Impact of Two Small Words Could be Significant: "At-Will" in the NLRB Cross-Hairs

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Appearing before a state bar association recently, the National Labor Relations Board ("NLRB") acting General Counsel, Lafe Solomon, said that the agency will seek to strike down at-will provisions in employment handbooks as a violation of section 8(a)(1) of the National Labor Relations Act ("NLRA").

This appears to be part of the present NLRB's effort to provide greater leeway to employees in their dealings with employers and to counter the trend away from unionization. Many employment handbooks currently provide that employment is "at-will," meaning either the employer or the employee may terminate the employment relationship with or without cause at any time. Handbooks typically include an additional provision stating that at-will status cannot be changed except by a written agreement entered into by an employer official. It has been a longstanding tenet of most state law that absent a specific agreement to the contrary, employment is at-will, subject only to the requirement that the employer not base a termination on an illegal factor (e.g., race, age, sex, disability, union activities, or other specific factors set forth in federal and state law). In Mr. Solomon's view, an at-will provision violates the NLRA because it implies that concerted or union activities by employees to change at-will status would be futile, and that even organizing a union could have no bearing on an employee's at-will status.

Mr. Solomon's statements appear to reflect an emerging view within the NLRB on the issue of at-will provisions. In American Red Cross Arizona Blood Services Region, Case No. 28-CA-23443, decided February 1, 2012, an administrative law judge accepted the General Counsel's position that an at-will provision and the employee's acknowledgment that such status could not be changed except by a written agreement signed by a company official, amounted to an employee's relinquishment of the protected right to seek to change this status through collective or concerted action with other employees. The administrative law judge concluded that this provision unlawfully interfered with employees' rights under Section 7 of the NLRA to engage in concerted activity to improve wages, hours and working conditions. The administrative law judge reached this conclusion notwithstanding the testimony of the employee that he had in fact engaged in concerted activities.

The Red Cross decision is not an isolated instance of the NLRB's emerging effort against at-will provisions. Hyatt Hotels recently settled a case in which the following language was claimed by the NLRB's General Counsel to be unlawful:

  • I understand my employment is "at-will"
  • 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 . . . Hyatt's Executive Vice President . . .
  • The sole exception [to employer's right to change handbook and other policies] to this is the at-will status of my employment, which can only be changed in a writing signed by me and [Hyatt Executive].

As in Red Cross, this language was deemed by the General Counsel to be employer interference with employees' rights under Section 7 of the NLRA to engage in concerted or union activities to improve working conditions.

It should be noted that while Hyatt agreed to settle this case and change its policies on a nationwide basis, neither the NLRB itself nor any federal court has yet ruled on the validity of the General Counsel's position on at-will provisions. At this time, we encourage you to review your company's employment policies as they relate to at-will disclaimers, and to contact labor and employment counsel for further guidance. We will notify you of any new activities that might have significant impact.