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The Board Plays On: The NLRB Clarifies Its Position on At-Will Disclaimers
May 15, 2013
In 2012, the National Labor Relations Board (NLRB) set the business community atwitter when an administrative law judge in American Red Cross decided that an at-will disclaimer in an employee handbook violated the National Labor Relations Act (NLRA) by being overly broad. In that case, the NLRB made the unprecedented argument that an at-will employment policy could violate Section 7 of the NLRA because it could chill an employee’s ability to communicate with others about wages, hours and working conditions or to engage in otherwise protected activity.

Although the decision has no precedential value, the case immediately worried employers in light of the NLRB’s recent penchant for applying the NLRA to non-union employers in unconventional areas like social media, investigations and confidentiality (while most employers have heard about the NLRB’s involvement in social media, it has also ruled that employers cannot maintain a blanket policy regarding the confidentiality of employee investigations, but must demonstrate its need for confidentiality on a case-by-case basis). Likely as a result of this increased scrutiny, shortly after the American Red Cross decision, Hyatt Hotels agreed to rescind and revise their at-will provision when it was investigated by the NLRB.

Perhaps having sensed the unease created by American Red Cross and Hyatt Hotels Corp., the NLRB has clarified – and possibly taken a step back – in its position regarding at-will employment policies. In two recent memoranda released by Associate General Counsel Barry J. Kearney, he examined the language of two at-will disclaimers and found they could not reasonably be construed to restrict an employee’s right to engage in Section 7 activity.

For example, in Fresh & Easy Neighborhood Market, the handbook language stated:

"Nothing in this [Handbook] changes this at-will relationship, guarantees you a benefit, creates a contract of continued employment or employment for a specified term, or any contractual obligation that conflicts with the [Employer’s] policy that the employment relationship with its employees is at-will.

No representative of the [Employer] other than a[n Employer] executive has the authority to enter into any agreement for employment for a specified duration or to make any agreement for employment other than at-will. Any such agreement that changes your at-will employment status must be explicit, in writing, and signed by both a[n Employer] executive and you."

Additionally, Fresh & Easy Neighborhood Market also used an at-will employment acknowledgment stating: “I further understand that the foregoing provision regarding my status as an at-will employee may only be changed by a written agreement signed by a[n Employer] executive and me that refers specifically to this provision.” Kearney determined that nothing in Fresh & Easy Neighborhood Market’s policies or its acknowledgement could reasonably be interpreted to restrict an employee’s Section 7 right to engage in protected concerted activity to change his or her employment at-will status in the future. Similarly, in Windsor Care Centers, Kearney found the following at-will language to be lawful: “[o]nly the Company President is authorized to modify the Company’s at-will employment policy or enter into any agreement contrary to this policy. Any such modification must be in writing and signed by the employee and the President.”

While the NLRB may still scrutinize at-will employment policies on a case-by-case basis, they will generally be problematic only where they do not allow for the possibility that at-will status could be changed through a collective bargaining agreement (i.e. a written agreement). Specifically, the NLRB seems to distinguish between at-will policies that can never be changed versus those that can only be changed by writing. The NLRB has held that only those policies that can never be changed will violate Section 7. Consequently, employers with at-will policies that do not allow for any form of employment other than at-will employment to ever exist should update their policy with language saying that even though the employer’s representatives are not authorized to change the employee’s at-will status, it may be changed by written agreement by the company’s chief executive. In light of this increased scrutiny on at-will employment policies, employers should review their company’s employee handbook to make sure that there are no policies that impede an employee’s right to engage in concerted protected activity while seeking to abandon their at-will employment.

Labor & Employment Law