The National Labor Relations Board's Division of Advice Endorses Appropriately Tailored Employment At-Will Policies

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[author: Michael S. Arnold]

On November 1, 2012, the National Labor Relation Board’s Acting General Counsel released two Advice Memoranda from its Division of Advice that should calm the nerves of employers who include employment at-will policies in their handbooks.  The Advice Memoranda, which you can access here and here, appear to come in response to a flurry of activity in February when the NLRB challenged the employment at-will policies of two employers. 

First, an Administrative Law Judge issued a decision against the American Red Cross Arizona Blood Services Division, invalidating a policy informing employees that their employment at-will status could not be “amended, modified or altered in any way.”  The ALJ concluded that this policy, which the employees were required to acknowledgment and sign, effectively required the employees to waive their National Labor Relations Act Section 7 rights to engage in concerted activity to change their at-will status.  Second, a regional office of the NLRB filed a Complaint  against the Hyatt Hotels Corporation challenging its employment at-will policy, which stated 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 either [the Company’s] Executive Vice President/Chief Operating Officer or [the Company's] President.”  The Complaint alleged that this policy, which the employees were required to acknowledge and sign, violated the employees Section 7 rights presumably because it limited the employee’s ability to effectuate an at-will status change through collective rather than individual efforts.  Both of those cases later settled before the Board had the ability to weigh in leaving many employers to question the validity of their own at-will policies. 

Perhaps recognizing that these challenges to at-will policies were causing employers some distress, the Division of Advice analyzed the following two at-will policies and found them both lawful.  Note that these policies, like the ones challenged by the NLRB, also required employees to acknowledge and sign:

AT-WILL EMPLOYMENT

The relationship between you and [the Company] is referred to as “employment at will.”  This means that your employment can be terminated at any time for any reason, with or without cause, with or without notice, by you or the Company. No representative of the Company has authority to enter into any agreement contrary to the foregoing “employment at will” relationship.  Nothing contained in this handbook creates an express or implied contract of employment.

STATEMENT OF AT-WILL EMPLOYMENT STATUS

Employment with [the Company] 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 [the Company] 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 both cases, the Division of Advice concluded that the policies did not violate the NLRA because the employees here would not reasonably construe them as restricting their right to engage in protected concerted activity.  In other words, the policies did not lead the employee to believe that he or she could not seek to change their at-will status by selecting a union representative and engaging in collective bargaining.  Instead, the policies here merely identified specific company representatives lacking or having the authority to alter the employees’ status.  As the Division of Advice noted, the language in these policies stood in contrast to the more broadly-worded policy found unlawful by the ALJ in American Red Cross.  While the Division of Advice did not address the policy one of its Regional offices challenged in the Hyatt case, it did direct that going forward all Regional offices were required to submit “all cases involving employer handbook provisions that restrict the future modification of an employee's at-will status” to the Division for review.

But perhaps the most welcome language to emanate from these Advice Memoranda was the Board’s endorsement of employment at-will policies generally, so long as they are reasonably tailored: “It is commonplace for employers to rely on policy provisions such as those at issue here as a defense against potential legal actions by employees asserting that the employee handbook creates an enforceable employment contract,” and “[i]t must be remembered that it is not the purpose of the [NLRA] to give the Board any control whatsoever over an employer's policies, including his policies concerning tenure of employment, and that an employer may hire and fire at will for any reason whatsoever, or for no reason, so long as the motivation is not violative of the [NLRA].” 

So what now?  We suggest that you have counsel review your employment at-will policy to determine whether your employees will interpret it as prohibiting them from seeking to change the at-will status of their employment relationship.  Based on the Division of Advice’s analysis, employers may also want to consider adding language to their policies that identify those individuals who may or who may not have authority to alter the employee’s at-will status.