NLRB Provides Guidance on At-Will Employment Disclaimers

by Ballard Spahr LLP
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[author: Daniel V. Johns, Rebecca L. Massimini]

At-will employment clauses in two employee handbooks did not violate employees’ rights under the National Labor Relations Act, according to advice memoranda issued last week by the National Labor Relations Board’s Acting General Counsel (AGC). The memoranda provide some relief to employers after an Administrative Law Judge (ALJ) found an at-will employment disclaimer to be unlawfully broad earlier this year in NLRB v. American Red Cross, which settled before it could go to the Board.

The Board had also issued a complaint earlier this year against Hyatt Hotels Corporation. The Board claimed that a provision in the company’s employee handbook violated the Act. The provision at issue stated that an employee could not alter his or her at-will status unless the employee and a company executive signed an individual contract altering the status. That matter settled as well.

In the October 31, 2012, memoranda, the AGC drew a distinction between the at-will employment clause at issue in the American Red Cross case and the clauses in the handbooks of the two employers in question—SWH Corporation d/b/a Mimi’s Café and Rocha Transportation. In the American Red Cross case, the ALJ held that the company violated the Act by requiring employees to sign a form that stated: “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.”

The ALJ found that the clause waived an employee’s right to advocate concertedly (whether represented by a union or not) to change his or her at-will status, particularly through the use of the personal pronoun “I.” The ALJ held that such a clause would reasonably chill employees interested in exercising their rights to organize under Section 7 of the Act.

By contrast, in the advice memoranda, the AGC found that language in the Mimi’s Café handbook (i.e. “No representative of the Company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship”) was lawful because it did not restrict Section 7 activity, was not promulgated in response to union activity, and could not be reasonably interpreted to restrict Section 7 rights to engage in concerted attempts to change at-will status. The AGC found that the provision simply highlighted the employer’s policy that its own representatives were not authorized to modify an employee’s at-will status.

The AGC found that language in the Rocha Transportation handbook and in its employee acknowledgment form was lawful for the same reasons. The Rocha handbook stated: “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.” The employee acknowledgement form noted that “Nothing in the Employee Handbook creates or is intended to create a promise, contract, or representation of continued employment.”

The AGC further noted that the handbook explicitly permitted the employer’s president to enter into written employment agreements that would modify the employment at-will relationship, and thus encompassed the possibility of a potential modification of the at-will relationship through a collective bargaining agreement ratified by the president.

The AGC noted that law on at-will employment disclaimers remains unsettled, and asked regional offices to send cases involving employer handbook at-will provisions to the Board’s Division of Advice.

Attorneys in Ballard Spahr’s Labor and Employment Group regularly assist employers in drafting employment policies and employee handbooks. Employers using or considering the use of at-will employment disclaimers should take note of the lawful provisions and the AGC’s reasoning addressed in the memoranda. For more information, contact Daniel V. Johns at 215.864.8107 or johns@ballardspahr.com, Rebecca L. Massimini at 215.864.8223 or massiminir@ballardspahr.com, or the member of the Labor and Employment Group with whom you work.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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