The Board continued its expansion of employee rights in its July 29th decision in Minteq International, Inc., 364 NLRB No. 63, finding that two common provisions in a non-compete agreement interfered with employees’ rights in violation of Section 8(a)(1) of the National Labor Relations Act. Among other allegations, the General Counsel in Minteq asserted that the “Interference with Relationships” and “At-Will Employee” provisions of the employer’s non-compete agreement could reasonably be construed to interfere with employee’s Section 7 rights.
In Minteq, the union represented some of the employer’s employees, and the employer and the union had a collective bargaining agreement in effect. The collective bargaining agreement provided that employees are probationary for their first six months of employment and that the employer’s discipline, layoff or discharge of a probationary employee “shall not be a violation of this Agreement.” After six months, the CBA imposes on the employer a “just cause” standard for any discipline, suspension, and discharge.
Unbeknownst to the union, the employer began having new hires sign a “Non-Compete and Confidentiality Agreement” (NCCA) containing the following provisions:
4. Interference with Relationships. During the Restricted Period Employee shall not, directly or indirectly, as employee, agent, consultant, stockholder, director, partner or in any other individual or representative capacity intentionally solicit or encourage any present or future customer or supplier of the Company to terminate or otherwise alter his, her or its relationship with the Company in an adverse manner.
12. At-Will-Employee. Employee acknowledges that this Agreement does not affect Employee’s status as an employee-at-will and that no additional right is provided herein which changes such status.
The NCCA also included a non-compete provision and acknowledgements from the employee that the employer would be irreparably damaged if the employee were to compete against the employer by providing services to any person or entity in violation of the provisions of the NCCA.
While the administrative law judge found that the employer violated Section 8(a)(5) and (1) by unilaterally having new hires sign the NCCA, the ALJ did not find that employees would construe the “Interference with Relationships” rule to prohibit Section 7 activity. The ALJ noted that “it would be quite an extrapolation from Section 4 to conclude that employees were prohibited, for example, from striking, because it would interfere with Minteq’s relationship with suppliers or customers.” The Board, despite the requirement that it “refrain from reading particular phrases in isolation,” disagreed:
The “Interference with Relationships” rule clearly places restrictions on employees’ ability to communicate with the Respondent’s customers and restricts employee efforts to “improve terms and conditions of employment or otherwise improve their lot as employees through channels outside the immediate employee-employer relationship.” … These efforts could include asking customers to boycott the Respondent’s products or services, as the General Counsel argues, but they could also encompass other forms of appeals to the Respondent’s customers. A prohibition of this type of conduct is an unlawful restriction of employees’ Section 7 rights.
The ALJ also found that the “at-will” disclaimer did not violate the Act as it “merely advises the new hire that he or she is an at-will employee [temporarily] and that nothing in the NCCA affects that status. … There is nothing in Section 12 that reasonably would lead an employee to conclude that he or she is waiving his or her Section 7 rights (assuming that he or she is aware that they have such rights). Even employees who are at-will employees throughout their employment retain their Section 7 rights.” Once again, the Board disagreed.
However, the Board did not find a violation because the employer purported to change the terms of the CBA unilaterally in violation of Section 8(a)(5). Instead, the Board found that Section 12 of the NCCA violates the Act because it would somehow discourage employees from engaging in Section 7 activities for fear that they could be terminated for such conduct:
We find that employees thus would reasonably doubt whether the CBA’s “just cause” provision remains in effect. Thus, the “At-Will” rule has a reasonable tendency to discourage employees from engaging in conduct that would be protected by the CBA’s “just cause” provision and by Section 7 of the Act, including the exercise of rights under the collective-bargaining agreement and other protected, concerted activity (such as, for example, communicating among themselves or with the Respondent’s customers concerning their terms and conditions of employment), for fear that they could be discharged without the contractual “just cause” protection. Similarly, the conflict between the “At-Will” provision and the “just cause” provision would reasonably discourage employees from engaging in the Section 7 activity of utilizing the contractual grievance and arbitration procedures to challenge disciplinary actions they believe were not for “just cause.”
The Board’s rationale for finding that the provision discourages employees from engaging in Section 7 activities is a stretch, as no employee–whether “at will” or with “just cause”–can be discharged because of their protected, concerted activity. As such, it stands to reason that no reasonable person could conclude that the “At-Will” provision prohibits Section 7 activities because, as the ALJ noted, “[e]ven employees who are at-will employees…retain their Section 7 rights.” Given the Board’s effort to go out of its way to rationalize a violation, Minteq begs the question of whether the Board wants to revisit the legality of “at-will” employment disclaimers.