The recent decisions in Costco and Karl Knauz Motors demonstrate that the NLRB will closely scrutinize any policy, including social media policies, that prohibits employees from making damaging comments about their employers.

Employers that have or are considering instituting social media or civility policies may want to pay attention to two National Labor Relations Board (NLRB; the Board) decisions issued in September 2012.

Costco Decision

On September 7, 2012, the NLRB issued a decision finding that Costco Wholesale Corporation's electronic posting policy violated the National Labor Relations Act (the Act). Specifically, the Board held that Costco's policy restricting employees from making electronic statements that damage the company or any person's reputation violated Section 7 and Section 8(a)(1) of the Act. The policy stated:

Any communications transmitted, stored or displayed electronically must comply with the policies outlined in the Costco Employee Agreement. 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 NLRB disagreed with the administrative law judge (ALJ) and found that employees would reasonably construe this rule as prohibiting Section 7 activity. The NLRB reasoned that while the rule did not explicitly reference Section 7 activity, by its terms, the broad prohibition against making statements that damage the company encompasses concerted communications protesting the company's treatment of employees. Therefore, employees "would reasonably conclude that the rule requires them to refrain from engaging in certain protected communications. . . ."

In its decision, the NLRB distinguished cases where the Board upheld other employer policies because unlike the policies in those cases, Costco's policy did not contain any language restricting the policy's application. Thus, employees could reasonably assume that the policy pertains to certain protected concerted activities, such as communications that are critical of the company's treatment of its employees.

Besides its determination on Costco's electronic communications policy, the NLRB also overturned the ALJ's determination that the company's rule prohibiting employees from leaving the premises during their work shifts violated Section 7. Contrary to the ALJ, the Board held that the prohibition from leaving the premises during work time would be reasonably understood to prohibit employees from leaving their posts for reasons unrelated to concerted activity.

Additionally, the NLRB affirmed the ALJ's finding that the company's rule requiring "appropriate business decorum" in communicating with others did not violate Section 7 activity. The ALJ relied on prior NLRB decisions in holding that "where the rules in question are clearly intended to promote 'a civil and decent workplace,' even though in some circumstances protected conduct might be restricted, reasonable employees would not infer that the rules restrict Section 7 activity."

Karl Knauz Motors Decision

On September 28, 2012, the NLRB issued a decision upholding an ALJ's finding that Karl Knauz Motors, Inc. did not violate the Act when it terminated a car salesman for Facebook postings about the company. However, a split NLRB voted 2-1 that the company's "Courtesy Rule" violated Section 7 of the Act.

Robert Becker was a car salesman for the company's BMW dealership in Illinois. During a meeting in preparation for a company sales event, Becker, along with another employee, expressed displeasure to management that hot dogs, cookies and chips were going to be provided at the event, arguing that higher-quality food should be served. Becker additionally discussed the food issue with other sales people after the meeting. At the event, Becker took pictures and then posted the pictures on his Facebook page, along with comments ridiculing the company's management.

A few days later, an accident involving a customer occurred at another company-owned dealership, next to the dealership where Becker worked. Becker took pictures of the accident and then posted these pictures on Facebook, along with sarcastic comments.

After the company learned of Becker's Facebook postings, Becker was terminated.

The ALJ first determined that Becker's Facebook postings regarding the company sales event was protected concerted activity because Becker had discussed his issues with the sales event with other employees and the sales event could have an effect upon his compensation. However, Becker's postings regarding the accident were neither protected nor concerted activity because Becker posted the pictures without any discussion with any other employee and the postings had no connection to any employee's terms and conditions of employment. The ALJ found that Becker was fired because of his Facebook postings about the accident, not the sales event, and the company did not violate the Act.

With regards to the Courtesy Rule, the rule appearing in the company's handbook stated:

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.

The Board found by a 2-1 vote that the Courtesy Rule was unlawful because employees would reasonably construe its broad prohibition against disrespectful conduct and language that injures the dealership as encompassing Section 7 activity, such as employees' protected statements that object to their working conditions. The Board reasoned that while the first section of the rule was positive and aspirational, the second section specifically proscribed certain types of conduct and statements. The Board distinguished its holding in Costco regarding the "appropriate business decorum" rule because the rule there contained no prohibition on employee statements or conduct that would reasonably apply to protected activity.

What This Means for Employers

The recent decisions in Costco and Karl Knauz Motors demonstrate that the NLRB will closely scrutinize any policy, including social media policies, that prohibits employees from making damaging comments about their employers. While Costco demonstrates that employers may require their employees to be civil with one another, employers risk violating the National Labor Relations Act where they prohibit communications that damage the employer's reputation. Before disciplining an employee for an inflammatory social media posting, employers should consider whether the employee's posting could be considered protected concerted activity. Additionally, employers should consider reviewing their social media policy and employee handbook to determine whether their existing policies may violate the Act.

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