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Blogs | October 12, 2012
4 minute read
Augmented Legality

The Real Reason Walmart's Social Media Policy Survived and Costco's Didn't (Hint: It's Not "Defamation")

The legal blogosphere has been tripping over itself to write about the National Labor Relations Board's September 7, 2012 Costco decision.  As the first social media-related decision from the NLRB itself--previous cases had been from lower administrative law judges or nonbinding guidance from the NLRB's general counsel--it deserved careful attention.   Unfortunately, in the rush to opine about the decision, a lot of commentators mischaracterized the ruling, and thus, in my view, missed the boat.

I'm talking specifically about the word "defamation."  The line in Costco's social media policy that troubled the NLRB was "the broad prohibition against making statements that 'damage the Company, defame any individual or damage any person’s reputation.'"  That line encompasses three separate types of injuries.  But commentators have seized onto the word "defame," making such proclamations as "NLRB greenlights defamation"  and that it found a "policy prohibiting defamation unlawful."

So what did the NLRB do here?  Let's parse its ruling a little more carefully.  It wasn't a complicated discussion; it occupies less than two pages in an 18-page opinion. With respect to these well-meaning bloggers, I submit that they got this one wrong.  As a media lawyer, I've litigated plenty of defamation cases.  "Defamation" is a legal term of art that, by definition, describes an unlawful act.  It's another word for "libel" or "slander," and means an intentionally false, unprivileged statement that causes a legally cognizable injury to a person's reputation.  Not all injury to reputation can support a lawsuit, anymore than all killing is murder.  But to call something "defamation" is to identify a type of statement that is unlawful, in the same way that calling a killing "murder" separates it from an accidental or legally excusable killing.  The NLRB could no more "greenlight" defamation than it could any other illegal act.

Costco's policy prohibited communications that "damage the Company, defame any individual or damage any person’s reputation."  Even though the word "defamation" has legal meaning, the other types of prohibited activity are much broader.  Reading this sentence as a whole, without any other explanation of what's prohibited and what's not, gives the reader the impression that anything that hurts someone's reputation or otherwise "damages" them is prohibited.  The Board decided that this could deter employees from speaking up for themselves or criticizing workplace conditions (i.e., to exercise their protected Section 7 rights).  It contrasted this to policy language prohibiting “conduct that is malicious, abusive, or unlawful,” which is not protected by Section 7.

As is universally true of all human language, the key to its meaning is its context.  The NLRB compared Costco's policy to one upheld in Tradesmen International, 338 NLRB 460, 460-63 (2002).  There, the Board upheld a rule that prohibited “statements which are slanderous [i.e., defamatory] or detrimental to the company or any of the company’s employees.”  But that rule "was among a list of 19 rules which prohibited egregious conduct such as 'sabotage and sexual or racial harassment.” In upholding this language, the Tradesmen International opinion "considered [the rule] in context" to determine that it only prohibited conduct that was unlawful.

In June 2012, NLRB General Counsel Lafe Solomon followed the same approach in endorsing Walmart's social media policy.  Discussing a similar section in that policy entitled "Be Respectful," Solomon acknowledged that "in certain contexts, the rule’s exhortation to be respectful and 'fair and courteous' in the posting of comments, complaints, photographs, or videos, could be overly broad."  But he concluded that, read in context, the rule "provides sufficient examples of plainly egregious conduct so that  employees would not reasonably construe the rule to prohibit Section 7 conduct."

According to the NLRB, that context was missing from Costco's policy.  "Indeed," wrote the Board, "there is nothing in the rule that even arguably suggests that protected communications are excluded from the broad parameters of the rule. In these circumstances, employees would reasonably conclude that the rule requires them to refrain from engaging in certain protected communications (i.e., those that are critical of [Costco] or its agents)."  Therefore, concluded the Board, Costco's "maintenance of the rule thus has a reasonable tendency to inhibit employees’ protected activity and, as such, violates Section 8(a)(1)."

Bottom line: context is key.  You need to read a policy as a whole to determine what any particular portion means.  So, contrary to a lot of the punditry about the Costco decision, the fact that the NLRB took issue with a sentence that included the word "defamation" does not mean that employers must now allow their employees to defame each other online.

The Social, Mobile and Emerging Media Practice Group that I chair at my law firm has written a "model" social media policy that we use as a template for advising clients.  Our model policy is careful not to categorically prohibit damaging the reputation of the company or a person.  Instead, following the NLRB's guidance, we recommend specific language and concrete examples  of exactly what employees should and should not do, being careful to acknowledge and preserve their rights under applicable labor laws.  We'd be glad to consult with you on your policy as well.