Recent NLRB Decisions Challenge At-Will Disclaimers and May Impact HR Investigations

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Earlier this year, in D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 6, 2012), the National Labor Relations Board (“Board” or “NLRB”) held that mandatory arbitration agreements requiring all employment disputes to be resolved through individual, bilateral arbitration violate the National Labor Relations Act (“NLRA”) because such agreements impermissibly restrict employees’ rights under Section 7 to engage in “concerted action for mutual aid or protection.” Although some courts have already rejected D.R. Horton (see e.g., opinion from S.D.N.Y., opinion from M.D. Fla. and opinion from California State Court) two recent pronouncements call into question additional, commonly used and accepted employment practices after finding they also had a “chilling effect” on employees’ right to engage in protected, concerted activity. Even though it remains to be seen whether these decisions will survive full Board and/or appellate court review, their rationale applies to union and non-union workplaces, and both decisions are worth reviewing now for the impact they may have on employer practices in these and other areas.

At-Will Disclaimers

Most employee handbooks incorporate acknowledgements of at-will employment. Offer letters typically include strong at-will language as well. Some employer policies even indicate that the at-will relationship can never be amended and cannot be changed in any way. Despite this common practice, an Administrative Law Judge in the Phoenix Region held earlier this year (see opinion) that such language violates the NLRA because employees would reasonably understand it to limit their ability to alter the at-will arrangement through collective bargaining or other concerted activity. Acting general counsel for the NLRB, Lafe Solomon, has even opined that (standard) language that provides that the at-will arrangement may only be changed in a written document signed by a company executive, may run afoul of the NLRA.

Confidentiality in HR Investigations

Individuals conducting internal HR investigations routinely ask employees not to discuss the matter under investigation with coworkers in order to protect the investigation’s integrity and the privacy interests of the parties involved. Such a confidentiality policy may also be repeated in employee handbooks or policies. But as of July 30, 2012, the NLRB has held that blanket confidentiality policies which prohibit employees from discussing ongoing HR investigations violate the NLRA. Once again, according to the NLRB, such broad policies place an unreasonable restraint on employees’ rights to engage in concerted activity under Section 7 of the NLRA.

Under this decision, employers can still ask employees to keep quiet about investigations, but only if they first establish that confidentiality is justified by “legitimate business needs” that outweigh the employees’ Section 7 rights. According to the Board, factors to consider in whether a confidentiality instruction is warranted include (1) whether any witnesses need protection, (2) whether there is any risk of testimony being fabricated or evidence being destroyed, or (3) if there is a need to prevent a cover-up.

Conclusion

What’s next? These most recent pronouncements are further examples of the current Board’s redefining of employees’ Section 7 rights, which has already affected social media policies. Union and non-union employers should be on the watch for continued efforts by the Board to redefine and expand employees’ Section 7 rights.