Costco Wholesale Corp.

National Labor Relations Board - Administrative Judge Opinions

Aug 11, 2010

34-CA-012421 (N.L.R.B. Aug. 11, 2010)

JD(NY)–30–10
Milford, CT
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
NEW YORK BRANCH OFFICE
COSTCO WHOLESALE CORPORATION
and Case 34-CA-12421
UNITED FOOD AND COMMERCIAL
WORKERS UNION, LOCAL 371
Rick Concepcion, Esq., for the General Counsel.
Paul Galligan, Esq., (Seyfarth Shaw LLP), of New
York, NY for the Respondent.
DECISION
STEVEN FISH, Administrative Law Judge: Pursuant to charges and amended charges
filed by United Food and Commercial Workers, Local 371, (the Union), the Director for Region
34 issued a Complaint and Notice of Hearing on November 30, 2009,1 alleging that Costco
Wholesale Corporation, (Respondent or Costco), violated Section 8(a)(1) of the Act.
On March 4, 2010, a hearing was held before me in Hartford, Connecticut with respect to
the allegations in said complaint. At the hearing, General Counsel amended the complaint by
withdrawing an 8(a)(1) interrogation allegation concerning Manager Jeff Dawson and added on
allegation that Respondent violated the Act by maintaining Rule 11.3.24 in its Employee
Agreement. Briefs have been filed and have been carefully considered. 2
Based upon the entire record, including my observation of the demeanor of the
witnesses, I make the following:
Findings of Fact
I. Jurisdiction and Labor Organization
Respondent is a Washington State corporation engaged in the retail operation of
wholesale club stores at various facilities throughout the United States, including a facility in
Milford, Connecticut, herein called the Milford facility.
During the 12-month period ending November 30, 2009, Respondent derived gross
revenues in excess of $500,000 and purchased and received goods valued in excess of
$50,000 at its Milford warehouse directly from points located outside the state of Connecticut.

1 All dates hereinafter referred are in 2009, unless otherwise indicated.
2 Respondent also filed a supplemental brief, without objection from General Counsel, which
has also been considered.
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It is admitted, and I so find, that Respondent is and has been an employer engaged in
commerce within the meaning of Section 2(2), (6) and (7) of the Act.
It is also admitted, and I so find, that the Union is a labor organization within the meaning
of Section 2(5) of the Act.
II. Facts
A. Background
Respondent’s facility in Milford, Connecticut is a warehouse employing various
employees, including a meat department consisting of eight employees. Jeff Dawson was the
General Warehouse Manager, who was in charge of the facility. Reporting to Dawson was Jim
Mager, Assistant General Warehouse Manager, who was responsible for overseeing the meat,
bakery and deli departments. Dave Simpson, the Meat Department Manager, reported to
Mager, as well as to Dawson. Mager, in the course of his duties, visits the meat department four
to five times a day to “check and make sure everything is going all right back there, running
smoothly.” During these visits, Mager will speak with Simpson and/or the employees about
various work related issues.
B. The Alleged Interrogation
The Union began a campaign to organize the meat department employees at
Respondent’s Milford warehouse in June or July. A petition was filed by the Union to represent
such employees on August 4. There is little dispute that the chief union supporter was Anthony
Chiepello, who openly expressed his union support in the presence of Simpson.
Eddie Ramirez, a meat cutter, testified that on either Monday, July 27 or Monday,
August 3, he attended a union meeting at the Stonebridge Restaurant.3
Ramirez also testified that he signed a union authorization card at that meeting,4 and
that on the day after the meeting, August 4, he had a conversation with Mager about the
meeting and the cards. According to Ramirez, in the early afternoon, he observed Mager
speaking with Simpson. Ramirez could not hear what they were saying to each other. About five
minutes later, Ramirez asserts that Mager entered the meat room, and addressed Ramirez and
Jack Voss, another meat cutter. Ramirez contends that Mager said, “Oh, I hear that you guys
are trying to get the union in the meat room.” Voss then allegedly answered, “Yeah, we’ve been
talking about it.” Ramirez then asserts that Mager said to him, “Oh, Eddy, I hear that you signed
a paper for the union.” Ramirez claims that he responded, “Yeah, I signed the paper because I
think we need a little security back here and signing such a paper is not illegal.” Mager then
allegedly replied, “Do you know that the union only takes your money; they don’t do anything for
you.”
Ramirez also testified that on the day after the alleged conversation, Mager again
entered the meat room. One of the packages of sausage was upside down in the case. Mager
started to fix it but then stopped, and said to Ramirez, “Oh, Eddy, I can’t touch this because the

3 Although Ramirez was uncertain about the date of the meeting, other record evidence
indicates, and I find, that the date was August 3.
4 The authorization card was not introduced into the record.
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union won’t let me. The union won’t let me straighten this out.” Ramirez himself straightened out
the package, and Mager then walked away.
On cross-examination, at one point, Ramirez testified that employees, including
Chiepello did not talk openly about the Union in the meat department. However, at another
point, Ramirez testified that he and other employees did discuss the Union in front of Simpson.
More specifically, Ramirez testified in regard to Simpson and union discussions by employees
as follows: “Oh, yes, he knew about it. Yeah, we used to talk about it in the bench there.”
At another time in his testimony, Ramirez testified that on the day that Mager allegedly
spoke to him and Voss about the Union and the signing of cards, Simpson heard Ramirez and
Voss discussing the Union, and then had a conversation with Mager, five minutes before Mager
allegedly spoke to the employees.
Upon further questioning by the undersigned, Ramirez asserted that he and Chiepello
were discussing the Union when Simpson allegedly walked by and possibly overheard the
employees’ discussion about the Union.5
Ramirez was also, as noted, uncertain about the date of the alleged conversation. In his
affidavit taken on August 17, Ramirez asserted that the conversation took place about a month
ago. The complaint alleges that the incident occurred in “late July.” In his testimony, Ramirez
admitted that the affidavit must be wrong about the date but he was sure that it was a day after
the Union meeting. He further testified that the conversation was on the same day as the
incident where Respondent alleged that Chiepello and Ramirez “trashed” the meat room, which
ultimately led to their suspensions and discharges.6
Mager testified that sometime in June, Simpson informed him that there was some union
activity in the meat department, and that some employees in the department were trying to form
a union.7 Mager further testified that this information was not a concern to him because if a
union came in “we’d just be business as usual.” He denied making any efforts to determine who
was organizing the union or who was signing cards because “it wasn’t a concern of mine.”
Mager denied asking Ramirez or any employee whether they had signed union cards. Mager
also denied making the comments attributed to him by Ramirez. (“I hear that you want the Union
in here” or “I hear you signed a paper for the Union.”)
Mager did admit that he had one conversation with employees concerning the Union in
early July. According to Mager, at that time, he walked into the meat room and heard Chiepello
talking to Ramirez and employee Mark Lindquist, and Chiepello said that when a union comes
in here, he won’t have to work nights. Mager asserts that he commented, “You know you’re
working for a good place here, you know, if you get the union in, that’s fine, in my opinion it’s
just the union taking money out of your check and you’re working for a good organization here.”
According to Mager, this was the only conversation that he ever had with any employee
concerning the Union.

5 I note that this was the first time, and the only time, Ramirez mentioned that Chiepello was
present at the time of Mager’s alleged questioning.
6 The Union’s charges alleged that the suspensions and discharges were in violation of the
Act. The Region disagreed, apparently concluding that the discharges were caused by the
conduct of the employees in connection with damage to the meat in the meat room.
7 Mager did not testify whether Simpson informed him of which employees were involved in
trying to bring in a union.
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On cross-examination, Mager admitted that he had conversations with Ramirez on
August 4, as he does every day, but could not recall what he said to Ramirez on that day.
Mager also testified that neither Ramirez nor Lindquist made any comments during the July
conversation, discussed above, and that he did not know anything about Ramirez’s position on
the Union. Mager also testified that he was unaware of any conversations between Simpson
and Ramirez regarding the Union. Finally, Mager also denied telling Ramirez (as Ramirez
testified) that he (Mager) couldn’t touch meat because union rules wouldn’t allow it or any type
of conversation along these lines.
Jack Voss was called as a witness by Respondent. Voss is still employed by
Respondent and is still under the supervision of Mager and Simpson. According to Voss,
Chiepello was the primary employee attempting to bring in the Union, but that Ramirez “worked
together” with Chiepello in organizing union meetings and talking to employees about bringing
the union into the meat department. Voss added that Chiepello and Ramirez did not try to hide
the organizing from anyone and that it “was all out in the open.”
Voss was asked about Ramirez’s testimony that in Voss’s presence, Mager told Ramirez
“I hear you signed a paper for the Union” or any words to that effect. Voss testified, “No, not that
I am aware of. That wasn’t said in front of me.”
On cross-examination, Voss admitted that he was not in favor of the Union, and he had
neither signed a card nor attended any union meetings. Further, on the last union meeting,
presumably on August 4, he saw a text message announcing the union meeting, inviting
everyone to attend except for the “two scabs,” Voss and another employee. Further, Voss
admitted that both Ramirez and Chiepello made derogatory comments about Voss.
Voss was also asked on cross-examination about his testimony that everyone in the
meat room talked openly about the union in the presence of management. Voss continued to
insist that both Chiepello and Ramirez spoke about the Union in the presence of Simpson.
However, his affidavit states only that he recalled one time that Chiepello spoke about the Union
in Simpson’s presence, and that the affidavit made no mention of whether Voss had observed
Ramirez discussing the Union in the presence of Simpson or any other management
representative.
Voss also testified that he spoke with both Simpson and Mager about the Union in July
and August. In each of these discussions, Voss initiated the conversations and informed both
Simpson and Mager that he (Voss) was not interested in the Union and/or that he didn’t sign
any papers for the Union. Neither Simpson nor Mager made any response to Voss’s comments
other than “Ok, it’s your decision.”
C. The Allegedly Unlawful Rules
1. The Employee Handbook
Respondent maintains a nationwide employee agreement entitled “Costco’s Employee
Agreement,” which sets forth terms and conditions of employment at all its nationwide facilities,
including its Milford facility, but not at its facilities where the employees are represented by a
union and where a union contract is in effect.8

