NLRB Clarifies At-Will Employment

Carolyn Rashby and Emi Gusukuma

The Recorder

12-13-2012

Employee handbooks commonly contain an at-will disclaimer specifying that the employment relationship can be terminated at any time, with or without cause or advance notice. Earlier this year, however, a National Labor Relations Board administrative law judge called into question whether at-will provisions are lawful, ruling that a disclaimer used by the American Red Cross Arizona Blood Services Region interfered with employee §7 rights under the National Labor Relations Act to engage in concerted activity.

The controversial decision was just the latest in a string of NLRB actions over the past year questioning the lawfulness of common employment policies — including social media and confidentiality provisions — and leaving employers uncertain about how to draft workplace policies without running afoul of the NLRA. But now, in a welcome move, the NLRB's Office of General Counsel has issued guidance assuring employers that carefully drafted at-will provisions can withstand challenge under the NLRA.

In American Red Cross Arizona Blood Services Region, 28-CA-23443, employees were required to sign a form acknowledging their at-will status. The acknowledgment contained the following language: "I further agree that the at-will employment relationship cannot be amended, modified or altered in any way." The administrative law judge found that requiring employees to sign this acknowledgment amounted to a violation of the NLRA. In particular, the at-will language could be construed by employees as relinquishing their right to "advocate concertedly" to change their at-will status. The administrative law judge ordered the American Red Cross unit to advise employees in writing that the policy had been rescinded and revised and to post a notice informing employees that it would not violate their NLRA rights.

On Oct. 31, the NLRB's Office of General Counsel issued advice memoranda endorsing two employers' at-will provisions and drawing a clear distinction with the American Red Cross provision. In particular, the NLRB evaluated at-will disclaimers in use by Rocha Transportation, a California trucking company, and SWH Corp. d/b/a Mimi's Café, an Arizona restaurant, and concluded that neither made the at-will relationship unalterable or chilled employees' NLRA rights.

In the Rocha Transportation matter, all new employees received a copy of the Rocha Transportation Driver Handbook, which contained details about the terms and conditions of employment. The handbook's at-will clause specifically stated:

"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."

In the Mimi's Café matter, all new employees received a copy of the teammate handbook, setting forth terms and conditions of employment and containing an at-will provision. The at-will language 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."

The NLRB found that while the Rocha and Mimi's disclaimers reaffirmed the at-will relationship, neither provision extracted a personal promise from employees to refrain from seeking to change their at-will status or to agree that their at-will status could not be changed in any way — in contrast to the American Red Cross provision scrutinized by the administrative law judge. The Rocha and Mimi's provisions simply prohibited the employer's own representatives from entering into employment agreements that provide for other than at-will employment. The NLRB also noted that there was no evidence that either employer issued the policies in response to union activity or other protected activity, and neither applied the policies to restrict §7 rights.

In a press release announcing the advice memoranda, the Office of General Counsel explained that because NLRB law on at-will employment disclaimers remains unsettled, it is asking regional offices to send cases involving at-will provisions to the NLRB's Division of Advice for uniform review, as the agency did previously with social media cases.

While the NLRB continues to sort this out, employers should take the time to review their at-will disclaimers — whether in employee handbooks, acknowledgments, offer letters, etc. — to ensure that the language is not overly broad under the NLRA, but more closely tracks the at-will provisions endorsed in the recent advice memos. Language that forecloses the possibility of an employee taking any action to change his or her at-will status runs the risk of being found unlawful.

Carolyn Rashby and Emi Gusukuma are special counsel with Miller Law Group, a management-side employment law firm with offices in San Francisco and Los Angeles. They advise employers on a wide range of workplace matters, including wage and hour, leaves of absence, discrimination, harassment and employee handbooks and personnel policies and practices.

This article originally appeared in The Recorder.