New Guidance on At-Will Employment Disclaimers in Employee Handbooks

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Summary
On October 31, 2012, the Division of Advice of the General Counsel's Office for the National Labor Relations Board ("NLRB") issued guidance regarding at-will employment disclaimers in employee handbooks. This guidance is good news for employers. It suggests that the Acting General Counsel is taking a more reasonable position regarding at-will disclaimers than what previously had been conveyed. Second and quite important, the guidance provides employers with a template to follow — and some level of certainty — as to what language the Acting General Counsel finds acceptable. This should help avoid complaints of unfair labor practices regarding at-will disclaimers, while also maintaining firm communications of the at-will employment relationship with employees.

Background

Over the past year, there have been a growing number of legal challenges brought under the National Labor Relations Act ("NLRA") regarding employers' use of at-will employment disclaimers in handbooks and other employment documents. The Acting General Counsel and at least one NLRB administrative law judge previously had found that where the challenged language could be read to imply the at-will nature of the employment relationship could never be changed, the provision violated employees' Section 7 rights to engage in protected concerted activity. The reasoning in these cases was that the at-will statement unlawfully restricted employee rights because it conveyed to employees that any effort to engage in concerted organizing efforts, such as forming and joining a union and collective bargaining with the employer, would be futile. Further, in American Red Cross Arizona Blood Services Region, Case 28-CA-23443 (February 1, 2012), an NLRB administrative law judge found a requirement that employees sign an acknowledgement that their employment was at-will, which provided, "I further agree that the at-will employment relationship cannot be amended, modified or altered in any way," was an unlawful waiver of employees' Section 7 rights.

Importantly, the October 31, 2012 Advice Memoranda do not reverse these findings or rationale. Rather, the memoranda seek to clarify the legal parameters regarding at-will disclaimers, and identify at-will language that the Acting General Counsel believes is acceptable. In each of the cases addressed by the advice memoranda, the language of the at-will disclaimers under scrutiny was found to pass muster under the NLRA.

The memoranda separately reviewed the at-will employment disclaimers contained in the employee handbooks of a trucking company (Rocha Transportation) and a restaurant (Mimi's Café). Rocha Transportation's handbook advised its drivers that (1) their employment was at-will, and may be terminated at any time; and (2) only the president of the company had the authority to modify the at-will employment relationship, and any modification needed to be in writing. The Division of Advice found this disclaimer to be lawful under the NLRA because it did not assert that the employment relationship could never be changed. While the disclaimer imposed a strict condition to modify the at-will employment (i.e. written approval by the president), it did not foreclose the possibility of modifying that relationship.

Mimi's Café's handbook stated: "No representative of the Company has authority to enter into any agreement contrary to the foregoing 'employment at will' relationship." The Division of Advice found this language acceptable, observing that it did not foreclose the possibility of modifying the at-will employment relationship. The memorandum explained, "the provision does not require employees to refrain from seeking to change their at-will status or to agree that their at-will status cannot be changed in any way. Instead, the provision simply highlights the Employer's policy that its own representatives are not authorized to modify an employee's at-will status."

Critically, the Memorandum noted the purpose of the provision was to reinforce the employer's at-will policy and the handbook did not create an express or implied contract of employment. It went on to acknowledge it is commonplace for employers to rely on policy provisions as a defense against potential legal actions by employees asserting that the handbook creates a binding contract.

What it Means for Employers

On November 1, 2012, Acting General Counsel Lafe Solomon, speaking at the annual conference of the American Bar Association's Labor and Employment Section held in Atlanta, Georgia, explained the memoranda and his approach and reasoning regarding at-will disclaimers. "Words make a difference," Solomon emphasized. A statement that "the employment relationship is at-will" by itself does not violate the NLRA, the Acting General Counsel explained. It is the subsequent language that causes the concern and, at times, is overbroad. Solomon stressed that if employees reasonably could construe the language of the at-will statement as waiving or restricting their Section 7 right to engage in concerted activity, it will be found to be overly broad and a violation of Section 8(a)(1) of the NLRA. Solomon added that the existence of a "savings clause" in the disclaimer acknowledging and preserving employees' rights under the NLRA would not automatically render the at-will disclaimer lawful. For the savings clause to pass muster, the language must be written in such a way that employees would reasonably understand they are not waiving their Section 7 rights.

Solomon recommended specificity and clarity in drafting at-will disclaimers and other policy provisions. The key, the Acting General Counsel explained, is to make it clear so that employees understand they are not waiving their Section 7 rights. Notably, he added that since, in his view, most employees do not know what the terms "Section 7 rights" or "protected concerted activity" mean, Solomon suggested employers be more descriptive in explaining employees' rights that are preserved. The clear implication is that employers should discuss the right to form and join unions.

The Division of Advice's recent guidance is a welcome step forward for employers in this new area of handbook and policy scrutiny. Now that Advice has provided clarification, employers have much more certainty in drafting at-will provisions, as well as a strong legal defense against any unfair labor charges related to the at-will employment disclaimers brought by unions or employees.

For more information on this matter please contact the authors or any member of Saul Ewing's Labor, Employment and Employee Benefits Practice.