In a decision reached in early September, the National Labor Relations Board has ruled that a company's prohibition against employees' making any online statements that “damage the Company … or damage any person’s reputation” is "overly broad" and thus violates employee rights under Section 7 of the National Labor Relations Act (NLRA).

Affirming an administrative law judge's earlier ruling, the bord held that under the prohibition "employees would reasonably conclude that the rule requires them to refrain from engaging in certain protected communications (i.e. those that are critical of the Respondent or its agents)."

The case involved Costco Wholesale Corp. and represented the first ruling on social media policy since the publication of guidelines by NLRB Acting General Counsel Lafe Solomon.

Solomon issued reports in January and June of 2012 and in August 2011, in which he highlighted actual company social media policy statements — and indeed, overall company policy approaches — that he felt the full board would find in violation of the NLRA's guarantee of "protected concerted activity" for employees.

In Costco's case, its prohibilition of damaging comments would have to include specific examples to overcome the charge of being "overly broad," and even then the examples would have to be so constructed that they don't "chill" employee participation in "protected concerted activity" in order to pass NLRB muster.