A three-member panel of the National Labor Relations Board (NLRB) found that it is impermissible for Costco’s social media policy to ban employees from making electronic postings that damage the reputation of the company or anyone else.  The NLRB held that policy was not permissible because Costco employees could reasonably assume that it prohibited communications protected by the National Labor Relations Act (NLRA), such as communications critical of the company’s treatment of its employees.

In reaching this conclusion, the NLRB panel highlighted the breadth of Costco’s social media policy, which states that electronic postings that “damage the Company, defame any individuals or damage any person’s reputation” may be subject to discipline.  The panel emphasized that the prohibition does not reference or contain any exception for NLRA-protected activity.  As a result of the decision, which also found certain other Costco restrictions on employee speech unlawful, the company must rescind or modify the impermissible portions of its social media policy. 

The order is the NLRB’s first on an employer’s social media policy.  The decision suggests that the NLRB may be implementing the approach reflected in a series of reports issued by NLRB general counsel Lafe Solomon analyzing employer social media policies under the NLRA.