8 Respondent’s counsel modified the above stipulation at the hearing by stating that in some
Continued
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The Employee Agreement, hereinafter referred to as the Agreement, provides for an
“open door policy,” which encourages employees “access to ascending levels of management
to resolve issues.” The Agreement is also a comprehensive document that spells out all the
terms and conditions of employment for all Costco employees, including rights under various
federal statutes, holidays, vacations, breaks, meal periods, paid sick leave, leave of absence,
scheduling, transfers and promotions.
Section 5 of the Agreement is entitled “How do I get paid? Compensation and Payroll.” It
then references “see tab in back for specific wages.”9 Section 5 then defines the work week,
scheduling, travel, supplemental pay, premium pay, overtime, double time, breaks and meal
periods.
The Complaint alleges and General Counsel contends that several sections of the
Agreement are unlawful. Section 11.3 is entitled “Causes for Termination,” which lists actions
that can result in immediate termination. Three of these “causes” are alleged to be unlawful.
4. Unauthorized collection, disclosure or misuse of confidential
information relating to Costco, its members, employees, suppliers
or agents including, but not limited to:
a. Unauthorized removal of confidential information from Company
premises.
22. Unauthorized posting, distribution, removal, or alteration of
any material on Company property.
24. Leaving Company premises during working shift without
permission of management.
Section 11.7 is entitled “Privacy Policy.” Portions of this section alleged to be unlawful
reads as follows:
Costco respects our members’ and employees right to privacy,
and it is up to each employee to take every precaution to make
sure we respect this right.
 In the course of our business, we collect from our
members and employees a substantial amount of personal
information (such as name, address, phone number, e-mail
address, social security number, membership numbers
and credit card numbers). All of this information must be
held strictly confidential and cannot be disclosed to any
third party for any reason, unless (1) we have the person’s
prior consent or (2) a special exception is allowed that has
been approved by the legal department
All Costco employees shall refrain from discussing private matters
_________________________
of Respondent’s unionized facilities, parts of the Employee Agreement are in effect, where they
do not conflict with union contracts in existence.
9 This apparently refers to Section 10 entitled “How much am I paid?,” which includes wage
rates for all titles and classifications.
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of member and other employees. This includes topics such as, but
not limited to, sick calls, leaves of absence, FMLA call outs, ADA
accommodations, workers’ comp injuries, personal health
information, etc.
Section 11.9 is entitled “Electronic Communications and Technology Policy.” The
portions of this section alleged to be unlawful are as follows:
Costco recognizes the benefits associated with electronic
communications for business use. All employees are responsible
for communicating with appropriate business decorum whether by
means of e-mail, the Internet, hard-copy, in conversation, or using
other technology or electronic means. Misuse or excessive
personal use of Costco technology or electronic communications
is a violation of Company policy for which you may be disciplined,
up to and including termination of employment. Your use of
Costco technology and electronic communication systems
represents your agreement with the following policies:
 Every employee is responsible for ensuring that all
information relating to Costco, its members, suppliers,
employees, and operations is secure, kept in confidence,
and not disseminated or misused.
 Any communication transmitted, stored or displayed
electronically must comply with the policies outlined in the
Costco Employee Agreement. Employees should be aware
that statements posted electronically (such as online
message boards or discussion groups) that damage the
Company, defame any individual or damage any person’s
reputation, or violate the policies outlined in the Costco
Employee Agreement, may be subject to discipline, up to
and including termination of employment.
 Sensitive information such as membership, payroll,
confidential financial, credit card numbers, social security
numbers, or employee personal health information may not
be shared, transmitted, or stored for personal or public use
without prior management approval. Additionally,
unauthorized removal of confidential material from
Company premised is prohibited.
III. Analysis and Conclusions
A. The Alleged Interrogation
General Counsel asserts, consistent with the Complaint’s allegation, that Respondent
unlawfully interrogated its employees by Mager’s alleged comment to Ramirez and Voss that he
(Mager) said “I hear that you signed a paper for the Union.” Continental Bus Systems, 229
NLRB 1262, 1264-1265 (1977) (“I heard that you (were) getting people signed-up for the union);
Ready Mix Inc., 337 NLRB 1189, 1190 (2002) (“I heard that you were passing out union cards”).
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However, before assessing whether Mager’s alleged comments were coercive or
unlawful, consistent with the above precedent, it is essential to resolve the significant credibility
dispute between Mager and Ramirez as to whether or not Mager made the quoted comment to
Ramirez.
I am not persuaded that General Counsel has met its burden of proof that Mager made
the statement to Ramirez, as Ramirez so testified. In addition to comparative demeanor
considerations, I rely on several other factors in coming to that conclusion. The principal factor
that I have relied upon is the testimony of Voss, who did not corroborate Ramirez’s testimony,
and in fact corroborated Mager’s testimony that the alleged statement by Mager, was testified to
by Ramirez, was not made. I recognize, as argued by General Counsel that Voss, not a union
supporter, is still employed by Respondent and is under the supervision of Mager. I have
considered these factors, but, nonetheless, found Voss to be an impressive and credible
witness. He is still in my view a “neutral” witness with no stake in the proceeding, and I believe
that he was candid and believable in his testimony.
I also found Mager to be a more credible witness than Ramirez for several reasons. I
found his testimony sincere and believable, that while he did find out about the fact that the
meat department employees were trying to organize from Simpson, “it was not a concern” to
him, and I find that it is not likely that he would ask Ramirez or any employee whether they
signed union cards. I also rely on the fact that Mager was candid in his testimony that he had
been told about the organizers in June by Simpson, as well as his admission that in July, after
hearing Chiepello and Ramirez discussing the Union, he (Mager) told the employees that in his
opinion the Union “just takes money out of you’re check” and that the employees were working
for a good organization here.” While General Counsel does not, as he should not, allege that
these comments are violative of the Act, these admissions could, in some circumstances, reflect
negatively upon Respondent. Thus, I conclude that Mager’s candid admissions that he made
such comments, and that he was told about the union organizing by another supervisor, reflects
positively on his testimony in general and on his denial that he made the statement to Ramirez,
as Ramirez testified.
I have also considered General Counsel’s arguments that Mager and Voss should not
be credited because their memory was hazy, as to precisely what conversations Mager had with
Ramirez on August 4. I find little significance to these alleged “deficiencies” in the recollections
of Mager and Voss. The evidence reveals that Mager and Ramirez have conversations every
day, usually about work related matters. Thus, it is not surprising that they would not be able to
recall precisely what was said in these conversations on August 4. What is significant is that
Mager and Voss were unequivocal and corroborative in stating that Mager did not say anything
to Ramirez about signing cards or “papers” for the Union.10
I was, on the other hand, less impressed with Ramirez’s testimony. His testimony was
uncertain as to the date of the alleged interrogation. This is important since Ramirez insisted
that the conversation took place the day after the union meeting and that at said meeting, he
(Ramirez) allegedly signed a union card. However, the card, allegedly signed by Ramirez on
August 3 (so argued by General Counsel) was not introduced as evidence, which tends to shed
some doubt on Ramirez’s testimony. Further, the comments that Mager allegedly made to
Ramirez accompanying the alleged interrogation (i.e. Mager’s opinion that the Union only takes
dues out of the employees’ salaries and that the employees were working for a good

