NLRB Guidance
NLRB Provides Useful and Surprise Guidance In Approving “At-Will” Handbook Language.
By Hugh W. Cuthbertson
For about the past 30 years companies have been advised by their employment lawyers to include disclaimers of contractual intent and employment at will policy statements in their employee handbooks. The reason for this was to defend against claims that those manuals created enforceable employment contracts or terms of employment. As courts came to recognize that the provisions in an employee manual could be contractually binding on employers, they also explained that employers could avoid such liability by disclaiming any contractual intent and by adopting an at-will employment policy in their handbooks. The use of contractual disclaimers and at-will employment policies in handbooks, therefore, became commonplace.
It has also been common for employee handbooks to contain or to be accompanied by a form to be signed by each employee, acknowledging receipt of the handbook and confirming the employee’s agreement with and understanding of its provisions.
Early last year (February 2012), the National Labor Relations Board (“NLRB”) raised eyebrows by issuing complaints against two separate companies – Hyatt Hotels and the American Red Cross – alleging that certain “at-will” employment language contained in their handbook acknowledgement forms violated the National Labor Relations Act (“NLRA”). The language alleged by the NLRB to be illegal was as follows: 1) “I acknowledge that no oral or written statements or representations regarding my employment [at Hyatt] can alter my at-will employment status, except for a written statement signed by me and either Hyatt’s executive vice-president/chief operation officer or Hyatt’s president;” and 2) “I further agree that the at-will employment relationship [at the American Red Cross] cannot be amended, modified or altered in any way.”
The NLRB’s position was based on its belief that provisions prohibiting any change in the terms and conditions of employment, except in a written document with a company executive (or not at all), would tend to chill employees in the exercise of their right to participate in union-organizing activities which is guaranteed in the NLRA. The NLRB’s argument was premised on the assumption that employees could in fact alter the terms and conditions of employment, including their at-will status, if they were to unionize and become covered by a collective bargaining agreement.
As it turned out, both companies agreed to change the wording in their handbooks and the cases settled during the NLRB’s administrative proceedings without judicial review. Therefore, it is uncertain whether the NLRB would have won in court, had either employer lost before that agency and then appealed to federal court.
While employment lawyers theorized about how to respond to the NLRB’s new and somewhat unanticipated scrutiny of employment-at-will disclaimers, the NLRB’s Associate General Counsel issued advisory memoranda at the end of October 2012 approving two slightly different employment-at-will handbook policy statements. Some employment lawyers see the NLRB’s recent memoranda as standing in contrast to the position it previously took in the Hyatt and American Red Cross cases.
The NLRB found that employees would not reasonably construe either provision reviewed to restrict their rights under the NLRA to select union representation and engage in collective bargaining for two reasons. First, the provisions did not require 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. Instead, the provisions simply emphasized the employer’s policy that its own representatives were not authorized to change an employee’s at-will status. Second, the NLRB found that the clear meaning of the language was simply to reinforce the employer’s plainly stated purpose of its at-will policy so as to avoid turning its handbook into an express or implied contract of employment.
Using the NLRB’s advisory memoranda as guidance, some employers may conclude that their employment at-will policy statements do not need any revision or, at most, only a slight change in wording. It may nevertheless be a good idea for employers to review with employment counsel the at-will statements in their handbooks to assess the risks posed and to see whether any changes are necessary or advisable.