On October 31, 2012, the National Labor Relations Board issued two memos that analyzed at-will employment clauses in employer handbooks. The memos are helpful guidance for employment attorneys and in house counsel to know what language passes muster and what language to avoid.
In both of the cases, charges were filed alleging that the at-will language used in the Employers' Handbook violated the National Labor Relations Act (NLRA) because the language was overbroad, and would reasonably chill employees in the exercise of their rights under the Act.
However, both of the clauses were found to be lawful.
Rule Governing At-Will Employment Policies
In so finding, the memos explain the rule that an employer violates the Section 8(a)(1) of the NLRA by maintaining work rules or policies that explicitly prohibit NLRA-protected union or concerted activity, such as joining a union or discussing terms and conditions of employment with coworkers. Even if not explicit, a rule can be unlawful if employees would reasonably construe the language to prohibit such activity.
In determining whether a policy has such an effect, the Board follows a two-step inquiry, set forth by Lutheran Heritage Village-Livonia, 343 NLRB 646, 646-47 (2004):
1. A rule is unlawful if it explicitly restricts Section 7 activities.
2. If the rule does not explicitly restrict protected activities, it will nonetheless be found to violate the Act upon a showing that:
a. Employees would reasonably construe the language to prohibit Section 7 activity;
b. The rule was promulgated in response to union activity; or
c. The rule has been applied to restrict the exercise of Section 7 rights.
In both of the cases, the Board determined that the language at issue did not explicitly restrict activities, was not promulgated in response to union or other protected activity, and the policy was not applied to restrict protected activity. Thus, applying the above rule, the clauses could only be found unlawful if employees would reasonably construe them in their context to restrict protected activities.
The first case involved Rocha Transportation, a California company that transports containerized freight to and from California's Central Valley and the Port of Oakland. In that case, the Handbook stated in its "Statement of At-Will Employment Status":
"Employment with Rocha Transportation is employment at-will. Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the Company. Nothing in this Handbook or in any document or statement shall limit the right to terminate employment at-will. 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."
All new employees were given the handbook and required to sign an "Acknowledgment and Receipt." The Handbook also contained the following statement "nothing in the employee handbook creates or is intended to create a promise, contract, or representation of continued employment. . ."
The Board concluded that the handbook provision would not reasonably be interpreted to restrict an employee's right to attempt to change his or her employment at-will status and does not require the employee to agree that their at-will status cannot be changed in any way. In fact, the language recognizes the possibility that the Company president would modify the at-will status through ratification of a collective bargaining agreement.
Therefore, employees would not reasonably assume that their NLRA rights are prohibited.
The second case involved Mimi's cafe, an Arizona restaurant, with multiple locations across the country. Its Handbook contained the following language:
AT-WILL EMPLOYMENT "The relationship between you and Mimi's Cafe 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."
The Board found this language was not unlawfully broad because the clause does not require employees to agree that the employment relationship cannot be changed in any way, but merely highlights that the employer's representatives are not authorized to change it.
As such, the Board concluded that employees would not reasonably construe this provision to restrict their Section 7 right to select a collective-bargaining representative and bargain collectively for a contract when considered in context.
Language That Would Be Prohibited
The Board distinguished a case, American Red Cross Arizona Blood Services Region, that was decided by an Administrative Law judge. The at-will clause in that case stated: "I further agree that the at-will employment relationship cannot be amended, modified or altered in any way." The employee was required to sign a form acknowledging their at-will status.
The ALJ in that case concluded that because the employee had to sign the form and the language used the pronoun "I," the employee was essentially waiving the right to advocate to change his or her at-will status.
The Board noted that the American Red Cross case settled before Board Review of the decision, and the law in this area remains unsettled, so it recommended that Regional Offices to submit cases involving employer handbook at-will provisions to the Division of Advice for further analysis and coordination.
It may be prudent to review your employer handbook in light of these advice memos, to ensure compliance. Given that the Board is requesting Regional Offices to submit cases involving at-will provisions, this appears to an issue of importance to them.
Anne O'Donnell is a recovering litigator who is now currently a Senior Writer for legal professional content at Findlaw.com. She practiced for 10 years in civil litigation in San Francisco.