10 Voss testified that in response to whether he heard Mager make such a comment to
Ramirez, “No, not that I am aware of. That wasn’t said in front of me.”
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organization) were made by Mager to Ramirez (and two other employees) in July. This evidence
suggests that Ramirez might have been confused about the date, as well as the substance of
the conversation with Mager about the Union.
Further, Ramirez was also inconsistent in his testimony concerning the “presence” of
Chiepello during the events in question. In his direct testimony, as well as on cross and redirect,
he made no mention of Chiepello being present at all on that day or at any of the events in
question. However, when pressed during an examination by undersigned concerning the details
on the discussions about the Union that Simpson allegedly overheard on August 4, and
allegedly immediately communicated to Mager five minutes before the alleged interrogation,
Ramirez for the first time asserted that he was speaking with Chiepello about the Union. Thus,
Ramirez’s credibility is further undermined by this inconsistency.
Accordingly, based on the foregoing, I do not credit Ramirez’s testimony vis a vis
Mager’s denials, corroborated by Voss, and therefore shall recommend dismissal of the
complaint that Respondent unlawfully interrogated its employees.
B. The Allegedly Unlawful Rules
1. Applicable Law
The analytical framework for assessing whether the maintenance of a work rule violates
Section 8(a)(1) of the Act is set forth in Crowne Plaza Hotel, 352 NLRB 382, 383 (2008), quoting
from Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004).
[A]n employer violates Section 8(a)(1) when it maintains a
work rule that reasonably tends to chill employees in the exercise
of their Section 7 rights. Lafayette Park Hotel, 326 NLRB 824, 825
(1998). In determining whether a challenged rule is unlawful, the
Board must, however, give the rule a reasonable reading. It must
refrain from reading particular phrases in isolation, and it must not
presume improper interference with employee rights. Id. at 825,
827. Consistent with the foregoing, our inquiry into whether the
maintenance of a challenged rule is unlawful begins with the issue
of whether the rule explicitly restricts activities protected by
Section 7. If it does, we will find the rule unlawful.
If the rule does not explicitly restrict activity protected by
Section 7, the violation is dependent upon a showing of one of the
following: (1) employees would reasonably construe the language
to prohibit Section 7 activity; (2) the rule was promulgated in
response to union activity; or (3) the rule has been applied to
restrict the exercise of Section 7 rights.
352 NLRB at 383, citing 343 NLRB at 646-647.
Here, there is no contention by General Counsel that any of Respondent’s rules that are
alleged to be unlawful were promulgated in response to union activity or that any of the rules
have applied to restrict the exercise of Section 7 rights.
Thus, the issues are whether any of the rules in question explicitly restricts Section 7
activity and/or whether the employees would reasonably construe the language to prohibit
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Section 7 activity.
It is to these issues that I now turn.
2. Rule 11.3.22
This rule, as detailed above, provides that one of the causes for immediate termination is
the “unauthorized posting, distribution, removal or alteration of any material on Company
property.”
General Counsel contends that this rule is unlawful since it explicitly prohibits protected
activity, such as posting or distribution of any material on company property and such a
prohibition is overbroad. MTD Products, 310 NLRB 733 (1993); Brunswick Corp., 282 NLRB
794, 795 (1987); Crowne Plaza Hotel, supra, 352 NLRB at 384-385.
Respondent does not dispute the general principles cited above that establishes that
restrictions on distribution or posting must be confined to “work areas.” Thus, Respondent
argues that since no evidence was adduced regarding what areas of the Milford warehouse are
not “work areas,” General Counsel has not satisfied its burden of proof since company property
could well be synonymous with its work area. I disagree. When a rule, such as Respondent’s is
presumptively unlawful on its face, the employer has the burden to show that it communicated
or applied the rule in a way that conveyed a clear intent to permit distribution in non-working
areas during non-working time. Ichikoh Mfg. Co., 312 NLRB 1022 (1993), enfd. 41 F.3d 1507
(6th Cir. 1994); Pontiac Osteopathic Hospital, 284 NLRB 442, 465 (1987); J.C. Penny, 266
NLRB 1223, 1224 (1983). Further, where ambiguities appear in employee work rules
promulgated by an employer, the ambiguity must be resolved against the promulgator of the
rule rather than the employees, who are required to obey it. Norris/O’Bannon, 307 NLRB 1236,
1245 (1992) (rule prohibiting distribution “anywhere on the company premises” overbroad and
unlawful).
Accordingly, based on the above precedent and analysis, I conclude that by maintaining
this rule in its Employee Agreement, Respondent has violated Section 8(a)(1) of the Act.11
3. Rule 11.3.24
Respondent also prohibits employees from “leaving company premises without
permission of management.”
It is well-settled that employees, who concertedly refuse to work in protest over wages,
hours or working conditions, are engaged in “concerted activities” for “mutual aid or protection”
within the meaning of Section 8(a)(1) of the Act. Odyssey Capital Group LP III, 337 NLRB 1110,
1111 (2002); NLRB v. Washington Aluminum, 370 US 9 (1962). It is also clear that the Act
protects the right of employees to strike without notice. Bethany Medical Center, 328 NLRB
1094 (1999). Finally, it is equally well-settled that an employer may not require an employee to
obtain permission from management before engaging in protected activity since such a

11 Respondent also asserts in its brief that “since Complaint was issued, Costco has revised
the language to conform with applicable Board case law, only restricting distribution of materials
in work areas.” I note that no record evidence has been adduced confirming this assertion. In
any event, even if true, it would not preclude the finding of a violation. Respondent’s alleged
revision of the language in its Agreement will be dealt with in the compliance phase of this case.
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requirement is an impediment to the full exercise of an employee’s Section 7 rights. Trump
Marina Associates, 354 NLRB # 123 ALJD slip op at 3 (2009); Brunswick, supra, 282 NLRB at
798; Enterprise Products, 265 NLRB 544, 553-554 (1982); American Cast Iron Pipe, 234 NLRB
1126, 1131 (1978).
Therefore, Respondent’s rule requiring the permission of management before
employees leave “Company premises” inhibits the employees’ rights to engage in Section 7
activity (i.e. strike) and is violative of Section 8(a)(1) of the Act. Crowne Plaza Hotel, supra, 352
NLRB at 386-387 (rule prohibiting employees from leaving their work area without authorization
before the completion of their shifts); Labor Ready Inc., 331 NLRB 1656 fn. 2 1657 (2000).
Respondent, however, relies on Wilshire at Lakewood, 343 NLRB 141, 144 (2004)
vacated in part in other grounds 343 NLRB 1050 (2005), reversed and remanded sub nom.
Jochims v. NLRB, 480 F.3d 1161 (DC Cir. 2007), and argues that an “almost identical rule” was
found to be lawful. Respondent is correct that the rule in Wilshire, supra was nearly identical to
the rule here.12 Respondent is also correct that the Board found such a provision lawful
because in the context of that case “employees could not reasonably read the rule as prohibiting
them from engaging in all strikes or similar protected concerted activity.” Id at 144.
However, Respondent conveniently ignores that the context of the rule therein was that
the employer was “a nursing home with many elderly patients, who are sick or infirm.” Id.
Therefore, the Board concluded “employees would necessarily read the rule intended to insure
that nursing home patients are not left without adequate care during an ordinary
workday…Considering the fact that the respondent’s mission is to ensure adequate care for its
patients, employees would necessarily read the rule as intended to avert such imminent danger,
not to prohibit protected conduct.” Id.
Here, of course, Respondent is not a nursing home or a health care facility so the
considerations relied upon by the Board in Wilshire, supra are not present. Therefore, Wilshire,
supra is clearly distinguishable and not dispositive. Crowne Plaza, supra, 352 NLRB at 387,
distinguishing Wilshire, supra on that basis.
Accordingly, I find that Respondent has further violated Section 8(a)(1) of the Act by
maintaining Rule 11.3.24.
4. Rule 11.7
Under this rule, Respondent states that “All Costco employees shall refrain from
discussing private matters of members and other employees. This includes topics such as, but
not limited to, sick calls, leaves of absence, FMLA call-outs, ADA accommodations, workers’
compensation injuries, personal health information, etc.”
General Counsel contends, and I agree, that this rule explicitly prohibits the exercise of
Section 7 activity and therefore is unlawful. I note that Respondent defines “private matters” of
members and other employees as including sick calls, leaves of absence, FMLA call-outs,
ADAD accommodations, workers compensation injuries, which cannot be discussed with
anyone. All of these “private” matters clearly are terms and conditions of employment of
Respondent’s employees, and Respondent’s explicit prohibition of employees discussing these

