To borrow from Mark Twain, the reports of the complete demise of employment-at-will clauses were greatly exaggerated. As we reported here, the NLRB’s actions earlier this year called into question whether an employer could have a strong at-will employment provision in its handbook without illegally trampling employee Section 7 rights. First, in February, an ALJ shot down the following acknowledgment in an American Red Cross handbook: “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” The ALJ found that this acknowledgement violated Section 7 as it could impermissibly suggest to employees that they could not organize and change the nature of their at-will employment through collective bargaining. In June, Lafe Solomon, Acting General Counsel for the Board, reiterated in a bar association meeting that forcing employees to acknowledge that their employment status was at-will and could not be changed without the agreement of a high-ranking company official might violate the NLRA.
The American Red Cross decision and Mr. Solomon’s comments led to a justifiable concern by many employers and their advocates that most at-will disclaimers in employment handbooks or policies could be found to illegally chill Section 7 rights.
Late last month, however, NLRA Associate General Counsel Barry Kearney issued two advice memoranda that appear to resurrect the viability of at least some at-will disclaimers. First, Mr. Kearney found that the following at-will clause used by Rocha Transportation could not be reasonably interpreted to restrict employees’ rights to change their at-will status through collective bargaining or otherwise:
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.
Next, Mr. Kearney found that a similar provision in Mimi’s Café’s employee handbook did not violate employees’ Section 7 rights:
The relationship between you and Mimi’s Cafe is referred to as “employment at will.” This means that your employment can be terminated at any time for any reason, with or without cause, with or without notice, by you or the Company. No representative of the Company has authority to enter into any agreement contrary to the foregoing “employment at will” relationship. Nothing contained in this handbook creates an express or implied contract of employment.
In both memoranda, Mr. Kearney noted that nothing in the challenged provisions explicitly forbade employee from seeking to change their at-will status. Instead, the clauses simply reminded employees of whom, if anyone, could modify their at-will relationship with their employers.
Kearney also attempted to distinguish the at-will clauses used by Roche and Mimi’s Café from the offending American Red Cross handbook acknowledgement – ”I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” Kearney found that the use of the personal pronoun “I” in this language made it more akin to an affirmative agreement by employees that they would not attempt to change their at-will employment relationship. As such, it “more clearly” constituted a forced waiver of employees’ Section 7 rights. In contrast, the Roche and Mimi’s Café provisions were more akin to reminders of the companies’ existing at-will policies.
Ultimately, Kearney correctly cautioned that “this area of the law remains unsettled.” Indeed, the rather narrow distinction he attempts to make between the American Red Cross language and that of the two employers at issue demonstrates that the difference between an acceptable at-will provision and one that impermissibly impedes Section 7 rights can be razor-thin. However, based on Kearney’s guidance, employers can at least feel comfortable using the language contained in the policies used by Roche and Mimi’s Café. At a minimum, any at-will employment policy provisions stated in the first person should be modified to avoid potential scrutiny from the NLRB.
We will keep you posted as we receive additional guidance on this issue from the Board and/or the courts. Stay tuned.