November 13, 2012

Labor Pains for Employers: NLRB Delivers Twin Employee-Friendly Decisions on Employer Social Media Policies

First NLRB Rulings on These Issues
Holland & Knight Alert
Howard Sokol

The National Labor Relations Board recently issued two rulings on employer social media policies that can be construed as favorable to employees. As a result, it is recommended that employers take the time to specifically define prohibited communications so that their policies do not unlawfully limit employees from discussing their terms and conditions of employment.


A brief summary of recent NLRB statements and rulings on social media issues is helpful before examining the two new rulings.

The NLRB has aggressively challenged employers' social media policies and other work rules concerning employee communications. Until recently, however, guidance to employers has come only from the memoranda of Lafe Solomon, the NLRB’s very active Acting General Counsel, and from decisions issued by various of the Board’s Administrative Law Judges (ALJ). (A number of such rulings are currently on appeal before the Board.) Mr. Solomon decides what policies will be challenged, but ultimately it is the Board’s decisions that determine and set forth what is lawful and unlawful.

Under Section 7 of the National Labor Relations Act (the Act), employees — union and nonunion alike — have the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” For an employer to interfere, restrain or coerce its employees in their exercise of this right is to commit an unfair labor practice under the Act. Accordingly, when employers have policies that prohibit or even limit the types of discussions or other communications in which employees might engage, including those through social media outlets, and especially where discipline might result, the Board has an invested interest in assuring the guaranteed protections under the Act.

The Costco and Knauz Rulings

In Costco Wholesale Corp., 358 NLRB No. 106 (Sept. 7, 2012) and Karl Knauz Motors Inc., 358 NLRB No. 164 (Sept. 28, 2012), the Board issued its first decisions on the acceptable parameters of and legal requirements for workplace social media policies.

With these cases, the Board has made it clear, as had the opinions of Mr. Solomon, that social media policies and other company rules that broadly limit employees' posts and communications on social media (e.g., Twitter, Facebook, blogs, etc.) will be found unlawful and in violation of the Act. Such a finding is especially likely when such policies do not also clearly inform employees that they will not be disciplined for discussing the terms and conditions of their employment. The Board said that these principles apply to nonunionized employees as well.

These decisions will guide employers not only in implementing lawful social media policies, but will also help to assure that adverse employment actions for employees’ social media activities do not violate the Act.  

Companies’ Social Media Policies and Work Rules Found Unlawful


Costco: Employers Need Not Be Warm and Fuzzy, But Don’t “Chill” Employees

In Costco, the Board considered the lawfulness of the company’s social media policy, which a union had challenged during an organizing campaign. The challenged part of the 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 Costco’s Employee Agreement, may be subject to discipline, up to and including termination of employment.

The Board unanimously ruled that this policy violated the Act. It explained that a rule is unlawful — even if it has never been applied to discipline employees — if it “reasonably tends to chill employees in the exercise of their Section 7 rights.” Even where the policy or rule does not explicitly restrict employees Section 7 rights, as was the case with Costco’s facially neutral policy, it will still be found unlawful if: (1) employees would reasonably construe the language to prohibit Section 7 activity, and (2) the rule was promulgated in response to union activity; or (3) the rules had been applied to restrict the exercise of Section 7 rights.

The Board found that Costco’s employees could reasonably construe the company’s policy as prohibiting them, under threat of discipline up to and including termination, from engaging in protected communications because the policy contained a broad prohibition that “clearly encompasses concerted communications,” without any carve-out for protected communications. In other words, the Board concluded that a Costco employee reading the policy would reasonably believe that he or she was prohibited from discussing with others his or her working conditions at Costco, even if critical of the company, which is a right guaranteed by Section 7 of the Act.

As the Board distilled, given that “there is nothing in the rule that even arguably suggests that protected communications are excluded from [the broad prohibitions] . . . . [the policy] allows employees to reasonably assume that it pertains to — among other things — certain protected concerted activities, such as communications that are critical of the respondent’s treatment of its employees.” The Board explained that the policy, by prohibiting the types of employee communications, in effect prohibited the content of such discussions, in violation of the Act.

The Board, however, found that another part of Costco’s policy requiring employees to use “appropriate business decorum” (in order to promote a “civil and decent workplace”) was lawful, because the policy monitored only the manner of communication and not the substance, and employees would not “reasonably construe” such a rule as prohibiting protected activities.

The Board in Costco also found unlawful company rules that prohibited employees from electronically: (1) sharing “confidential” information such as employees’ names, addresses, telephone numbers and email addresses; (2) discussing private employee matters, including various terms and conditions of employment; (3) sharing sensitive information such as payroll data; and from (4) the “unauthorized posting, distribution, removal or alteration of any material on company property.” The Board reasoned that employees would reasonably construe such restrictions to prohibit or limit discussion of wages and other terms and conditions of employment, all which are protected by Section 7 of the Act.

Knauz: Asking for Courtesy Might Be Demanding Too Much

Just a few weeks after its decision in Costco, in Karl Knauz Motors Inc., the Board considered the following rule, which had been used to terminate an employee based on his comments about the employer on a social media site:

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 reasoning in Costco, a divided Board found this rule, which applied to nonunion employees, to be unlawful. The Board’s majority explained that the “employees would reasonably construe its broad prohibition against ‘disrespectful’ conduct and ‘language which injures the image or reputation of the Dealership’” as encompassing “employees’ protected statements — whether to coworkers, supervisors, managers, or third parties,” that “object to their working conditions and seek the support of others in improving them.” Although (and unlike in Costco) the rule in Knauz did not contain any warning of discipline for those who violate the policy, the majority still concluded that without any explicit statement detailing that employee communications otherwise protected by the Act are “excluded” from the company’s broad rule, “an employee reading this rule would reasonably assume that the employer would regard statements of protest or criticism as ‘disrespectful’ or ‘injur[ious] [to] the image or reputation of the Dealership.’”