12 The rule prohibited employees from “abandoning your job by walking off the shift without
permission of your supervisor or administrator.”
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matters with anyone, which would include other employees or union representatives, is
overbroad and unlawful. Double Eagle Hotel & Casino, 341 NLRB 112, 113-116 (2004), enfd. as
modified 414 f.3d 1249 (10th Cir. 2005) (rule explicitly restricts discussion of terms and
conditions of employment as defined by employer as “confidential information”).
Alternatively, I also conclude that employees would reasonably conclude that
Respondent’s rule prohibits them from discussing terms and conditions of their employment with
other employees or with a union. NLS Group, 352 NLRB 744, 745 (2008) (rule states that terms
of employment including compensation are confidential and disclosure of such terms to other
parties may constitute grounds for dismissal); Cintas Corp., 344 NLRB 943 (2005), enfd. 482
F.3d 463 (DC Cir. 2007) (employer deemed any information concerning its “partners”13
confidential and prohibited disclosure); Flamingo Hilton – Laughlin, 330 NLRB 287, 288 fn.3
(1999) (prohibition on employees revealing confidential information about “fellow employees”
overbroad and unlawful); IRIS USA Inc., 336 NLRB 1013 (2001) (rule in handbook instructing
employees to keep information about employees strictly confidential).
Respondent argues, however, that its policy says nothing about Section 7 rights and that
its Privacy Policy “simply codifies Costco’s obligations (in some cases, legal obligations) to its
members and employees, who have given personal information to Costco.” It argues that the
rule must be read in context, and that the Privacy Policy (11.7) mentions information that
Respondent collects from employees, which must be kept strictly confidential and additional
rules apply to personal health information collected in its pharmacies and centers, as well as
personal health information related to employees, such as benefits and leaves of absence for
medical reasons. Since these sections immediately precede the allegedly offending paragraph,
Respondent argues that a reasonable employee would read its policy to prohibit only the
disclosure of information such as medical information about himself that he has given to
Respondent and that is now stored on Respondent’s database or in the employee’s medical or
personnel file. I cannot agree.
While all of the terms and conditions of employment listed in the rule can be construed
as relating to medical issues, that does not change the fact that the rule explicitly prohibits
employees from discussing terms and conditions of employment. Thus, an employee would
reasonably be constrained by this rule from discussing any complaint that he may have about
how Respondent is interpreting or enforcing its policies with regard to these issues with other
employees or a union, or indeed informing a union of what Respondent’s policies are
concerning these items.
The best that can be said for Respondent’s position is that its rule is somewhat
ambiguous, but in my view, if Respondent intended to prohibit only discussion of private medical
information in its files, it could easily have done so. Instead, it included a separate paragraph
precluding discussions of topics, including terms and conditions of employment. Thus, even if
the rule could be considered ambiguous, any ambiguity must be construed against Respondent
as the promulgator of the rule. Lafayette Park Hotel, supra, 326 NLRB at 828; Norris/O’Bannon,
supra, 307 NLRB at 1245; Crowne Plaza Hotel, supra, 352 at 386. (“At the very least, the
second sentence renders the rule ambiguous, and as such, it is susceptible to the reasonable
interpretation that it bars Section 7 activity.”)
Respondent cites a number of cases, which it asserts are dispositive. It argues that
Windstream Corp., 352 NLRB 510 (2008), “could not be more directly on point” and the facts

13 Partners at said employer were its employees.
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therein are “impossible to distinguish from the facts involved here.” Respondent notes that in
Windstream, as here, the rule in question referred to information collected by employees
through the employer’s records. It also asserts that the Board held that the rule as modified by
the employer “clearly identifies the target audience of the rule and makes it clear as well that
employees can discuss among themselves personnel information so long as that information did
not come into their possession through access to company records in the course of their job
duties.” 352 NLRB at 514.
However, Respondent’s reliance is misplaced for several reasons. Firstly, the Board did
not “hold” what Respondent claims in Windstream since there “no party has excepted to the
judge’s findings with respect to the underlying complaint allegations.” fn. 3 at 510. Therefore, the
case has no precedential value concerning the portions cited by Respondent, which come from
the ALJ’s decision. Trump Marina, supra, 354 NLRB #123 fn.2 at p 1.
More importantly, an examination of the facts in Windstream, even considering the
judge’s decision as persuasive, does not support Respondent’s reliance on the opinion. To the
contrary, the facts there support the finding of a violation here. The judge relied on the
employer’s modification of its original rule, which he viewed as clearly identifying the target
audience, and making it clear that employees can discuss among themselves personnel
information, as long as that information did not come into their possession through access to
company records in the course of their job duties. The precise “modification” referred to by the
judge added the following to the rule, previously found by the judge to be unlawful. “This does
not prohibit you from disclosing or discussing personal, confidential information with others, so
long as you did not come into possession of such information through access, which you have
as a part of your formal company duties.”
Here, Respondent, unlike the employer in Windstream, did not issue any such
modification, which clarifies the intent of the rule and makes clear to employees that they are
free to discuss their terms and conditions of employment with others. Indeed, as I observed
below, it was Respondent’s obligation to clarify any ambiguities in its rule, which it has not done.
Thus, I find that Windstream, supra is supportive of my finding that Respondent’s rule is
overbroad and unlawful.14
Respondent also places considerable reliance on Fiesta Hotel d/b/a Palms Hotel &
Casino, 344 NLRB 1363 (2005). Once again, its reliance on Palms Hotel & Casino is misplaced.
While Respondent argues that the Board upheld the judge’s finding that the employer’s
confidentiality rule was lawful15, this assertion is incorrect. In fact, there were no exceptions to
the judge’s dismissal of the complaint allegations pertaining to this rule. 344 NLRB at 1363 fn. 1.
Thus, the judge’s decision concerning this rule, as well as language cited by Respondent in
discussing this rule, has no precedential value. Trump Marina, supra. Therefore, the judge’s
reliance on the fact that the employer there, similar to Respondent here, published information
concerning its wages and benefits to conclude in part that therefore employees would not
reasonably conclude that they are prohibited from discussing these matters is not persuasive

14 I express no opinion on precisely what “modification” of Respondent’s rule would be
sufficient to render its rule lawful. I therefore do not necessarily conclude that the modification
issued by the employer in Windstream would be sufficient to lawfully clarify Respondent’s rule. I
shall leave that issue to compliance.
15 The rule in question prohibited employees from “revealing, distributing or discussing such
matters with outsiders or non-privileged team members.” The matters referred to were the
“company’s operational, financial and business affairs and activities.”
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precedent. Moreover, in my view, this fact, contrary to Respondent’s contentions, has little
significance in assessing what an employee would reasonably believe was being prohibited by
Respondent’s rules. The fact that Respondent publishes in its manual its employees’ wages and
benefits, including the benefits that it specifically prohibited employees from discussing, says
nothing about whether it was appropriate for employees to discuss these benefits with other
employees or outsiders, such as a union. Notably, in this regard, there is no evidence that
Respondent’s manual is available to outsiders, such as a union. Thus, it is quite reasonable for
employees to conclude that they are prohibited from discussing these benefits with outsiders,
such as a union, notwithstanding the fact that these benefits were published in the manual and
made available to all employees.16
Respondent also relied on the finding of the judge in Palms Hotel & Casino, supra, which
is consistent with several Board cases17 that the fact that Respondent’s confidentiality provision
has never been enforced to prohibit employees from discussing their terms and conditions of
employment reinforces the view that such conduct is not covered by the rule. 344 NLRB at
1389.
While as I have observed above, the precedential value of Palms Hotel & Casino, supra
is non-existent with respect to any analysis of the confidentiality rule, the issue of whether the
rule was ever enforced to prohibit protected conduct is a factor to be considered. (See cases
cited in preceding footnote.) However, I note that that in none of these cases were there an
explicit prohibition on discussing terms of conditions of employment as we have here. Further,
the lack of enforcement was only one factor in assessing whether employees would reasonably
construe the prohibitions as including protected conduct. Indeed, as I have observed above,
there are numerous cases where, supported by the Courts, the Board has found rules to be
unlawful even in the absence of evidence that it was ever enforced to punish protected conduct.
Cintas, supra, 344 NLRB at 946, Cintas v. NLRB, supra, 482 F.3d at 468; Guardsmark, LLC v.
NLRB, 475 F.3d 369, 375-378 (DC Cir. 2007), enforcing 344 NLRB 809 (2005); Flamingo Hilton,
supra, 330 NLRB at 288; Palms Hotel & Casino, supra, 344 NLRB at 1363 fn. 3 (rule with
respect to loitering); Double Eagle Hotel, supra, 341 NLRB at 115; Main Street Terrance Care
Center, 327 NLRB 522, 525 (1999); Franklin Iron & Metal Co., 315 NLRB 819, 820 (1994);
Radisson Plaza Minneapolis, 307 NLRB 94 (1992), enfd. 987 F.2d 1376 (8th Cir. 1993) (Board
reverses judge, who dismissed allegation based primarily on finding that rule was never
enforced); Pontiac Osteopathic Hospital, supra, 284 NLRB at 465.
Accordingly, based upon the foregoing analysis and precedent, I conclude that the
portion of Respondent’s Rule 11.7 that prohibits employees discussing “private” matters and
specifics topics covered by the ban, which includes terms and conditions of employment,
explicitly restricts Section 7 activity. Alternatively, I also find that employees would reasonably
construe the language of the rule to prohibit Section 7 activity. Therefore, I find that Respondent
has further violated Section 8(a)(1) of the Act by maintaining this rule in its Employee
Agreement.18

