Get In Touch

Legal Articles

Is Nothing Sacred? The NLRB Takes on Employment at Will

December 7, 2012


The "employment at will" doctrine, holding that an employer may terminate an employee for no reason or any reason and that an employee can likewise quit for no reason or any reason, is the "sacred cow" of American employment law. Although riddled with exceptions created by legislative action protecting various classes and the advent of the tort of wrongful discharge, the doctrine nonetheless affords a substantial measure of flexibility and discretion to employers throughout the country, with the exception of Montana where the doctrine has been for the most part abrogated by statute. However, the National Labor Relations Board now has the "employment at will" doctrine in its crosshairs. Over the last two years, the NLRB has been aggressively seeking to expand the application of the National Labor Relations Act to the nonunion workplace. Many of the NLRB's plans have been stymied by court challenges, such as its rule requiring that posters be displayed advising employees of their rights to organize and engage in concerted activity and its revised election rules which make it easier and quicker for employees to select a union to represent them. However, other initiatives have been more successful, such as the NLRB's efforts to protect use of electronic media by employees to engage in concerted activity. Now, the NLRB is seeking to restrict the application of "employment at will" policies as another means of reshaping the contours of employment law as we know it. As with many of the NLRB's other initiatives, only time will tell whether it will be successful in upsetting well-established principles. However, employers should take a second look at their employee handbooks to ensure that their "at will" policies do not run afoul of the NLRB's new guidelines.

A. The American Red Cross Case

On February 1, 2012, an Administrative Law Judge of the NLRB decided that the American Red Cross violated Section 8(a)(1) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 158(a)(1), by requiring employees to sign a document entitled "Agreement and Acknowledgment of Receipt of Employee Handbook." By signing the acknowledgment form, employees confirm receipt of, and agree to abide by, the rules and policies set forth in the handbook. The acknowledgment form also defines the concept of an "at will" employment relationship and contains the following language: "I further agree that the at-will employment relationship cannot be amended, modified or altered in any way."

The NLRB's General Counsel, the prosecutorial arm of the agency, contended that the language in the acknowledgment form was overly broad and tended to chill employees in the exercise of their rights under Section 7 of the NLRA, 29 U.S.C. § 157, to engage in protected concerted activity. The ALJ, while recognizing that the language did not expressly infringe upon or restrict protected conduct, nevertheless concluded it was unlawful because there was "no doubt" that employees would reasonably construe the language to prohibit Section 7 activity. Explaining this conclusion, the ALJ stated that "the signing of the acknowledgement form is essentially a waiver in which an employee agrees that his/her at-will status cannot change, thereby relinquishing his/her right to advocate concertedly, whether represented by a union or not, to change his/her at-will status." As a result, according to the ALJ, "the clause in question premises employment on an employee's agreement not to enter into any contract, to make any efforts, or to engage in conduct that could result in union representation and in a collective-bargaining agreement, which would amend, modify, or alter the at-will relationship." The ALJ held that requiring such an agreement impermissibly chilled employees interested in exercising their Section 7 rights and ordered the Red Cross to revise or rescind the offending provision and post a notice of employee rights.

B. The General Counsel's Recent Advice Memos

The American Red Cross case garnered a great deal of attention and was controversial because to many it signaled that the NLRB was attempting to undermine the concept of "employment at will." On October 31, 2012, the General Counsel issued Advice Memos in two cases that dealt with the legality of at-will employment provisions in employee handbooks. The General Counsel issues such advice memos to regional NLRB offices which are deciding whether certain conduct alleged in an unfair labor practice charge violates the NLRA.

The Advice Memos issued on October 31, 2012, involved similar language. In one case, the employee handbook stated that, although "[n]o manager, supervisor or employee of [the Employer] has any authority to enter into any agreement for employment for any specified period of time or to make an agreement for employment other than at-will," the president of the company "has the authority to make such agreement and then only in writing." In the second case, the language went even further, stating that "[n]o representative of the Company has the authority to enter into any agreement contrary to the foregoing ‘employment at will' relationship."

The General Counsel decided in both cases that the provisions at issue did not violate the NLRA. In the first case, the General Counsel concluded that the language in the handbook "would not reasonably be interpreted to restrict an employee's Section 7 rights to engage in concerted activity to change his or her employment at-will status" because it 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." In fact, the language stating that the company president could enter into a written agreement abrogating employment at-will encompassed "the possibility of a potential modification of the at-will relationship through a collective-bargaining agreement that is ratified by the Company president." In the second case, the General Counsel made a similar decision, concluding that the language at issue did not require employees to agree that the at-will relationship could not be changed but merely withdrew authority from employer representatives to do so.

In issuing these memos, the General Counsel made clear that, "[b]ecause the law in this area remains unsettled, the Regions should submit to the Division of Advice all cases involving employer handbook provisions that restrict the future modification of an employee's at-will status." This statement means that the General Counsel will be placing such provisions under heavy scrutiny in the future.

C. What Should a Human Resource Professional Do?

In light of the NLRB's interest in at-will employment policies, it is incumbent upon human resource professionals to review their companies' employee handbooks to make sure that there are no provisions which could be reasonably construed by an employee to infringe upon or restrict the right to advocate or engage in concerted activity seeking abandonment of employment at will. Handbooks or acknowledgment forms that require employees to agree to or abide by all employer policies may be problematic especially if the at-will provision is described or defined as the "policy" of the company. Language as in the American Red Cross case which states that the policy simply cannot be changed will also most likely be deemed a violation of the NLRA. Language which at least holds out the possibility that a high-ranking company official could waive or vary the at-will policy is probably advisable. As usual, if there is any doubt as to what language complies with the NLRB's current view of the law, a view that is likely to stay consistent over the next four years of the Obama Administration, consultation with labor law counsel is advised.