Employment Law

Employee Handbook "Employment At Will" Provisions Declared Unlawful by NLRB

By
J.K. Simms

A standard provision in nearly every employee handbook I have drafted and seen is an employment at-will provision, which is a declaration or acknowledgment by the employee and employer that the employment relationship is an “at-will” relationship that may be terminated by either party at any time with or without notice or and without cause.  A recent ruling by the National Labor Relations Board should concern employers.  I also wrote about last month regarding the Board’s position on social media policies. Read it here.  In two separate rulings, Region 28 of the NLRB, which is located in Arizona, found such an at-will provision to be unlawful under the National Labor Relations Act (NLRA).

The first case is American Red Cross Arizona and Lois Hampton, which was an unjust termination case where the at-will section of the employee handbook was ruled to be prohibitively “overly broad and discriminatory.”  The employee handbook in this case contained an acknowledgement section, which stated that the at-will employment relationship could not be modified without the signature of both the employee and the designated representative of the employer (American Red Cross).  The judge ruled that this language constituted a waiver by employees of their right to engage in concerted activities to change their at-will employment status, and that such waiver violated the NLRA.  The judge in that case ordered that the employer reinstate the employee, make her whole for her lost wages and other damages, expunge her personnel file of any reference to the termination, and that the employer post explicit language reinforcing employees’ rights to engage in concerted activities under the NLRA.

The second case of note is Hyatt Hotels Corp. and Unite Here Int’l Union, where the Union and the NLRB also alleged that an at-will provision in the acknowledgement section of an employee handbook was “overly broad and discriminatory.”  Specifically, the provision contained the following language:  “I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will employment status, except by a  written statement signed by me and either Hyatt’s Executive VP/Chief Operating Officer or Hyatt’s President.”  This matter was resolved by Agreement and the company agreed to revise the employee handbook and to post notices of the changes to the handbook.  However, this case is highlighted because it is a second case where the NLRB has taken this position regarding fairly standard at-will provisions.

Now, these rulings appear to be limited at this time to Region 28 of the NLRB, but they certainly serve to show the NLRB’s stance with respect to at-will provisions.  In fact, NLRB Acting General Counsel, Lafe Solomon recently stated that at-will provisions in an employee handbook which restrict modification of the at-will employment relationship to a writing approved by a designated company official violate the NLRA.  Solomon contends that if an employee could reasonably believe that the provision means that even union representation and a collective bargaining agreement cannot alter the at-will status, the employee might conclude that union organization is futile, then the provision violates the NLRA.

Absent an alternative controlling ruling in this jurisdiction, employers may want to review the at-will provision in their employee handbooks and add a “savings clause”, or specific statement that the at-will nature of the employment relationship does not impact or infringe upon the employee’s ability to bargain collectively and engage in concerted activities regarding the terms and conditions of employment under the NLRA.

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