16 Further, as I observed above, a reasonable employee would infer from the prohibition that
he was precluded from discussing with fellow employees any complaints that he may have
about any of these benefits or how Respondent has implemented such benefits.
17 Safeway Inc., 338 NLRB 525, 526 (2002); Lafayette Park, supra at 826; K-Mart d/b/a
Super K-Mart, 330 NLRB 263 (1999).
18 General Counsel also attacks other portions of Rule 11.7 in connection with Respondent’s
definition of “confidential information” in connection with Rules 11.3.4 and 11.9. I shall discuss
these contentions below.
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5. Rule 11.9
(Prohibition on Sharing Payroll Information)
Rule 11.9 of the Agreement entitled “Electronic Communications and Technology
Policy,” includes the following section. “Sensitive information such as membership, payroll,
confidential financial, credit card numbers, social security number or employee personal health
information may not be shared, transmitted or stored for personal or public use without prior
management approval. Additionally, unauthorized removal of confidential material from
Company premises is prohibited.”
General Counsel asserts that two portions of this rule are unlawful. The first concerns
the prohibition against sharing payroll information. Secondly, it is asserted that the portion of the
rule prohibiting “unauthorized removal of confidential information” is also unlawful. The latter
contention will be dealt with below when the issue of Respondent’s definition of confidential
information and its effect on various rules are discussed.
With regard to the rule’s prohibition against sharing payroll information, it does not define
with whom such information can be shared. Thus, it is clear, and I find, that a reasonable
employee would construe the rule as prohibiting sharing (or discussing) payroll information with
other employees or with outsiders, such as a union. However, that is not the end of the inquiry.
The meaning of the term “payroll” in this context is in dispute and must be determined.
I agree with General Counsel that a reasonable employee would read that term as
encompassing their wages or other terms and conditions of employment and that the rule
inhibits the exercise of Section 7 conduct. Indeed, similar rules have been found to be unlawfully
broad, and to be reasonably construed by employees to restrict discussion of wages and other
terms and conditions of employment with their fellow employees and with the union. Cintas,
supra, 344 NLRB at 943 (prohibition on disclosing any information concerning its partner
employees); NLS Group, 352 NLRB 477, 745 (2008) (rule states that terms and conditions of
employment including compensation are confidential and may not be disclosed to “other
parties”); Double Eagle Hotel & Casino, supra, 341 NLRB at 115 (information concerning “any of
its employees”); Flamingo Hilton, supra, 330 NLRB at 288 (prohibiting disclosing information
about “fellow employees”); Bigg’s Food, 342 NLRB 425 fn. 3 (2006) (prohibiting disclosure of
salaries to anyone outside the company); Pontiac Osteopathic Hospital, supra, 284 NLRB at
466 (rule bans discussion of employee problems).
Respondent argues that the term “payroll” in its rule refers only to “the confidential
business information component of payroll, such as budgeted payroll and expenses and the
like, which Costco does not wish to share with its competitors and has nothing to do with terms
and conditions of employment of its employees.” Respondent also cites a number of cases,
where it contends that the Board, as well as the Courts, has found rules similar to Respondent’s
rule not to be unlawful. Aroostook County Regional Ophthalmology, 81 F.3d 209, 213 (DC Cir.
1996) (rule prohibiting discussion of “official business”); Mediaone of Greater Florida, 340 NLRB
277, 279 (2003) (rule prohibits disclosure of “employee information”); Safeway, Inc., 338 NLRB
525, 527 (2002) (rule prohibiting providing “sensitive information” to others, which includes
“financial information” and “personal information”); Lafayette Park, supra, 326 NLRB at 826
(prohibition on divulging “hotel-private information”); Super K-Mart, supra, 330 NLRB at 263-269
(disclosure of “company business and documents”).
Respondent also asserts that viewing the rule in the context of other portions of the rule
makes it clear that Section 7 rights are not implicated by its prohibition on discussion of
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“payroll.” Aroostook v. NLRB, supra, 81 F.3d at 212-213 (rule read in context designed only to
prevent employees from providing medical information, relying on placement of term “office
business” in manual in relation to discussion of confidential medical information); Mediaone,
supra, 340 NLRB at 229 (term “employee information” appears within larger provision
prohibiting disclosure of “proprietary information”; thus, Board concludes that employees
“reading rule as a whole would reasonably understand that it was designed to protect the
confidentiality of respondent’s proprietary business information rather than to prohibit discussion
of employee wages”); Safeway, supra, 338 NLRB at 527 (“personal records” and “payroll data”
must read in context of entire rule, which included numerous categories that do not implicate
any Section 7 rights; Board finds it improbable that employees would infer that the rule referred
to their own wages or working conditions).
While I agree with Respondent that the rule must be read in the context of other portions
of the Agreement, I do not agree that such an analysis supports Respondent’s contention that
employees would reasonably view the prohibition on disclosure of “payroll” information as
referring only to the “confidential business information component of payroll,” which Respondent
does not want to share with its competitors. While some portions of Rule 11.9 are clearly non-
Section 7 items, such as “confidential financial,” “credit card numbers,” “social security numbers”
or “employee personal health” in the same sentence as “payroll,” other portions of the rule and
the Agreement shed a different light on how employees would perceive the term “payroll.” Thus,
another portion of Rule 11.9 states that employees are responsible for ensuring that “all”
information relating to Respondent, its “employees” (emphasis supplied) is secure and not be
disseminated. This overbroad provision would reasonably be construed to cover wages or
working conditions of its employees. Cintas, supra.
Further and more importantly, Section 5.0 of the Agreement is entitled as follows: “How
do I get Paid? Compensation and Payroll.” It then makes reference to tab in the back for specific
wages and goes on to state “for payroll and accounting purposes, the work week is Monday
through Sunday and the workday is midnight to midnight.” The Agreement then goes on to
define scheduling, minimum work hours and work schedule. Thus, Respondent’s Agreement
itself links the term payroll with compensation. In these circumstances, considering the term
“payroll” in the context of the Agreement, I find that employees would reasonably construe the
language to prohibit Section 7 activity. Cintas, supra;19 Flamingo Hilton, supra; Double Eagle
Hotel & Casino, supra.
The above findings demonstrate that Respondent’s reliance on Aroostook County,
supra,20 Mediaone, supra and Palms Hotel & Casino21 is misplaced since in each of these

