NLRB Upholds Handbooks’ At-Will Provisions

By Allen Smith Nov 2, 2012
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The National Labor Relations Board (NLRB) clarified in two Oct. 31, 2012, memos from the agency’s Division of Advice that not all handbook at-will clauses violate the National Labor Relations Act (NLRA). Upholding two employers’ at-will provisions as lawful, the board distinguished their wording from a clause thatan agency administrative law judge struck down in February 2012 as unlawful in American Red Cross, 28-CA-23443 (Feb. 1, 2012).

Company President Could Alter Status

The overturned clause in American Red Cross included an acknowledgment form where the employee—through the use of the personal pronoun “I”—agreed that the at-will agreement could not be changed in any way. In both advice memorandums, the NLRB noted that the American Red Cross language more clearly involved an employee’s waiver of the Section 7 “concerted activity” right than the recently challenged handbook provisions.

In one of the memos, the NLRB upheld the at-will language in the employee handbook of Rocha Transportation in Modesto, Calif. The challenged language stated: “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.”

This wording was challenged as overbroad, but the NLRB determined that the contested language could not reasonably be interpreted as restricting an employee’s Section 7 right to engage in concerted attempts to change at-will status.

“The provision does 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,” the NLRB noted. “Instead, the provision simply prohibits the employer’s own representatives from entering into employment agreements that provide for other than at-will employment.”

The NLRB Division of Advice emphasized that the company’s president could modify the at-will relationship.

Broader Language Upheld

In the other memo, the NLRB determined that broader at-will language did not violate the NLRA.

Mimi’s Café in Casa Grande, Ariz., had a handbook provision that said, “No representative of the company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship.”

As with the language in Rocha Transportation’s handbook, this wording was challenged as overbroad. The NLRB again concluded that the contested handbook provision could not reasonably be interpreted to restrict an employee’s Section 7 right to concerted activity.

“Instead, the provision simply highlights the employer’s policy that its own representatives are not authorized to modify an employee’s at-will status,” the NLRB Division of Advice stated. The clear meaning of the challenged language is to reinforce that “nothing in this handbook creates an express or implied contract of employment.”

The NLRB acknowledged, “It is commonplace for employers to rely on policy provisions such as those at issue here as a defense against potential legal actions by employees asserting that the employee handbook creates an enforceable employment contract.”

Nevertheless, both memoranda concluded: “Because 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.”

Allen Smith, J.D., is manager, workplace law content, for SHRM.

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