The Office of the General Counsel (GC) of the National Labor Relations Board (NLRB or Board) recently issued two advice memoranda that shed some light on the legality of employers’ “at-will” disclaimers in employee handbooks and other policies. The October 31, 2012, memoranda examined at-will disclaimers of two employers and found both to be lawful.

Even though they are not binding on the Board, the advice memoranda are welcome pieces of guidance considering the uncertainties employers faced following recent cases where two employers’ at-will disclaimers were called into question under the National Labor Relations Act (NLRA).

Recent Cases Created Uncertainty

In American Red Cross Arizona Blood Services Region, Case 28-CA-23443 (February 1, 2012), an administrative law judge found an employer’s requirement that employees sign an acknowledgement that their employment was at-will, and “agree that the at-will employment relationship cannot be amended, modified or altered in any way,” was unlawful because it forced employees to waive their rights under Section 7 of the NLRA. The judge held that because the provision stated that “the at-will agreement could not be changed in any way,” the at-will disclaimer was “essentially a waiver of the employee’s right to advocate…to change his/her at-will status.”

In another recent case, the NLRB Regional Director in Region 28 (Phoenix, Arjzona) issued a complaint against a national hotel chain soon after the administrative law judge’s decision in American Red Cross Arizona. In part, the complaint alleged that the employer required employees to sign an acknowledgment form containing an “overly broad and discriminatory” at-will disclaimer. In that case, the employee handbook contained the following provisions:

  • I understand my employment is “at will.”
  • I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will employment status, except for a written statement signed by me and either [the company’s] Executive Vice-President/Chief Operating Officer or [the company’s] President.
  • In order to retain flexibility in its policies and procedures, I understand [the company], in its sole discretion, can change, modify or delete guidelines, rules, policies, practices and benefits in this handbook without prior notice at any time. The sole exception to this is the at-will status of my employment, which can only be changed in a writing signed by me and either [the company’s] Executive Vice President/Chief Operating Officer or [the company’s] President.

Although the case ultimately settled, the at-will disclaimer was not as broad as the one that the administrative law judge found unlawful in American Red Cross Arizona, leaving employers to wonder exactly which parts of at-will disclaimers could be problematic.

New Guidance Provides Some Clarity

The October 31, 2012, memoranda involved at-will disclaimers called into question by unfair labor practice charges filed against employers in Rocha Transportation, Case 32-CA-086799 (October 31, 2012) and Mimi’s Café, Case 28-CA-084365 (October 31, 2012).

In Rocha Transportation, the GC examined the employer’s at-will disclaimer, which stated:

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 GC memorandum stated that the “provision would not reasonably be interpreted to restrict an employee’s Section 7 right[s]” because the “provision simply prohibits the Employer’s own representatives from entering into employment agreements that provide for other than at-will employment.” Ultimately, the GC’s interpretation turned on the following fact:

[T]he provision explicitly permits the Employer’s president to enter into written employment agreements that modify the employment at-will relationship, and thus encompasses the possibility of a potential modification of the at-will relationship through a collective-bargaining agreement that is ratified by the Company president.

In Mimi’s Café, the GC examined the employer’s at-will disclaimer, which provided:

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.

Similar to its analysis in Rocha Transportation, the GC stated that the at-will disclaimer at issue did not “explicitly restrict Section 7 activity,” and it “would not reasonably be interpreted to restrict” Section 7 activity. The GC’s conclusion noted that “the provision does not require employees to refrain from seeking to change their at-will status or agree that their at-will status cannot be changed in any way.” The GC stated that the “provision simply highlights the Employer’s policy that its own representatives are not authorized to modify an employee’s at will status.” Finally, perhaps the most insightful portion of the GC’s conclusion was the emphasis on the provision’s context. The GC noted the provision’s context as simply reinforcement of the “Employer’s unambiguously-stated purpose” to inform employees that “[n]othing contained in [the] handbook creates an express or implied contract of employment.”

These GC memoranda relieved the anxiety of many employers regarding the legality of at-will disclaimers because the memoranda provide employers with a clearer picture of what is acceptable under the NLRA. Additionally, due to the fact that at-will disclaimers are commonplace in employer handbooks and other policy materials, the likelihood of future decisions and guidance on the issue is significant. Stay tuned.

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The attorneys in Ogletree Deakins’ Traditional Labor Practice Group have vast experience in complex and sophisticated traditional labor law matters. This includes experience advising and representing employers of all sizes and across virtually all industries in connection with union representation campaigns, collective bargaining negotiations, strike preparations, labor arbitrations, and National Labor Relations Board proceedings.

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