NLRB Provides New Guidance on At-Will Employment Provisions

On October 31, 2012, the National Labor Relations Board’s (NLRB) Office of the General Counsel issued two advice memoranda addressing at-will provisions in employee handbooks. In both cases, the NLRB concluded that the specific at-will provision could not reasonably be interpreted to restrict protected activity and, therefore, was permissible under federal labor law.

The NLRB’s guidance follows a controversial decision earlier this year from an NLRB administrative law judge (ALJ). In that decision, the ALJ held that an at-will disclaimer adopted by an American Red Cross regional unit was unlawfully overbroad to the extent it conveyed that at-will status could never be changed. Notably, Red Cross employees were required to sign a form stating “I further agree that the at-will employment relationship cannot be amended, modified, or altered in any way.” In the Red Cross matter, the ALJ found the language to be unlawful because it implied any concerted effort undertaken by employees to alter the at-will status would be futile. (We previously commented on the Red Cross decision in our October 2012 Employer Alert.)

The ALJ’s ruling in Red Cross generated significant attention and raised concerns that more challenges to the at-will language commonly included in employee handbooks would follow. The NLRB’s recent advice memos, however, provide welcome guidance and serve to allay these concerns.

The first advice memo (available here) addressed language in a restaurant’s handbook that “No representative of the Company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship.” The second advice memo (available here) addressed a challenge to a trucking company’s handbook, which advised drivers that employment was at will and that at-will status could be modified only in writing by the employer’s president.

The NLRB found both provisions to be lawful. Distinguishing Red Cross, the NLRB noted that the two provisions at issue did not imply that the at-will relationship could never be changed. Rather, the disclaimers left open the possibility of modification through collective bargaining or other concerted efforts. According to the NLRB, the provisions simply reinforced the at-will employment relationship and highlighted that the employer’s own representatives have limited authority to modify at-will status. The NLRB went on to acknowledge that “[i]t is commonplace for employers to rely on policy provisions such as those at issue here as a defense against legal actions by employees asserting that the employee handbook creates an enforceable employment contract.”

While the NLRB’s advice memos do not reverse the ALJ’s findings in Red Cross, they do provide much-needed clarification on what at-will disclaimers the NLRB will find acceptable going forward. To be sure, all employment handbooks should include, at the least, a statement that "the employment relationship is at will and can be terminated by either the employee or employer at any time and for any reason.” Employers also would be well-advised to indicate that only the highest officers have authority to modify the at-will relationship, and that such modifications must be in writing. When drafting disclaimers, however, employers must be cautious to avoid language that could be interpreted to foreclose any possibility of modifying at-will status. As the NLRB’s recent guidance indicates, such language will be found to be overbroad and a violation of federal labor law.

We will keep you updated through our blog on any further developments in this area.