19 I note the Court of Appeal’s decision affirming the Board approved the Board’s reliance
therein on the principle that “any ambiguity must be construed against the promulgator of the
rule.” 482 F.3d at 469 citing Lafayette Park, supra, 326 NLRB at 828. That principle is equally
applicable here. At best, the rule is “ambiguous” and must be construed against Respondent.
20 I note that Aroostook County, supra is a Court of Appeals case reversing the Board’s
decision in 317 NLRB 218 (1995) that the rule therein was overbroad and unlawful. Ordinarily, I
am bound by the Board’s view notwithstanding the Court of Appeals’ reversal. However, the
Court decision in Aroostook County, supra was favorably discussed and relied upon by the
Board in Lafayette Park, supra, 326 NLRB at 826. I find that the Court’s views on this issue to
be more reflective of current Board law, although the Board decision in Aroostook County was
not specifically overruled. Nonetheless, as detailed above and below, Aroostook County is
clearly distinguishable from the instant case.
21 As I observed above in discussing earlier rules, the portion of the judge’s decision
Continued
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cases, the context and placement of the rules in question were substantial reasons for finding
them lawful.
Respondent’s reliance on Safeway, supra is also misplaced. Respondent is correct that
the rule in question therein did include prohibition on disclosure of “payroll data” and “salary
information.” However, Safeway, supra was a representation case, and the Board was
reviewing a hearing officer’s decision that the rule was overbroad and that its maintenance
warranted the setting aside of the election. The Board decision found it unnecessary to pass on
the hearing officer’s finding that the rule was overbroad. See Footnote 3, 338 NLRB at 526.
The Board did reverse the hearing officer’s decision concerning the effect of the
maintenance of the rule on the election. In that connection, the Board majority22 principally
relied on the fact that the employees were represented by a union in a RD election. It also
stressed that the rule was never enforced and that to the extent that any employee was
confused about their statutory right to discuss terms and conditions of employment with the
union or with other employees, “the union was ideally placed to advise employees of their
rights.” Further, when making some of the comments quoted by Respondent, where it rejected
finding that the rule had a chilling effect on Section 7 rights because it depended on “a chain of
inferences upon inferences,” the majority concluded that “that it is highly improbable that the
employees in this unit, who have been represented by the union for several years would draw
these inferences23 under the circumstances of this case.” Id at 327. Therefore, it is clear the
basis for the majority’s decision in Safeway that the rule in question did not warrant setting aside
the election, was the presence of the union on the scene, which could advise the employees
about any confusion concerning the meaning of the rule. Since there is no union here, Safeway,
supra has minimal precedential significance and is not dispositive.
Respondent also argues, as it did in regard to other rules in issue, that there is no
evidence that it ever enforced the rule to prohibit or punish protected activity. As I have
observed above, Board precedent supported by the Courts consistently find that such evidence
does not preclude a finding that employees would reasonably conclude rules inhibit Section 7
activity. Cintas v. NLRB, supra, 482 F.3d at 375; Guardsmark v. NLRB, supra at 374-376 (DC
Cir. 2007); Double Eagle Hotel, supra, 341 NLRB at 115; Radisson Plaza, supra. I so find.
Accordingly, based on the foregoing analysis and precedent, I conclude that employees
would reasonably construe Respondent’s prohibition on disclosure of “payroll” to inhibit their
exercise of Section 7 activity and that its maintenance by Respondent is violative of Section
8(a)(1) of Act.
_________________________
dismissing the complaint allegation concerning the rule cited by Respondent was not excepted
to. Thus, it has no precedential value. Trump Marina, supra. However, even considering it for
even persuasive authority, it is distinguishable since there the rule in question preceded items
precluded from disclosure, such as customer or marketing lists or strategies, financial
information, computer files or programs. Therefore, the judge concluded that employees would
reasonably understand that what respondent desires to maintain as confidential is proprietary
business information, and that they are not precluded from “disclosing their wage information.”
No such finding can reasonably be made here.
22 Member Liebman vigorously dissented from the majority opinion and would have adopted
the hearing officer’s report.
23 The inferences referred to are that employees would infer that the references to personnel
and payroll records in the context of the rule referred to their own wages and working
conditions.
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6. Rule 11.9
(Requiring Employees to use “Appropriate Business Decorum”
in Communicating with Others and
Precluding Employees from Damaging Another Employee’s Reputation)
General Counsel argues that Respondent’s rules requiring employees to use
“appropriate business decorum” in communications (including conversations) and prohibiting
employees from posting messages that “damage any person’s reputation” are overbroad and
unlawful because they do not define the term “appropriate business decorum” or explain actions
that that might “damage any person’s reputation.” General Counsel argues that the failure of the
rules to define what conduct is prohibited leads to the conclusion that employees could
reasonably view various protected activities24 as violative of Respondent’s policies. Lutheran
Heritage Village, supra, 343 NLRB at 65025; University Medical Center, 335 NLRB 1318, 1321
(2001), enfd. denied 335 F.3d 1079 (DC Cir. 2003); Southern Maryland Hospital, 293 NLRB
1209, 1222 (1989), enfd. in pert. part 916 F.2d 932, 940 (4th Cir. 1990); Ridgeview Industries,
353 NLRB #119 (2009) (rule prohibiting employees from engaging in behavior designed to
create discord or lack of harmony found unlawful).
Respondent, on the other hand, argues that employers are entitled to establish rules to
maintain a civil workplace, and that a reasonable employee would view such rules as supporting
that proposition, and would not view either of these rules as proscribing Section 7 activity. With
respect to General Counsel’s assertion that the rules “could” be interpreted to prohibit Section 7
activity, this assertion is contrary to current law. Respondent cities Lutheran Heritage Village,
“Where as here, the rule does not refer to Section 7 activities, we will not conclude that a
reasonable employee would read the rule to apply to such activity simply because the rule could
be interpreted that way. To take a different analytical approach, would require the Board to find
a violation whenever the rule could conceivably be read to cover Section 7 activity, even that
reading is unreasonable. We decline to take that approach.” 343 NLRB at 647. (Board finds rule
prohibiting “abusive and profane language,” “harassment” and “verbal, mental and physical
abuse” to be lawful.)
In this instance, I agree with Respondent’s analysis of relevant precedent, and that
General Counsel has not met its burden of proof that employees would (emphasis supplied)
reasonably construe these rules as regulating or inhibiting Section 7 conduct. It is quite
significant that General Counsel cites the dissenting opinion of Members Liebman and Walsh in
Lutheran Heritage Village, supra. General Counsel seems to be anticipating that the views
expressed in this dissenting opinion, which is consistent with dissenting opinions filed by these
and other members in several cases,26 will now be changed in view of the new composition of
the Board. Whether General Counsel is correct or not in that assumption is not for me to decide.
I must and shall apply current law and not rely upon dissenting opinions. The essence of these
dissents is, as argued by General Counsel, that where employers maintain rules that “could” be
perceived as inhibiting Section 7 conduct, that there is an obligation to define permissible
conduct and clarify for employees that the rule does not prohibit employees from engaging in

24 Such protected activities include (1) protests about the company during a walkout; (2) a
concerted protest about a supervisor; or (3) calling a co-worker a “scab” during a strike.
25 Dissenting opinion of members Liebman and Walsh.
26 Palms Hotel & Casino, supra, 344 NLRB at 1368-1370; Tradesman International, 338
NLRB 460, 463-465 (2002); Flamingo Hilton, 330 NLRB fn.2 at 287, fn. 7 at 289; Lafayette Park,
supra, 326 NLRB at 830-831.
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Section 7 activities. Lutheran Heritage Village, supra at 647, 650; Palms Hotel & Casino, supra
at 1369-1370; Flamingo Hilton, supra at 287; Tradesman International, supra at 463-465;
Lafayette Park, supra at 831. However, as the majority opinions in these and other cases makes
clear, that is not the law. Indeed, these decisions have considered rules similar to the rules here
and concluded, contrary to General Counsel and the dissenting opinions therein, that where the
rules in question on their face are clearly intended to promote “a civil and decent workplace,”
even though in some circumstances protected conduct might be restricted, reasonable
employees would (emphasis supplied) not infer that the rules restrict Section 7 activity. Lutheran
Heritage Village, supra at 647-649 (rule prohibiting “abusive and profane language,”
“harassment” and “verbal, mental and physical abuse”); Palms Hotel & Casino, supra at 1367-
1368 (rule forbids employees from engaging in “any type of conduct, which is or has the effect
of being injurious, offensive, coercing or interfering with fellow team members or patrons”);
Tradesmen International, supra at 460-463 (rule prohibiting “disloyal, disruptive, competitive or
damaging” conduct and prohibiting “verbal or other statements, which are slanderous or
detrimental to the company or any of the company’s employees”); Lafayette Park, supra at 825-
826 (rules prohibit engaging in conduct that does not meet employer’s “goals and objectives”
and “improper conduct, which affects the employee relationship with the job, fellow employees,
supervisors or the hotel’s reputation or good will in the community”). See also Ark Law Vegas
Restaurant, 335 NLRB 1284, 1291-1292 (2001) (rule prohibiting “conducting oneself
unprofessionally or unethically with the potential of damaging the reputation or a department of
the company” and “participating in any conduct that tends to bring discredit to or reflects
adversely on yourself, fellow associates, the company or its guest, or that adversely affects job
performance”); Adtranz AFF Daimler Bentz v. NLRB, 253 F.3d 19, 25-28 (DC Cir. 2001),
reversing 331 NLRB 291, 293 (2000) (rule prohibiting use of “abusive or threatening language to
anyone on company premises”).27
I additionally rely on Albertson’s Inc., 351 NLRB 254, 258-259 (2007), where the Board
dismissed complaint allegations that rules prohibiting “disclosing confidential information or any
other similar act constituting disregard for the company’s best interest,” and prohibiting
employees from engaging in conduct, which has a negative effect on the company’s reputation
or operation or employee morale or productivity, were overbroad or violative of the Act. The
Board emphasized that neither rule expressly covers Section 7 activity, and there is no evidence
that the employer applied the rules to protected activity or that it was adopted in response to
protected activity. The Board went on to observe that it “did not believe that either rule can
reasonably be read as encompassing Section 7 activity. To ascribe such a meaning to these
words is quite simply far-fetched. Employees would reasonably believe that these rules were
intended to reach serious misconduct but not conduct protected by the Act.” Id at 259. I find the
above language applicable to the rules here that General Counsel is attacking. I find in
agreement with Respondent that a reasonable employee would infer that Respondent’s purpose
in promulgating the challenged rules was to ensure a “civil and decent” workplace and not to
restrict Section 7 activity. Lutheran Heritage, supra at 648.
General Counsel’s reliance in University Medical Center, supra and Ridgeview
Industries, supra is unpersuasive. University Medical Center, supra did find, as General Counsel

