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A reprieve on at-will handbook provisions? Recent NLRB guidance may put employers at ease

November 6th, 2012  |  Lisa Milam-Perez

Much consternation arose among the employer community earlier this year when the National Labor Relations Board (NLRB) signaled that it would set its enforcement sights on at-will provisions in employee handbooks. A common feature of most employee handbooks, the standard “at-will employment” clause is founded upon long-settled principles of state law. So the federal agency’s foray into this terrain was met with alarm.

However, employers can rest a bit easier after the NLRB’s Division of Advice, in a pair of memos issued on October 31, 2012, concluded that two at-will handbook clauses were lawful under the National Labor Relations Act (NLRA) and advised the agency to dismiss the charges in both instances.

Overly broad? In charges filed with the NLRB, petitioners contended that the employee handbooks distributed by a California trucking company and an Arizona restaurant defined “at-will employment” so broadly that their employees would be led to reasonably believe they were barred from engaging in NLRA-protected activity.

Rocha Transportation’s handbook stated that employees were at-will and could be terminated at any time. “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,” the handbook also provided. “Only the president of the Company has the authority to make any such agreement and then only in writing.” Because this clause explicitly stated that the employment relationship could be altered, employees would not reasonably assume that their NLRA rights to do so were prohibited, the Division of Advice concluded.

A similar provision in a Mimi’s Café handbook stated: “No representative of the Company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship.” This clause was not unlawfully broad either, the Division of Advice found. It reasoned that the clause did not require employees to agree that the employment relationship cannot be changed in any way, or to refrain from trying to do so — it merely stated that the employer’s representatives are not authorized to change it. As such, the handbook clause was distinguished from language that was held unlawful by an NLRB law judge: “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” In the law judge’s view, this latter provision was “essentially a waiver” of the employee’s right “to advocate concertedly… to change his/her at-will status.” (That case settled before the handbook dispute made its way to the Board.)

The “I”s have it. In a nod to employers, the Division of Advice gave the all-clear to a requirement in Rocha Transportation’s handbook mandating employees to sign an “acknowledgement of receipt” that “nothing in the employee handbook creates or is intended to create a promise, contract, or representation of continued employment.” Yet the Acting General Counsel, in a post-hearing brief filed in another case, had objected to an employer’s requirement that employees acknowledge their at-will status in writing. The difference? A personal pronoun. In the provision deemed unlawful, the required acknowledgement said “I agree that” at-will employment could not be changed in any way. It was the specific use of the “I” that ran afoul of the Act because, again, it essentially amounted to an express waiver by employees of their right to undertake concerted action.

No quarrel with “no contract.”
Perhaps more importantly, in reviewing the Mimi’s Café handbook clause, the Board gave the thumbs-up to the employer’s unambiguously stated purpose in enacting the provision: to reinforce that nothing in the handbook is intended to create an express or implied contract of employment. “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,” the memo noted. The fact that the Division of Advice had no quarrel with this intended purpose should help to assuage the fears of those who were anticipating a frontal assault on the very notion of at-will employment.

Cautious optimism. The advice memos on at-will handbook provisions were a positive sign for employers. Keep in mind, though, that the NLRB also indicated that “Board law in this area remains unsettled.” Also, the Acting General Counsel has instructed the agency’s regional offices to submit all cases involving at-will provisions in employee handbooks to the Division of Advice for further analysis and to ensure a coordinated agency approach. In other words, the NLRB’s careful scrutiny of at-will provisions will continue. And it’s uncertain whether the reprieve is only temporary. As such, employers must parse their at-will handbook provisions with a keen eye to the Division of Advice guidance to ensure conformity with the requirements of the Act — as currently interpreted by the agency.