NLRB Clarifies At-Will Requirements

In February 2012 a NLRB Administrative Law Judge ruled that an employer’s at-will language contained in its employee handbook violated the National Labor Relations Act (NLRA).  The violative language stated, “I further agree that the at-will employment relationship cannot be amended, modified, or altered in any way.” American Red Cross, 28-CA-23443.  The judge found the language restricted an employee’s section 7 rights to organize a union and bargain collectively.   The ruling left many employers concerned and uncertain whether, and to what extent, traditional at-will concepts still applied.

Even though the NLRB has become increasingly aggressive in applying the NLRA to non-union workplaces, especially in the areas of social media, investigations, and confidentiality language, it appears to have taken a step back in its at-will position.  On October 31, 2012, the NLRB’s Acting General Counsel (AGC) issued two Advice Memos that clarify the contours of an acceptable at-will provision.

In Mimi’s Café, 28-CA-084365, the AGC found the following language to be acceptable:

“The relationship between you and Mimi’s Café 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.”  (emphasis added).

At issue was the bolded language that indicates no member of management has the authority to change the at-will nature of the relationship, and whether such language was overbroad and would chill employees in their exercise of section 7 rights.  In making that determination the AGC relied on a two step test. First, a rule is unlawful if it explicitly restricts section 7 activities. Second, if not, it will still violate the Act if employees would reasonably construe the language to prohibit section 7 activities, or if the rule was promulgated in response to union activity, or if the rule has been applied to restrict section 7 rights.  Further the rule must not be read in isolation, but must be read in its proper context.

With regard to the specific language at issue, the AGC found the rule did not explicitly restrict section 7 activity.  Nor was it promulgated in response to union or other protected activity, or applied to restrict section 7 rights. His analysis thus boiled down to whether employees could reasonably construe the language to prohibit section 7 activities.  In effect, would employees read the language in a way that may reasonably lead them to think they were restricted from trying to form a union or engage in concerted activity to change their at-will status?

In finding no such restrictive interpretation, the AGC stated the language simply highlights the employer’s policy that its own representatives are not authorized to modify an employee’s at-will status.  Further when read in the proper context, the purpose of the sentence was to reinforce the concept that nothing in the handbook creates an express or implied contract of employment.

At first blush, the language in both American Red Cross and Mimi’s appear to equally foreclose a change in the at-will nature of the employment relationship; however, the AGC distinguished the two.  The former required the employee to agree that there would be no change to the at-will relationship, and effectively forced him to waive any right to act in concert with others to seek a change.  The latter simply clarified that no member of management had the right to make a change. This subtly based on whose actions were being restricted was apparently enough to make the difference.

In Rocha Transportation, 32-CA-086799, the handbook language in dispute read, “No 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.” The handbook also contained an Acknowledgment of Receipt that the employee was required to sign that reiterated the disputed language, and further stated that employees understood they are being hired at-will, and that nothing in the handbook creates or is intended to create a contract or representation of continued employment.  

In using the same test outlined above, the AGC found this language lawful, and commented positively on the provision that permitted the President to change the at-will nature of the employment relationship.  This language is at least more distinguishable than American Red Cross, and is probably safer to use.

These Memos provide significant guidance for drafting at-will language.  Employers have the right to clearly state the at-will nature of the employment relationship.  They also have the right to state that no member of management has the authority to change the relationship, or alternatively they can designate particular officials who are vested with the right to do so.  Employers should not require employees to affirmatively agree that the at-will relationship cannot be changed under any circumstances, but they can be asked to acknowledge they understand they are being hired at-will, and that nothing in the handbook creates or is intended to create a contract or representation of continued employment.  As this area of the law is still unsettled, it would be prudent to have counsel review any at-will language and acknowledgments currently being used, or contemplated in the future.