27 While ordinarily I am bound by the Board’s decision rather than the Court’s reversal, that
is not the case with respect to Adtranz, supra. Thus, the Court’s decision in Adtranz was relied
on heavily on both Palms Hotel & Casino, supra at 1367-1368 and Lutheran Village, supra at
647, agreeing with the Court’s view (rather than the Board’s) that a reasonable employee would
not construe language prohibiting “threatening or abusive language” as prohibiting Section 7
conduct. Thus, the Court’s decision in Adtranz represents current Board law.
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correctly points out, that a rule prohibiting employees from engaging in “insubordination … or
other disrespectful conduct toward a service investigator, service coordinator or other individual”
was unlawful. 335 NLRB at 621. However, that decision was reversed by the DC Circuit in
Community Hospitals v. NLRB, 335 F.3d 1079, 1088-1089 (DC Cir. 2003). The Court agreed
with the employer relying on Adtranz, supra that the rule was lawful. The Court viewed that the
rule prohibiting disrespectful conduct applied to “incivility and outright insubordination” and that
the Board’s suggestion that employees would consider such conduct prohibitive of Section 7
activity “is misplaced.” The Court added, “In short, to quote the Board itself in a more realistic
moment ‘any arguable ambiguity’ in the rule ‘arises only through parsing the language of the
rule, viewing the phrase…in isolation and attributing to the (employer) an intent to interfere with
employee rights.’ Lafayette Park Hotel, 326 NLRB at 825.” 335 F.3d at 1089.
While again, I am cognizant of the fact that ordinarily I am bound by Board rather than
Court law, once more later Board precedent establishes that the Court’s view in University
Medical Center, has been adopted by the Board. See Lutheran Heritage Village, supra at 647,
where the Board relied on the Court’s decisions in University Medical, as well as Adtranz, to
conclude that “a reasonable employee reading these rules would not construe them to prohibit
conduct protected by the Act.”
Finally, General Counsel relies on the relatively recent case of Ridgeview Industries,
supra. While General Counsel is correct that the judge found therein that a rule prohibiting
employees from “engaging in behavior designed to create discord or disharmony” was unlawful,
353 NLRB #119 ALJD slip op at 17, that finding has no precedential value here. Thus, there
were no exceptions to the judge’s finding that the employer violated Section 8(a)(1) of the Act by
maintaining rules prohibiting employees from engaging in behavior designed to create discord
or lack of harmony. See fn. 2 at pg. 1 of 353 NLRB #119. Thus, the judge’s finding, although
affirmed by the Board, cannot be cited as authority for finding the rule unlawful. Trump Marina,
supra. Moreover, an examination of the facts in Ridgeview Industries, supra establish that even
under the judge’s analysis, Ridgeview does not support a finding of a violation here.
Thus, the judge emphasized in applying Lutheran Heritage Village, supra that the rule in
issue was utilized as a partial basis to discipline employee Balczak for his sarcastic remark to
another employee vis a vis Company President Nykamp’s earlier anti-union argument. Further,
the rule was highlighted in disciplinary notices given to Balczak, and plant manager MacLaren
told Balczak that his rule violations were highlighted (or circled). The judge then concluded that
“Balczak’s conversations or attempt at a conversation with a fellow employee was clearly
protected in that Balczak’s comments were directed at Nykamp’s earlier anti-union propaganda.
Thus, inasmuch as the rule has been applied to restrict Section 7 rights, I conclude that it tends
to chill the exercise of Section 7 rights and violates Section 8(a)(1).” Id at 17. Therefore, it is
clear that the judge in Ridgeway Industries, supra based his finding of a violation solely on the
fact that the rule has been applied to restrict Section 7 activity. That finding has no applicability
here, where there is no evidence that Respondent applied these rules to restrict protected
conduct.
Accordingly, based on the foregoing analysis and precedent, I recommend dismissal of
these complaint allegations.
7. Rules Relating to Disclosure of Confidential Information
(Because of How Respondent Defines “Confidential” Information)
Rule 11.3.4 cites one of the causes for termination as “unauthorized collection,
disclosure or misuse of confidential information relating to Costco, its members, employees,
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suppliers or agents, including but not limited to: a) Unauthorized removal of confidential
information.
Section 11.7, entitled Privacy Policy, and Section 11.9, entitled Electronic
Communications and Technology Policy, read as follows:
11.7 Privacy Policy
Costco respects our members’ and employees’ right to
privacy, and it is up to each employee to take every precaution to
make sure we respect this right.
*In the course of our business, we collect from our
members and employees a substantial amount of personal
information (such as name, address, phone number, e-mail
address, social security number, membership numbers and credit
card numbers). All of this information must be held strictly
confidential and cannot be disclosed to any third party for any
reason, unless (1) we have the person’s prior consent or (2) a
special exception is allowed that has been approved by the legal
department.
11.9 Electronic Communications and Technology Policy
Every employee is responsible for ensuring that all
information relating to Costco, its members, suppliers, employees,
and operations is secure, kept in confidence, and not
disseminated or misused.
 Sensitive information such as membership, payroll,
confidential financial, credit card numbers, social security
numbers, or employee personal health information may not
be shared, transmitted, or stored for personal or public use
without prior management approval. Additionally,
unauthorized removal of confidential material from
Company premised is prohibited.
General Counsel asserts that under all three rules employees would reasonably
construe each rule dealing with confidentiality to prohibit activity protected by Section 7. In this
connection, General Counsel argues that Respondent defines “confidential” to include
employees’ names, addresses, phone numbers and e-mail addresses, which they otherwise
have a protected right to share with each other or with outside entities, such as unions, in the
course of protected activities.
I agree with General Counsel that this provision is overly broad and would reasonably be
perceived by employees as inhibiting Section 7 conduct. Albertson’s, supra, 351 NLRB at 259
and at 366 (unlawful to discipline employee for disclosing work schedule, including list of names
of employees to the union). Ridgely Mfg. Co., 207 NLRB 193, 197 (1973), enfd. 510 F.2d 185
(DC Cir. 1975) (employee engaged in protected conduct by obtaining names of employees on
timecards).
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Thus, the applicable rule is that employees are entitled to use for organizational
purposes information and knowledge that comes to their attention in the normal course of their
work activity but are not entitled to their employer’s private or confidential records. Ridgely Mfg.,
supra at 197; Anserphone of Michigan, 184 NLRB 305, 306 (1970) (employee obtained names
and addresses of employees from office manager, who was rightly in possession of such
information); CF Roadway Express, 271 NLRB 1238, 1239-1240 (1984) (employee not engaged
in protected activity when he removed business records from employer’s files not in the normal
course of his work activity).
Here, this portion of Respondent’s rule is overbroad since it does not distinguish
between information obtained in the normal course of work or information obtained from
Respondent’s files or even between information obtained by employees from contact with or
discussions with other employees. For example, as in Ridgely, supra or Albertson’s, supra, an
employee obtained information concerning names of employees and possibly addresses from
timecards or posted work schedules or other sources in the regular course of their employment.
Yet, employees would reasonably perceive that Respondent’s rule prohibits them from
disclosing such information to other employees or to the union.
Respondent cites Asheville School, 347 NLRB 877 (2006) for the proposition that
disclosure of confidential wage and salary information by a payroll accountant is unprotected.
However, in that case, the judge concluded that the payroll accountant possessed special
custody of such records and was aware that her job duties included keeping that information
confidential. However, Respondent’s rule is still overbroad as it is not restricted to such an
employee or to such information. It is, as I observed above, broad enough to include prohibiting
any employee from disclosing information to the union concerning names and addresses of
employees even where the employee obtained such information from respondent’s work
schedule or timecards, and employees would, in my view, construe the rule.
General Counsel also noted that Rule 11.9 defines confidential to include “all information
relating to Costco and its employees.” I have concluded above that this rule is overbroad and
unlawful. Cintas, supra; Double Eagle Hotel, supra; IRIS USA, supra. Similarly, I also concluded
above that the mention of “payroll” in the rule is also overbroad and unlawful since a reasonable
employee would believe that it prohibits him from engaging in Section 7 conduct. Cintas, supra;
Bigg’s Foods, supra. In view of these findings, Respondent’s definition of confidential impinges
on Section 7 rights. Therefore, its rule prohibiting the “unauthorized removal of confidential
material from Company premises” is unlawful and violative of Section 8(a)(1) of the Act. Double
Eagle Hotel, supra, 341 NLRB at 115 (communication rule unlawful in light of link between
unlawful confidentiality rule and the communication rule); Bigg’s Foods, supra at 436
(consideration of confidentiality policy and confidentiality statement together).
Similarly, Section 11.3’s listing as one of the causes for termination as “unlawful removal
of confidential information from Company premises” is also unlawful and violative of Section
8(1)(a) of the Act. I so find. Double Eagle Hotel, supra; Bigg’s, supra.
The Remedy
Having found that Respondent has violated Section (1) of the Act. I shall recommend
that it cease and desist therefrom, and take certain affirmative action designed to effectuate the
purposes and policies of the Act.
Where an employer’s overbroad or unlawful rules are maintained on a companywide
basis, the Board will generally order the employer to post a notice at all of its facilities where the
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unlawful policy has been or is in effect. Longs Drug Stores California, 347 NLRB 500, 501
(2006); Cintas, supra at 943, 962; Guardsmark LLC, 344 NLRB 809, 812 (2005); Albertson’s
Inc., 300 NLRB 1013 fn. 2 (1990), enf. denied on other grounds, mem. NLRB v. Albertson’s Inc.,
17 F.3d 395 (9th Cir. 1994).
Such an order is appropriate here since the rules found unlawful are in effect in most of
Respondent’s facilities nationwide. I shall therefore recommend that the notice be posted at all
facilities of Respondent’s, where the portions of its Employee Agreement that contain the
unlawful rules are in effect.28
I shall also recommend that Respondent’s obligation to rescind or modify the rules found
to be unlawful shall be governed by the Board’s analysis and order in Guardsmark LLC,
supra.29
Conclusions of Law
1. The Respondent is and has been an Employer engaged in commerce of Section 2(2),
(6) and (7) of the Act.
2. The Union is a labor organization within the meaning of Section 2(5) of the Act.
3. The Respondent has violated Section 8(a)(1) of the Act by maintaining rules in its
“Employee Agreement” that prohibit the unauthorized posting, distribution or alteration of any
material on Company property, that may reasonably be interpreted as prohibiting employees
from discussing their wages and other terms and conditions of employment with other
employees and third parties, including union representatives, that may reasonably be
interpreted as prohibiting employees from sharing or storing wage information or information
relating to other terms and conditions of employment of employees without permission of
management, that prohibit the removal of confidential material from Company premises, which
Respondent has defined as conduct that may be reasonably be interpreted as including wages
and other terms and conditions of employment of its employees and that prohibit employees
from leaving Company premises during their work shift without permission of management.
4. The Respondent has not violated Section 8(a)(1) of the Act in any other manner as
alleged in the Complaint.

