesale Corp., Case No. 34-CA-012421 (2012)). Section 7 rights include the right to engage in concerted activities “for the purpose of collective bargaining or other mutual aid or protection.”

In this case, the NLRB found that the rule against damaging the Company or defaming any individual “clearly encompasses” protected concerted communications such as those criticizing the employer’s treatment of employees. The Board also noted that the rule contained no language restricting its application. Thus, it reasoned, employees could reasonably assume it covered concerted protected activity.

Given the earlier guidance on social medial policies from the Acting General Counsel, it’s not surprising that the Board would find prohibitions on statements that damage the Company’s or individual’s reputations have a chilling effect on Section 7 activity. That is, such a rule may inhibit employees from criticizing the working conditions or management.

What’s striking about the Board’s decision is that it did not differentiate between “damaging” and “defamatory.” The Board attempts to distinguish Costco from previous cases where it upheld work rules prohibiting activity that was “injurious, offensive, threatening, intimidating, coercing, or interfering with other employees” and “statements which are slanderous or detrimental to the company or any of the company’s employees.” The Board does this by asserting that, unlike the earlier cases, the Costco rule contained no “language that would restrict its application.”

However, Costco’s prohibition on damaging the Company or a person’s reputation was in the context of prohibiting defamation. Defamation involves an intentionally false statement that is spoken or published and that injures another’s reputation or good name. Defamatory remarks can result in civil, and sometimes criminal, liability. Viewing the rule in context, it is difficult to understand how a reasonable employee could believe it prohibited protected concerted activity.

To be fair, the Board’s Order requires Costco to rescind or modify the language in the policy “to the extent that it prohibits employees from making statements that damage the Company or damage any person’s reputation.” It does not require the employer to modify the language prohibiting defamation. Nonetheless, the decision itself fails to make this distinction.

Shortly after its Costco ruling, the Board struck down a Courtesy Policy promulgated by an auto dealership (Karl Knauz Motors, Inc., Case 13-CA-046452 (2012)). In this case, the employer included in its employee handbook a Courtesy Policy that stated:

Courtesy: Courtesy is the responsibility of every employee. Everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as to their fellow employees. No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.

Relying on its decision in Costco, the Board found that this policy could reasonably be interpreted by employees to prohibit protected concerted activity. As in Costco, the Board stated that nothing in the rule or the handbook as a whole suggested to employees that the rule did not apply to Section 7 activity.

However, as the dissent in Karl Knauz Motors points out, “by its “Courtesy” rule the [employer] sought to promote civility and decorum in the workplace and prevent conduct that injures the dealership’s reputation—purposes that would have been patently obvious to [the employer’s] employees, who depend on the dealership’s image for their livelihoods.”

On a positive note for employers, in Karl Knauz Motors, the Board upheld the employer’s decision to terminate an employee who posted on Facebook comments and photos of a car accident that occurred at the dealership. The Board reasoned that these photos and comments did not involve other employees or deal with the terms and condition of employment. Therefore, the termination was unrelated to Section 7 activities.

Bottom Line: Neither Costco nor Karl Knauz Motors provides much additional guidance for employers struggling to formulate social media policies that both satisfy the NLRB and protect the integrity of their businesses. However, both decisions serve as a reminder to employers to include specific examples of the types of conduct social media and other policies prohibit.

Related articles:

• NLRA: Social media changes the game for protected concerted activity
• NLRB report examines employer social media Policies
• NLRB provides guidance on social media policies