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How do you maintain at-will employment if you can’t tell anyone?
November 20, 2012
While two recent memoranda from the National Labor Relations Board (“NLRB” or “the Board”) have helped clarify the Board’s position, employers remain rightfully troubled by the NLRB’s position that having employees acknowledge their “at-will employment” status may violate the National Labor Relations Act (“NLRA” or “the Act”). The concern with at-will employment disclaimers in employee handbooks – at least according to the NLRB – is that they can be interpreted by employees as a waiver of the employee’s right to engage in protected activities under the NLRA and violate employees’ Section 7 rights to engage in concerted activities (such as joining a union).

Earlier this year, in the case of NLRB v. Hyatt Hotel Corp., Case 28-CA-061114, the Board claimed that the following handbook disclaimer violates the NLRA:

I understand my employment is “at-will.” This means I am free to separate my employment at any time, for any reason, and [Employer] has these same rights. Nothing in this handbook is intended to change my at-will employment status. I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will employment status, except for a written statement signed by me and either [Employer’s] Vice President/Chief Operating Officer or [Employer’s] President.

However, there is no written opinion analyzing whether the complaint had merit because the matter was settled after Hyatt agreed to post notices at its hotels stating that it would no longer maintain the “overly broad acknowledgement forms.”

In the second case, NLRB v. American Red Cross, Case 28-A-23443, an Administrative Law Judge (“ALJ”) ruled that an employer engaged in an unfair labor practice when it included the following language in its employee handbook: “I further agree that the at-will relationship cannot be amended, modified or altered in any way.” The ALJ ruled that the language was unlawfully overbroad to the extent it conveyed that at-will status could never be changed. In other words, the ALJ was concerned that the language implied that any concerted effort undertaken by employees to alter the at-will status would be futile. The ALJ ruled this way even though the employer permitted the employee to delete this language before signing the acknowledgement and subsequently modified the handbook at-will provision for all employees.

But more recent cases, In re Rocha Transportation and In re Mimi’s Café, have upheld at-will employment disclaimers that were worded more narrowly than that in American Red Cross. On October 31, 2012, the Office of the General Counsel of the NLRB issued two advice memoranda analyzing at-will employment policies in employee handbooks maintained by Mimi’s Café and Rocha Transportation. In doing so, the General Counsel concluded that the at-will policies at issue:
  • Did not explicitly restrict employees’ Section 7 activity;
  • Were not set out in response to union activity or other protected activity and have not been applied to restrict protected activity; and
  • Read in context, would not reasonably be interpreted to restrict an employee's Section 7 right to:
              -engage in concerted attempts to change his/her employment at-will status;
              -or select a collective bargaining representative and bargain collectively for
               a contract.

The General Counsel concluded that the policy in Mimi's Café is permissible because it merely reinforces that nothing in the handbook creates an employment contract and highlights the employer's policy that most company representatives are not authorized to modify an employee's at-will status. The NLRB advised that such language cannot be reasonably construed to restrict an employee's Section 7 right to enter into collective bargaining with an employer to change the employment at-will relationship. Additionally, the policy in Rocha Transportation is allowable because although it prohibits the employer’s representatives from entering into employment contracts with employees, it explicitly permits the employer's president to enter into written employment agreements that modify the at-will relationship, which would include the possibility of a collective bargaining agreement.

The General Counsel differentiated the these policies from the disclaimers in American Red Cross by noting that the employees in American Red Cross had to acknowledge that: “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” The General Counsel opined that this language is more suspect because it implied a waiver of the employee's Section 7 rights. The General Counsel explicitly recognized that this area is unsettled, and he recommended that all cases involving employer handbook provisions restricting modification of an employee's at-will status be submitted to the Division of Advice.

Future Implications:
  • Employers should make sure that employee at-will acknowledgements do not waive any ability to change the employment relationship in the future.
  • Employers should also consider inserting a reference to a management employee (such as the company President) who has the authority to enter into employment contracts that are not at-will.
  • Savings clauses to the effect that nothing in the policy infringes on rights under the NLRA will likely be insufficient to prevent exposure.

Labor & Employment Law