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Online Seminar


September 18, 2012

In a recent National Labor Relations Board (NLRB) decision (Costco Wholesale Corporation and United Food and Commercial Workers Union, Local 371, Case 34-CA-012421), the NLRB invalidated certain COSTCO personnel policies protecting the dissemination of employee health information and personal identifiers.

COSTCO has several rules regulating employee speech that prohibit employees from posting or distributing materials on company property, discussing other employees’ private matters (such as leaves of absence), and sharing or transmitting employees’ sensitive
financial and other personal information. The Company also prohibited employees from electronically posting statements that “damage the Company, defame any individual or damage any person’s reputation, or violate the policies outlined in the Costco Employee Agreement” and prohibited employees from leaving the employer’s premises without permission. Employees who violated these rules could be subject to discipline, up to and including termination.

The United Food and Commercial Workers union challenged these rules by filing unfair labor practice charges. Aside from the electronic positing rule, the administrative law judge (ALJ) held that the challenged rules regulating employee communication violated Section 8(a)(1) of the NLRA because the unit employees could reasonably construe the language of the rules to prohibit protected concerted activity under Section 7 of the NLRA.

The ALJ held that the employees would not reasonably construe the electronic posting rule as regulating and thereby prohibiting Section 7 activity. Rather, the employees would reasonably infer that the purpose of the electronic posting rule was to
create a “civil and decent workplace.” Therefore, the ALJ dismissed that complaint allegation.

Costco and the counsel for the NLRB’s General Counsel filed exceptions to the ALJ’s decision with the four member panel (Board) heading the NLRB’s judicial functions. On September 7, 2012, the NLRB issued a decision affirming the findings of the ALJ that most of the challenged employee communications rules violated Section 3(a)(1) of the NLRA. However, the NLRB reversed the ALJ regarding the electronic posting rule and held that it is unlawful because it could reasonably tend to “chill” employees in the exercise of their Section 7 rights.

According to the NLRB ruling, several policies in COSTCO’s nationwide employee handbook must be modified or rescinded because they violate federal labor law. It is unlawful for employers to maintain rules that interfere with protected activity or even “chill” employees in the exercise of rights guaranteed under the National Labor Relations Act.

At issue in this case were rules that went too far by, for example, prohibiting employees from distributing material on company property without authorization and sharing or electronically posting various types of information, including details about their terms and conditions of employment and critical statements about the company.

The specific policies ruled illegal by the NLRB are typical of those in many, if not most, employee handbooks. Among the invalidated rules were those that forbid employees from discussing or sharing private or otherwise sensitive information such as sick calls, leaves of absences, FMLA call-outs, ADAaccommodations, workers’ compensation injuries, employee personal health information, payroll, credit card and social security numbers, employees’ names, addresses, telephone numbers and email addresses.

Also, the NLRB struck down Costco’s rule prohibiting employees from electronically posting statements that “damage the Company…or damage any person’s reputation” because, read broadly, it prohibited negative statements
about how Costco treated its employees. 09.18.2012