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Home / Questions / PROBLEM-SOLVING APPLICATION CASE (PSAC) Costco Management Walks Tightrope with Social Media Job...

PROBLEM-SOLVING APPLICATION CASE (PSAC) Costco Management Walks Tightrope with Social Media Job...


Costco Management Walks Tightrope with Social Media

Job seekers and employers have long known that risqué revelations on Facebook can jeopardize career prospects. But now companies are facing their own challenges for alleged blunders in dealing with social media. Take Costco Wholesale Corporation. Analysts say that the company offers the best pay and benefits in retail.78 In  fact, Wall Street critics have even accused Costco of favoring employees too much and want to see lower compensation costs and higher returns.79 So how did Costco catch the attention of the National Labor Review Board (NLRB)? Costco was charged with perceived violations of labor rights, due to language in the company’s employee handbook related to employees’ use of the Internet and social media. The NLRB ruled that Costco’s employee policies violated labor law (discussed below), and it required the company to rewrite its policies.80 Protecting the Firm vs. Protecting Workers’ Rights The Costco action highlights the way that digital media has increased the need for even greater care by employers to protect the company while still protecting the rights of employees. Here’s what started the trouble: Costco’s employee handbook prohibited its employees, subject to discipline and even dismissal, from electronically posting statements that “damage the Company . . . or . . . any person’s reputation.” What’s wrong with that? From many points of view this language would seem reasonable and wise. Costco has a responsibility to protect the company and its reputation, as well as to protect the rights of individuals from unwanted postings by someone it employs. The NLRB saw the Costco language as much too broad and potentially infringing on employees’ rights. At Stake for Labor The NLRB oversees compliance with the National Labor Relations Act (NLRA). The NLRA protects basic rights of most private-sector employees to organize into trade unions, engage in collective bargaining for better terms and conditions at work, and take collective action including protests and strikes. The NLRB puts a high priority on digital speech rights under the Act. It comes down to employees’ rights to “concerted activity,” under Section 7 of the statute, “when two or more employees take action for their mutual aid or protection regarding terms and conditions of employment.” This means that employees are allowed to speak out and do so together. But there must be limits. At Stake for Companies The NLRA applies whether or not employees belong to a union, so most companies are affected. All companies must now walk a tightrope in making sure they fulfill their obligations to ownership (e.g., shareholders) and employees. If they err too far in one direction, they infringe the rights of employees. If they err too far in the other, they risk the reputation and value of the company. Employers “desiring to implement a social media policy,” writes one law firm specializing in the area, “must walk a very fine line between prohibiting unwanted conduct— such as revealing confidential information or making disparaging comments about the company—and avoiding undue restrictions on protected activities.”81 A Moving Target Companies trying to get the right balance face a moving target because regulatory institutions are still playing catch up with the implications of social media. The NLRB has issued—and reissued—guidelines for employers. Their guidance offers suggestions but not “preapproved” language. Companies must individually hammer out their own policies and hope they are in compliance. (Note: The NLRB has suggested that companies provide helpful examples of allowed and disallowed speech.) “The core issue is that social media alters the way we as individuals share who we are, merging our roles as people, professionals, and consumers,” writes Nick Hayes, an analyst for Forrester Research, in the wake of Costco’s problems. In all, Hayes counts 12 different regulatory agencies, from the NLRB to the Federal Trade Commission, with a stake in how companies guide employees’ use of social media.82 In response to the NLRB, Costco quietly rewrote its employee handbook to be more specific about what kinds of employee speech could be considered grounds for action and what kinds would be protected. No doubt the new handbook is longer than before and will continue to grow. Apply the 3-Stop Problem-



Jul 22 2020 View more View Less

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