Nearly all employee handbooks for nonunionized employees contain statements declaring that employees are employed “at will” – that is, their employment can be terminated at any time and for any reason. These statements are such a fundamental reflection of the typical employment relationship in most nonunionized workplaces that they often attract little attention. Earlier this year, however, an Administrative Law Judge of the National Labor Relations Board (“NLRB”) found that an employment-at-will provision in an employee handbook unlawfully interfered with employees’ rights under the National Labor Relations Act (“NLRA”). Although it has no precedential effect, that decision raised concerns about the legality of at-will provisions under the NLRA, a law that applies to most private-sector employers, regardless of whether there is a union in the picture. Those concerns were reduced recently when the NLRB’s Acting General Counsel (the official whose office prosecutes unfair labor practice cases before the NLRB) issued two advice memoranda that give much needed guidance to employers about how to draft employment-at-will disclaimers without violating the NLRA.
The Reasons for Concern
The NLRA grants employees the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157. In simple terms, this means that, among other things, employees have a statutory right to act together to try to change wages, hours, and working conditions. An employer’s rules or policies can violate the NLRA when they restrict or interfere with the exercise of this right. A rule or policy need not expressly prohibit protected concerted activity to run afoul of the NLRA. Indeed, a rule or policy that merely has the tendency to chill employees’ exercise of their NLRA rights can be unlawful. Thus, a policy that is so broadly worded that employees would reasonably construe it as prohibiting NLRA-protected activity violates the NLRA.
In February 2012, an NLRB Administrative Law Judge (“ALJ”) found an at-will disclaimer in the employee handbook of an American Red Cross unit was unlawfully overbroad because it required employees to sign off on a statement declaring that the at-will employment relationship could not be modified in any way. The ALJ found this provision violated an employee’s right under the NLRA to “advocate concertedly . . . to change his/her at-will status.” This ruling, along with a subsequent unfair labor practice complaint challenging an at-will employment disclaimer in the employee handbook of a major hotel chain, caused concern that the NLRB would crack down on employers who simply wanted to ensure their employees were aware of the at-will nature of their employment.
The NLRB Advice Memoranda
Responding to a request for advice on unfair labor practice charges challenging the at-will-employment disclaimers of two employers, Mimi’s Café and Rocha Transportation, the NLRB’s Acting General Counsel issued two advice memoranda on October 31, 2012 that shed light on how the NLRB is likely to rule on these types of cases. The charges addressed in the memoranda alleged that the disclaimers were overbroad and would chill employees’ rights under the NLRA. The Acting General Counsel concluded that both disclaimers were lawful, in part because the language in the challenged provisions did not require employees to agree that the at-will nature of their employment could never be changed or to refrain from seeking to change it.
The disclaimer in Mimi’s Café’s handbook stated that “[n]o representative of the Company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship.” The NLRB’s Acting General Counsel found this language simply clarified that the employer’s representatives are not authorized to change the at-will nature of the employment.
The language in Rocha Transportation’s handbook was similar, stating that “[n]o 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.” Like the language in Mimi’s Café’s handbook, this language clarified that certain employees could not change the at-will nature of the employment. This provision, however, explicitly stated the president of the company could change the at-will nature of the employment if he/she did so in writing.
Significantly, the Acting General Counsel found no language in either of the at-will provisions that required employees to refrain from seeking to change their at-will status or to agree that their at-will status could never be changed.
Although the Acting General Counsel’s advice memoranda are not binding interpretations of the NLRA, they do provide helpful guidance on how best to communicate the at-will employment relationship at a company while minimizing the risk that the at-will statement will violate the NLRA. That guidance can be summarized in four simple rules:
- You may tell employees whose employment may be terminated at any time and for any reason that their employment relationship is considered “at will.”
- You should not say that this employment relationship can never be modified.
- You may state, however, that the at-will relationship cannot be modified by oral statements made by any member of management or by written documents signed by low-level management.
- You should say who can modify the employment relationship and how that modification can be effectuated. For example, it may be appropriate to state, “The at-will relationship can be amended, modified, or altered only by the President of the Company and only in a written document that expressly limits the right to terminate employment.”
Employers should review the at-will employment statements in their employee handbooks, handbook acknowledgment forms, employment offer letters, and other documents and consider whether those statements go beyond the guidelines described above.