The majority noted that the first sentence of the rule — “everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers — would be lawful on its own. That portion proscribes only a specific manner of communicating, not the content of the communications. But the second sentence, prohibiting being “disrespectful and using any “language” that “injures the reputation of the dealership,” specifically limits “the content of employee speech — content that would damage the Respondent’s reputation.” Given the second sentence, an employee reading the rule could reasonably conclude that almost any critical statement about the employer could be interpreted as “disrespectful” and subject the employee to discipline. Because employees have a right to make statements critical of their employers’ treatment of employees or the employees’ terms and conditions of employment, a rule that can be read to limit such critical statements violates the Act, the majority said.

In a vigorous dissent, Board Member Brian Hayes took issue with what he considered the majority’s tortured interpretation of  the employer’s courtesy policy. He criticized the majority for “reading words and phrases in isolation” and for determining the Act “invalidates any handbook policy that employees conceivably could construe to prohibit protected activity, regardless of whether they reasonably would do so.” He also said the majority’s ruling was inconsistent with the Board’s unanimous decision just two weeks before upholding Costco’s “business decorum” rule.

Nevertheless, the Board unanimously affirmed the ALJ’s decision upholding an employee’s termination over Facebook posts and uploading pictures which mocked Knauz. An employee of the BMW dealership owned by Knauz took pictures of an accident at an adjacent Knauz-owned Land Rover dealership in which a customer’s young son drove a Land Rover into a pond in front of the dealership. The employee posted photos of the accident on his Facebook page along with a caption that read: “This is your car: This is your car on drugs.” The same employee also made mocking comments concerning the food (hot dogs and chips) that the BMW dealership had served to customers at an event held to introduce a new BMW model.

The Board concluded that the posts regarding the accident were not protected by the Act because: (1) the employee acted individually, rather than in concert with other employees; and (2) the post had nothing to do with his terms and conditions of employment. The Board further agreed with the ALJ that even if the employees’ posts about the food were protected, the employer actually fired the employee only for his posts about the accident.  

It is important to note that the ALJ had found the employee’s Facebook posts criticizing the food to be served at the sales event to be protected by the Act. The ALJ reasoned that the statements were “concerted” because the employee and one of his co-workers had raised the issue of the inferior food at a meeting just prior to the event, and he found that the food at a sales event could affect the salesperson’s sales and thus his compensation, a term and condition of employment. He further found that the employee’s statements about the food, although mocking and critical, were not so "opprobrious" or "disloyal" to lose the protection of the Act. Unless statements are harassing based on a protected characteristic, maliciously false, gratuitously obscene or criticize the employer's products or services, vendors, customers or competitors, they are likely protected.

Lesson for Employers: Be Clear and Specific, and Give Examples

These recent decisions confirm that the NLRB believes that employees have significant rights to discuss their employment, criticize their employers and engage in union activity on social media sites. As a result, the Board will find to be unlawful social media policies and other work rules that could be read to prohibit criticism by employees of their employers’ treatment of them and comments by employees or their terms and conditions of employment. These decisions also underscore that the NLRB will hold ambiguity in such a policies and work rules against the employer.

As the decisions instruct, the key to creating a lawful social media policy and work rules is to give specific examples of the kinds of conduct that are prohibited so employees will not reasonably believe protected discussions of their working conditions are prohibited.

Mr. Solomon’s analysis from May 2012 of why retail giant Wal-Mart’s social media policy is lawful provides helpful guidance. In his memorandum, the Acting General Counsel concluded that the company’s prohibition of “inappropriate” social media postings was lawful because the company further defined inappropriate postings to mean “discriminatory remarks, harassment, and threats of violence or similar inappropriate or unlawful conduct.” Similarly, Mr. Solomon found that Wal-Mart’s request that employees be “fair and courteous” in their social media postings “could be overly broad,” but he concluded that the company provided “sufficient examples of plainly egregious conduct so that employees would not reasonably construe the rule to prohibit” conduct protected by the Act. More specifically, the policy said it prohibited “malicious, obscene, threatening or intimidating” conduct, explained the prohibition on “bullying,” and cited discrimination on the basis of race, sex, disability, religion “or any other status protected by law or company policy” in prohibiting employees from engaging in conduct that would contribute to a hostile working environment for others.

Mr. Solomon also concluded that specific examples saved Wal-Mart’s prohibition against disclosing the company’s confidential information and trade secrets on social media sites. Wal-Mart’s rule “provided sufficient examples of prohibited disclosures (i.e., information regarding the development of systems, processes, products, know-how, technology, internal reports, procedures, or other internal business-related communications) for employees to understand that it does not reach protected communications about working conditions.”

Finally, employers can prohibit disparaging or derogatory social media posts concerning their customers, vendors, suppliers or competitors. But such prohibitions concerning the employer or its supervisors and managers must be limited to knowingly false or deliberately false statements.

The NLRB decisions show that social media policies and work rules will continue to be challenged as violating the Act, and that the devil is in the details.

Please contact Holland & Knight if you would like more information about these rulings, or for counsel regarding your company’s social media policy or work rules concerning employee communications.






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