A Halloween Treat for Employers? – NLRB's Acting General Counsel Issues Advice on At-Will Employment Statements

by Constangy, Brooks, Smith & Prophete, LLP

[author: David P. Phippen]

On Halloween, Lafe Solomon, Acting General Counsel for the National Labor Relations Board, issued two Advice Memoranda addressing whether employment-at-will statements in two employee handbooks violated Section 7 of the National Labor Relations Act. In each memorandum, Solomon approved language that told employees that employer representatives did not have the authority to change the at-will status of employees. There was nothing in the handbook language that limited the rights of employees to alter that status or otherwise engage in protected concerted activity. Accordingly, Solomon said, the language would not reasonably be interpreted by employees to restrict employees' exercise of Section 7 rights and thus did not violate Section 8(a)(1) of the Act.

The Advice Memoranda are just that -- guidance, with respect to the two specific situations addressed in the memoranda. The Acting General Counsel and the Board itself are free to take a different view in a different case.

Background Clamor

The issue of at-will statements created a modest uproar after an administrative law judge of the Board found this past February that a statement on a form used by a unit of the American Red Cross violated the Act. The Red Cross unit's form, which employees were required to sign to acknowledge that they had received the employee handbook, said: "I further agree that the at-will employment relationship cannot be amended, modified or altered in any way." The ALJ found that there was "no doubt" that employees would reasonably construe the form to mean that they could not vary their at-will employment status in any way, including through collective bargaining. Thus, according to the ALJ, the statement effectively amounted to a waiver of the right to change the status by collective activity and thus constituted unlawful interference violating Section 8(a)(1) of the Act.. The case settled before the ALJ's decision could be reviewed by the Board.

In another case, a Regional Office of the Board issued a complaint against Hyatt Hotels Corporation, alleging that the employer's at-will statement in an acknowledgement form for receipt of a handbook violated the Act. The Hyatt acknowledgement form provided, "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/Chief Operating Officer or Hyatt's President." (The language is on page 9 of the linked pdf, in Paragraph 5(k).) After the Board issued its complaint, the case settled.

The at-will statements in the acknowledgment forms at issue in the American Red Cross and Hyatt cases were similar to those used routinely by employers and considered completely unremarkable by courts. However, that language was arguably susceptible to an interpretation by employees, reasonable or unreasonable, that Section 7 activity would be futile. Neither employer's statement simply limited the authority of its representatives to avoid making contracts with employees that altered the employees' at-will status.

The Recent Advice Memos

In the first of the two cases, Acting General Counsel Solomon considered employee handbook language of Mimi's Café, a restaurant in Arizona, that provided as follows: "No representative of the Company has authority to enter into any agreement contrary to the foregoing 'employment at will' relationship." Solomon found that the language merely indicated that the employer's representatives were not authorized to change the at-will status and would not reasonably be interpreted by employees to restrict their Section 7 activity.

In the second case, Solomon considered employee handbook language of Rocha Transportation, a trucking company in California, that provided as follows:

No manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for a 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.

Solomon found that this language (1) simply prohibited employer representatives from making "agreements that provide for other than at-will employment," (2) explicitly permitted and thus encompassed the possibility of modification of the at-will relationship, and (3) would not reasonably be construed by employees to restrict their Section 7 rights.

In each case, Solomon directed the Regional Office to dismiss the charge allegation, absent withdrawal, and concluded, "Because the law in this area remains unsettled, the Regions should submit to the Division of Advice [Solomon's office] all cases involving employer handbook provisions that restrict future modification of an employee's at-will status."

Going Forward

The Board is obviously interested in the impact of at-will statements on Section 7 rights and may issue a decision on this topic. Meanwhile, employers who do not want to be "test cases" can revise their handbook and policy language to track the language in the Mimi's Café and Rocha handbooks, and they can follow the broader principle that an employer can lawfully inform employees that employer representatives' authority to modify employment terms, including at-will status, is restricted. Employers seeking to avoid unfair labor practice charges concerning their at-will employment statements should avoid making any broad, ambiguous at-will statement that is susceptible to an interpretation that the statement restricts employees' rights to change their employment terms. An aggressive Board is likely to see any such statement as unlawfully interfering with employees' Section 7 rights. As Halloween treats go, this one might not be the greatest, but with the current Board, perhaps employers should be grateful even for this surprise.

If you have any questions about this issue, please contact any member of Constangy's Labor Relations Practice Group, or the Constangy attorney of your choice.


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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