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When does “at-will” not violate the NLRA?

November 13, 2012

Article courtesy of SBAM Approved Partner ASE

By Anthony Kaylin  

The National Labor Relations Board seemed to be backing down recently from its initial attacks on “at-will” employment clauses. But, at second blush, maybe not …

The NLRB issued two advice memos on October 31st discussing the use of specific “at-will” clauses used by employers.

The first one addressed the at-will clause in a handbook maintained by Rocha Transportation in Modesto, California. The language advised drivers that their employment is at-will and may be terminated at any time.  The clause is as follows:

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.

The handbook has a sign-off (by the employee) provision which states in part: “nothing in the employee handbook creates or is intended to create a promise, contract, or representation of continued employment.”

The memo describes the test that the NLRB will use to determine if the at-will rule/clause is lawful. 

First, a rule is unlawful if it explicitly restricts Section 7 activities (Section 7 of the NLRA expressly grants the employee’s right to engage in concerted activities related to terms and conditions of employment, including at-will status).

Second, if the rule does not explicitly restrict protected activities, it will nonetheless be found to violate the Act upon a showing that: (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.

In this situation, the advice memo concluded that the contested handbook provision would not reasonably be interpreted to restrict an employee’s Section 7 rights. According to its reasoning, the provision did not require employees to refrain from seeking to change their at-will status or to agree that their at-will status cannot be changed in any way. Instead, the provision simply prohibits the employer’s own representatives from entering into employment agreements that provide for other than at-will employment.  In fact, by authorizing only the president to have the authority to change the arrangement, the NLRB concluded this encompassed an at-will relationship through a collective-bargaining agreement that is ratified by the company president.

On the other hand, in the case of American Red Cross Arizona Blood Services Region (Case 28-CA-23443) the sign-off clause stated that “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” In this situation, the NLRB found that that the signing of the acknowledgement form, whereby the employee – through the use of the personal pronoun “I”- specifically agreed that the at-will agreement could not be changed in any way, was “essentially a waiver” of the employee’s Section 7 rights.

With respect to Mimi’s Café in Casa Grande, Arizona, the Teammate Handbook description of at-will employment includes the sentence: “No representative of the Company has authority to enter into any agreement contrary to the foregoing “employment at will” relationship.”  The advice memo concluded that this clause was permissible 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.

The crux of the decisions in both cases is that the employee’s right to consider changing the at-will status through collective bargaining was not found affected by the sign-off clauses.  Both clauses affected employers’ representatives, not the employee, from agreeing to any change in status.  The Red Cross case has unfortunately used the pronoun “I” and that is why the clause was considered overly broad and invalid.

It should be noted that the Acting General Counsel is asking all Regional Offices to submit cases involving employer handbook at-will provisions to the Division of Advice for further analysis and coordination.  Assuming the right case comes before the Board for litigation, “at-will” clauses have tenuous life under the Obama administration.

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