NLRB Takes Aim At Employment-At-Will Clauses In Employee Handbooks

As discussed in previous postings on this site, the National Labor Relations Board (NLRB) is devoting a significant amount of attention to “concerted activity” under Section 7 of the NLRA, and is aggressively working to expand the “concerted activity” definition.  According to two recent NLRB decisions, requiring an employee to sign an “at-will” acknowledgement form violates the employee’s right to engage in concerted activity under Section 7of the National Labor Relations Act (NLRA).

The clash between at-will employment and the NLRA first emerged earlier this year in American Red Cross Arizona Blood Services Division, in which Lois Hampton, a Donor Recruitment Representative with the American Red Cross, was terminated for alleged performance issues.  As a condition of employment, Hampton was required to sign a document titled “Agreement and Acknowledgement of Receipt of Employee Handbook” which stated in part, “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.”  The NLRB alleged, among other things, that language was a violation of Hampton’s Section 7 rights.

In analyzing this language, the Administrative Law Judge (ALJ) acknowledged that it  was questionable whether the language expressly restricted Section 7 activity, but held that there was “no doubt” that it violated the Act because employees would reasonably construe the language to prohibit Section 7 activity.  Specifically, the ALJ reasoned that by signing the form the employee waived her right to individually attempt to change her at-will status.  The language, however, could be interpreted by employees as also waiving the right to engage in concerted activity in an attempt to change that status.  For these reasons, the ALJ concluded that the acknowledgement form contained “overly-broad and discriminatory language that had a chilling effect on the employee’s Section 7 rights,” and violated the NLRA.    The American Red Cross was ordered to remove or revise the language, notify all employees in writing that the provision had been revised or rescinded, and post a notice advising employees of their rights under the NLRA, and assuring them it would respect those rights.

Just weeks after this case was decided, the NLRB filed a complaint against Hyatt Hotels attacking Hyatt’s social media policies and also alleging that Hyatt’s policy of requiring employees to sign a form acknowledging the employee’s at-will status violated the NLRA.  The Hyatt case is distinguishable from the American Red Cross case in a significant way.  Specifically, the acknowledgement in American Red Cross stipulated that the “employee’s at-will status could not be altered or modified in any way.”  In Hyatt, however, the language was not as broad, and stated, “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 Hyatt’s Executive Vice President/Chief Operating Officer or Hyatt’s President.”  The American Red Cross decision was premised on the fact that employees could interpret the language to foreclose all efforts to change the at-will status, including concerted efforts.  The Hyatt language, however, was clearly communicating that the at-will status could potentially be changed either through individual or concerted activity.

Unfortunately, Hyatt chose to settle this matter which means employers are provided with no insight into why this clause allegedly violated the NLRA.

These rulings are troubling for employers since it is common practice for employers to have an employee handbook setting forth the various policies of the organization.  The handbook typically sets forth the employer’s expectations and may help the employer defend against wrongful termination or other claims.  Frequently, employee handbooks require the employee to sign an acknowledgment form stating that the employee acknowledges and agrees that his/her employment is “at-will” and the “at-will” status cannot be altered.    At-will employment is a state law doctrine that allows an employer to terminate an employee any time and for any reason, so long as that reason is not illegal.  Employers may also terminate the employee for no reason at all.  The acknowledgement form serves the purpose of protecting the employer from an employee who claims he was promised employment for a specified period of time and that he could only be terminated for cause.   While at-will employment is a state law issue, employers must, nonetheless, comply with all federal laws, including those of the NLRA.

A partial remedy for each of these two cases requires the employers to post notices about the rights provided to employees under the NLRA, including the employees’ right to unionize and engage in concerted activity.   Interestingly, this is the same requirement the NLRB recently tried to mandate on every employer in the country by requiring employers to display posters explaining the rights; a matter that has been stayed by a federal court.  Since the NLRB has addressed the “at-will” employment issue twice within the last six months, employers can safely assume it is seeking to aggressively take aim at at-will employment agreements and will likely lodge unexpected enforcement actions against additional employers; using those actions as a means to circumvent the posting requirement that is currently pending appeal.