NLRB General Counsel Gives Guidance on "At Will" Provisions in Employee Handbooks
The NLRB General Counsel’s Division of Advice has issued opinions in two cases (available here and here), finding the employers’ handbook provisions concerning “at-will employment” to be lawful. The Advice Memoranda, both dated October 31, 2012, provide much needed guidance for employers whose handbooks and policies advise employees that their employment is “at will” and may be terminated at any time. As the General Counsel observes in both memoranda, it has become commonplace for employers to rely on such policy provisions as a defense against employees asserting that the employee handbook creates an enforceable employment contract. Whether such provisions would pass scrutiny by the NLRB, however, has been an open question.
In American Red Cross Arizona Blood Services Region, Case 28 CA-23443 (Feb. 1, 2013), an administrative law judge (“ALJ”) found one employer’s “at will employment” provision unlawfully interfered with employee rights by requiring employees to sign an acknowledgement stating “I further agree that the at-will employment relationship cannot be amended, modified, or altered in any way.” The ALJ reasoned that this essentially required that employees agree that their “at will” status could not be changed, thereby effectively waiving their right to seek a “just cause” provision through organizing and bargaining for a union contract. That case settled without any ruling by the NLRB, leaving a cloud of doubt surrounding other “at will employment” provisions.
The two cases decided by the Division of Advice bring clarity to this issue. In both cases, the clauses recited that company representatives were without authority to enter into any agreement altering the “at-will” status of the employees, and that the handbook itself did not constitute an express or implied employment contract. One of the handbooks also required that employees sign an “Acknowledgement of Receipt.” The General Counsel observed that the provisions did “not explicitly restrict Section 7 activity.” Moreover, in neither case was the provision promulgated in response to union activity, nor had the provision been applied to restrict union activity. Hence, the sole issue was whether employees would reasonably construe the language to prohibit union organizing or other concerted activity protected by Section 7.
The General Counsel concluded that employees would not reasonably understand the provisions to prevent them from engaging in concerted activity for the purpose of altering their at-will status. The clauses do not require employees to agree to refrain from such activity, nor do they require employees to agree that their status cannot be changed. Unlike the at-will provision involved in the American Red Cross case, these clauses simply recite that management representatives could not alter the employees’ status. As such, the provisions reflect a restriction on the authority of company representatives, not on employee rights.
As these cases demonstrate, employers may avoid issuance of a complaint by carefully drafting their “employment at will” handbook provisions to avoid interference with employee organizing rights or protected activity. Without another issuance of a complaint by the General Counsel, this issue could continue to evade decision by the NLRB for some time. Employers should expect continued scrutiny of these clauses, however, as the two memoranda remind the Board’s Regional Offices to continue to submit all cases raising such issues to the Division of Advice for review.