28 The record reflects that the Agreement is not in effect at some of Respondent’s unionized
facilities.
29 “The Respondent may comply with our Order by rescinding the unlawful provisions and
republishing its employee handbook without them. We recognize, however, that republishing the
handbook could entail significant costs. Accordingly, the Respondent may supply the employees
either with handbook inserts stating that the unlawful rules have been rescinded, or with new
and lawfully worded rules on adhesive backing which will cover the old and unlawfully broad
rules, until it republishes the handbook without the unlawful provisions. Thereafter, any copies of
the handbook that are printed with the unlawful rules must include the new inserts before being
distributed to employees.” Guardsmark, supra at 812 fn. 8. Consistent with Guardsmark, the
Order will additionally provide the Respondent with the option of immediately rescinding the
unlawful provisions or modifying the existing provisions to make clear that the discussion of
wages and other terms and conditions of employment is not prohibited. Longs Drug Stores,
supra at 501 fn. 5.
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5. The aforesaid unfair labor practices affect commerce within the meaning of Section
2(2), (6) and (7) of the Act.
On these findings of fact and conclusions of law and on the entire record, I make the
following recommended 30
ORDER
The Respondent, Costco Wholesale Corporation, Milford, Connecticut, its officers,
agents, successors and assigns, shall
1. Cease and desist from
(a) Maintaining provisions in its Costco Wholesale Employee Agreement (the Employee
Agreement) that prohibit the unauthorized posting, distribution or alteration of any material on
Company property.
(b) Maintaining provisions in its Employee Agreement that prohibit its employees from
leaving Company premises during their work shift without permission of management.
(c) Maintaining provisions in its Employee Agreement that may reasonably be
interpreted as prohibiting employees from discussing their wages and conditions of employment
with other employees and third parties, including union representatives.
(d) Maintaining provisions in its Employee Agreement that may reasonably be
interpreted as prohibiting its employees from sharing or storing wage information or information
relating to other terms and conditions of employment of employees without permission of
management.
(e) Maintaining provisions in its Employee Agreement that prohibit the removal of
confidential material from Company premises, which Respondent has defined as conduct that
may reasonably be interpreted as including wages or other terms and conditions of employment
of its employees.
(f) In any like or related manner, interfering with, restraining or coercing employees in
the exercise of rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative actions necessary to effectuate the policies of the Act.
(a) Rescind or modify the language in the following provisions of its “Employee
Agreement.”
1. Sections 11.3 and 4(a), 11.3.22 and 11.3.24,
2. Section 11.7 to the extent that it defines the name, address, phone number
and E-mail address of employees as confidential and prohibits disclosure of

30 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules and
Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec.
102.48 of the Rules, be adopted by the Board and all objections to them shall be deemed
waived for all purposes.
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such information to any third parties,
3. The portions of Section 11.7 that provides that “All Costco employees shall
refrain from discussing private matters of other employees. This includes
topics such as, but not limited to sick calls, leaves of absence, FMLA call
outs, ADA accommodations, workers’ comp. injuries…etc.,”
4. Section 11.9 to the extent that it provides that all information relating to
Costco’s employees must not be disseminated, that payroll information may
not be shared or transmitted and unauthorized removal of confidential
material (as defined overbroadly by Respondent in its Employee Agreement)
from Company premises is prohibited.
(b) Furnish all current employees with inserts for the current “Employee Agreement” that
1. advise that the unlawful rules have been rescinded or modified, or
2. provide the language of lawful provisions or publish and distribute to all
current employees a revised “Employee Agreement” that
a. do not contain the unlawful provisions, or
b. provide the language of lawful provisions.
(c) Within 14 days after service by the Region, post at each of its facilities in the United
States, where its “Employee Agreement” is in effect, copies of the attached notice marked
“Appendix.”31 Copies of the notice, on forms provided by the Regional Director for Region 34,
after being signed by the Respondent’s authorized representative, shall be posted by the
Respondent and maintained for 60 consecutive days in conspicuous places including all places
where notices to employees are customarily posted. Reasonable steps shall be taken by the
Respondent to ensure that the notices are not altered, defaced, or covered by any other
material. In the event that, during the pendency of these proceedings, the Respondent has gone
out of business or closed the facility involved in these proceedings, the Respondent shall
duplicate and mail, at its own expense, a copy of the notice to all current employees and former
employees employed by the Respondent at any time since May 3, 2009.
(d) Within 21 days after service by the Region, file with the Regional Director a sworn
certification of a responsible official on a form provided by the Region attesting to the steps that
the Respondent has taken to comply.
IT IS FURTHER ORDERED that the complaint is dismissed insofar as it alleges
violations not found.
Dated, Washington, D.C., August 11, 2010.
____________________
Steven Fish,
Administrative Law Judge

31 If this Order is enforced by a judgment of a United States court of appeals, the words in
the notice reading “Posted by Order of the National Labor Relations Board” shall read “Posted
Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”
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APPENDIX
NOTICE TO EMPLOYEES
Posted by Order of the
National Labor Relations Board
An Agency of the United States Government
The National Labor Relations Board has found that we violated Federal labor law and has
ordered us to post and obey this Notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on your behalf
Act together with other employees for your benefit and protection
Choose not to engage in any of these protected activities
WE WILL NOT maintain provisions in our Costco Wholesale Employee Agreement (the
Employee Agreement) that prohibit the unauthorized posting, distribution or alteration of any
material on Company property.
WE WILL NOT maintain provisions in our Employee Agreement that prohibit you from leaving
Company premises during your work shift without permission of management.
WE WILL NOT maintain provisions in our Employee Agreement that may reasonably be
interpreted as prohibiting you from discussing your wages and other terms and conditions of
employment with other employees and third parties, including union representatives.
WE WILL NOT maintain provisions in our Employee Agreement that may reasonably be
interpreted as prohibiting you from sharing or storing wage information or information relating to
other terms and conditions of employment of employees without permission of management.
WE WILL NOT maintain provisions in our Employee Agreement that prohibit the removal of
confidential material from Company premises, which we have defined as conduct that may
reasonably be interpreted as including your wages or other terms and conditions of
employment.
WE WILL NOT, in any like or related manner, interfere with, restrain or coerce you in the
exercise of your rights guaranteed you by Section 7 of the Act.
WE WILL rescind or modify the language in the following provisions of our “Employee
Agreement.”
1. Sections 11.3 and 4(a), 11.3.22 and 11.3.24,
2. Section 11.7 to the extent that it defines the name, address, phone number
and E-mail address of employees as confidential and prohibits disclosure of
such information to any third parties,
3. The portions of Section 11.7 that provides that “All Costco employees shall
refrain from discussing private matters of other employees. This includes
topics such as, but not limited to sick calls, leaves of absence, FMLA call
outs, ADA accommodations, workers’ comp. injuries…etc.,”
JD(NY)–30–10
4. Section 11.9 to the extent that it provides that all information relating to our
employees must not be disseminated, that payroll information may not be
shared or transmitted and unauthorized removal of confidential material (as
defined overbroadly by Respondent in the Agreement) from Company
premises is prohibited.
WE WILL furnish all current employees with inserts for the current “Employee Agreement” that
advise that the unlawful rules have been rescinded or modified or provide the language of lawful
provisions, or
WE WILL publish and distribute to all you a revised “Employee Agreement” that (1) does not
contain the unlawful provisions, or (2) provides the language of lawful provisions.
COSTCO WHOLESALE CORPORATION
(Employer)
Dated By
(Representative) (Title)
The National Labor Relations Board is an independent Federal agency created in 1935 to enforce the National Labor
Relations Act. It conducts secret-ballot elections to determine whether employees want union representation and it
investigates and remedies unfair labor practices by employers and unions. To find out more about your rights under
the Act and how to file a charge or election petition, you may speak confidentially to any agent with the Board’s
Regional Office set forth below. You may also obtain information from the Board’s website: www.nlrb.gov.
A.A Ribicoff Federal Building and Courthouse
450 Main Street, 4th Floor
Hartford, Connecticut 06103-3503
Hours: 8:30 a.m. to 5 p.m.
860-240-3522.
THIS IS AN OFFICIAL NOTICE AND MUST NOT BE DEFACED BY ANYONE
THIS NOTICE MUST REMAIN POSTED FOR 60 CONSECUTIVE DAYS FROM THE DATE OF POSTING AND MUST
NOT BE ALTERED, DEFACED, OR COVERED BY ANY OTHER MATERIAL. ANY QUESTIONS CONCERNING THIS
NOTICE OR COMPLIANCE WITH ITS PROVISIONS MAY BE DIRECTED TO THE ABOVE REGIONAL OFFICE’S
COMPLIANCE OFFICER, 860-240-3528.