Employers—both union and non-union—have routinely included at-will employment provisions in their employee handbooks and other employment documents, in order to put employees on notice that their employment relationship was terminable at will and the company’s policies do not constitute an employment contract. Within the last year, the National Labor Relations Board (NLRB) has made attempts to restrict this practice by finding certain at-will provisions unlawful under the National Labor Relations Act (NLRA).
Under Section 7 of the NLRA employees have the right to engage in “protected concerted activity,” which includes the right to discuss compensation, benefits, terms of employment, as well as supervision. Policies which attempt to prevent those types of discussions or activities are usually found to unlawfully interfere with Section 7 rights. With respect to at-will employment provisions, the Board has argued that these provisions are unlawful to the extent they cause employees to believe that union representation and collective bargaining could not alter their at-will employment status, thereby discouraging concerted activities.
The Board put its rationale to the test in American Red Cross Arizona Blood Services Region (“Red Cross”), a case decided in February 2012. In Red Cross, an Administrative Law Judge found that the employer had violated the NLRA by maintaining the following language in a form that employees were required to sign acknowledging their at-will employment status: “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” The ALJ found that the signing of the acknowledgment form, whereby the employee—through use of the personal pronoun “I”—specifically agreed that the at-will agreement could not be changed in any way, essentially amounted to a “waiver” of the employee’s right “to advocate concertedly. . . to change his/her at-will status.”
On October 31, 2012, and following the decision in Red Cross, the NLRB Office of the General Counsel issued two Advice Memoranda evaluating “at-will” employment provisions in two separate employee handbooks. Contrary to the decision in Red Cross, the General Counsel concluded that both at-will provisions were permissible under federal labor law and could not reasonably be interpreted to restrict protected concerted activity.
In the first Advice Memorandum, (Rocha Transportation) the General Counsel considered the employer, Rocha’s at-will employment policy that provided:
Employment with Rocha Transportation is employment at-will. Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the Company. Nothing in this Handbook or in any document or statement shall limit the right to terminate employment at-will. No manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will. Only the president of the Company has the authority to make any such agreement and then only in writing.
In the second memo, (MiMi’s Café), the General Counsel considered a similar at-will policy.
The General Counsel concluded that both at-will provisions were lawful because neither statement implied that the at-will relationship could never be changed. Additionally, neither provision explicitly required employees to refrain from seeking to change their at-will employment status, but instead left open the possibility of modification through collective bargaining or other concerted efforts.
Specifically, the policy in Rocha permitted the President of the Company to agree to a change in employment at-will status, which encompasses the possibility of a potential collective bargaining agreement ratified by the company president. Similarly, it was concluded that MiMi’s policy simply highlighted the employer’s policy that its agents are not authorized to modify an employee’s at-will status but also reinforced the employer’s stated purpose which is to defend against potential claims that the employee handbook created an enforceable employment contract. For these reasons, the General Counsel concluded that: “employees would not reasonably construe [these provisions] to restrict their Section 7 right to select a collective bargaining representative and bargain collectively for a contract when considered in context.”
The General Counsel’s Advice Memoranda did not overrule but rather, expressly distinguished the ALJ’s findings in Red Cross. While the General Counsel memos do not constitute binding precedent, these Memoranda provide useful guidance for employers and provide some clarification on what at-will policies the NLRB will consider lawful going forward. While the General Counsel continues to caution that the law in this area remains “unsettled,” the NLRB’s recent guidance makes clear that employers should avoid language that could be interpreted to foreclose any possibility of modifying at-will status, as such language could be found to be overbroad and a violation of federal labor law.