Recently, the National Labor Relations Board (NLRB) has issued a number of decisions restricting the ways in which employers can limit employee electronic communications, even when those communications may damage the company or another employee’s reputation.  For many employers, those decisions have caused serious consternation, as companies now focus on what can and cannot be included in handbooks and policies.  Many companies feel as if they are being faced with a decision between risking a violation of the National Labor Relations Act (NLRA) and protecting proprietary information, including confidential personnel information.   

Earlier this month, the NLRB found that a retail company’s handbook policies, which prohibited certain employee postings and communications, violated Section 8 of the NLRA.  Costco Wholesale Corp., 358 N.L.R.B. No. 106, September 7, 2012.  Section 8 states that it is an “unfair labor practice” for an employer to “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7 [of the NLRA].”  Section 7 provides to all employees – unionized and non-unionized – the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

In that case, an employer (Costco) maintained a nationwide handbook for its non-union employees that set out the terms and conditions of employment for those individuals.  The handbook included rules that prohibited: “unauthorized posting, distribution, removal or alteration” of material; discussion of “private matters” of other employees, including sick days, leaves of absence, and personal health information; sharing of “sensitive information” such as employee personal health information, social security numbers, and financial information; and sharing “confidential” information such as employees’ names, phone numbers, addresses, and e-mail addresses.  It also included a specific policy prohibiting electronic postings that “damage the Company, defame any individual or damage any person’s reputation.” 

During the course of an organizing drive to unionize a Costco facility in Milford, Connecticut, unfair labor practice charges were filed in which it was alleged that the Company was maintaining policies that violated the NLRA.  An Administrative Law Judge held a hearing and determined that the policies limiting the sharing of information violated the NLRA, but that the policy prohibiting electronic postings that might damage the Company or defame individuals did not.  Upon review by a three-member panel, the NLRB agreed with the ALJ and adopted his findings that the policies against sharing information violated the NLRA.  However, the panel disagreed with the ALJ regarding the rule prohibiting statements that damage the Company or any person’s reputation, finding – without elaboration – that “employees would reasonably construe this rule as one that prohibits Section 7 activity.”  Therefore, according to the NLRB, an employer’s general prohibition of statements that could damage or defame the company or others could be viewed by the NLRB as violations of employees’ right to “concerted activity.” 

In its opinion, however, the NLRB made statements that could provide to employers a “safe harbor” which may protect a company from allegations that a policy has prohibited employees’ concerted activities.  First, the panel pointed out that Costco’s “broad” prohibition against making statements that damage the Company or any person’s reputation “clearly” encompasses concerted communications, but pointedly adds that “there is nothing in [Costco’s] rule that even arguably suggests that protected communications are excluded from the broad parameters of the rule.” The panel goes on to add that Costco’s rule “does not present accompanying language that would tend to restrict its application.”   Those two statements, taken together, flag the fact that, had the rule included language specifically exempting concerted protected activities, such as communications that were critical of Costco’s treatment of employees, or had it prohibited only egregious conduct, such as sabotage or sexual harassment, the NLRB may have found the policy narrowly drawn and not in violation of Section 8. 

It is clear from this decision that the NLRB will not condone company policies that broadly prohibit either the “unauthorized posting, distribution, or alteration” of information or materials, or the sharing or storing of information related to the terms of employment (including wage information), even if that information is viewed as confidential by an employer.  Taken in conjunction with previous NLRB decisions and opinions, this case makes it imperative that handbooks and policies are narrowly drafted to address specific prohibited behavior, and that the language of the policies include the business justification for such prohibitions, in order to avoid unanticipated liability for violation of the NLRA.