Companies Should Reexamine Their Social Media Policies in Light of Recent NLRB Decision on Costco, Attorney Says

NEWARK, N.J. — A recent Decision and Order issued by the National Labor Relations Board that invalidated electronic posting or social media limits enacted by Costco Wholesale Corp. could have a chilling effect on many companies, according to Joseph P. Paranac Jr., a shareholder in LeClairRyan’s Newark office who focuses on labor and employment law.

The September 7 NLRB decision, Costco Wholesale Corporation and United Food and Commercial Workers Union, Local 371 [Case 34–CA–012421], found that a passage in Costco’s employee handbook was overly broad and could easily be construed as a violation of Section 7 of the National Labor Relations Act that protects employees’ rights to engage in collective bargaining. The passage prohibited employees from posting statements electronically “that damage the company, defame any individual or damage any person’s reputation, or violate the policies outlined in the Costco Employee Agreement.”

“This is significant because the NLRB cited the potential restraint on protected union activity despite the fact that the Costco prohibition did not explicitly reference Section 7 activity,” explains Paranac. “This decision concerned a nonunion Costco meat department in Milford, Conn. that was the target of union organizers, but the wording could be broad enough to affect just about any company regardless of its size or union status.”

Paranac suggests that any company with a social media policy in place should consider working with its legal advisers to review the policies in light of this NLRB decision. “If you don’t have a social media policy in place, you might consider speaking with your in-house counsel or outside legal advisers before structuring and implementing one,” he adds.

Employers have increasingly been seeking such advice, he says. “The NLRB’s focus typically changes depending on the political party that’s in the White House,” Paranac says. “Under the Republicans, this would likely not have been an issue. But under the current administration the NLRB has expanded its definition of protected organizing activity, and during the past few years an increasing number of businesses have sought counsel on their social media policies.”

The wording of the recent ruling, however, may offer a safe harbor, he adds.

“The NLRB concluded that the Costco restrictions could be construed by employees as a prohibition on union organizing activities,” Paranac explains. “But that begs a question: what would have happened if Costco had explicitly excluded union organizing activity from the restrictions? Companies might consider amending their employee social media policies by adding language that makes it clear that the company does not intend to infringe on Section 7 activity. You may be able to retain language about not defaming individuals or not harming the company, but it could be useful to confer with your advisers about adding language that makes it clear that Section 7 activity is not being restricted.”

Leave a comment