Employment Handbooks with “At-Will” Employment Language Could Violate the NLRA

The National Labor Relations Board (NLRB) has recently taken the controversial position that certain written “at-will” employment disclaimers could be violating Section 8(a)(1) of the National Labor Relations Act (the “Act”).  Specifically, the NLRB is taking aggressive steps to protect employees’ rights under Section 7 of the Act, which gives employees the right to engage in concerted activities in order to alter the terms or conditions of their employment.  The NLRB has recently claimed that these typical “at-will” employment disclaimers are stifling Section 7 of the Act in violation of Section 8(a)(1).

The first of two recent cases to address this issue is NLRB v. Hyatt Hotel Corp., Case 28 CA-061114 (Feb. 29, 2012).  In this case, the NLRB filed an unfair labor practice charge against Hyatt, stating that the acknowledgement form in its employee handbooks is “overly-broad and discriminatory.”  The acknowledgment states:

“I understand my employment is ‘at will.’  This means I am free to separate my employment at any time, for any reason, and Hyatt has these same rights.  Nothing in this handbook is intended to change my at-will employment status.  I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will employment status, except for a written statement signed by me and either Hyatt’s executive vice-president/chief operating officer or Hyatt’s president.”

The NLRB advocated that such language violates Section 7 of the Act because it prohibits a change in the conditions of employment except through a written document signed by a company executive.  In other words, the NLRB’s position is that Section 7 provides employees with a legitimate means to alter their employment status, and this right cannot be contracted away.  Hyatt eventually settled the case before it got to a hearing, and agreed to revise its at-will provision.

In another case, NLRB v. Am. Red Cross Ariz. Blood Servs. Region, Case 28-CA-23443 (Feb. 1, 2012), an administrative law judge concluded that similar “at-will” disclaimer language did actually violate the Act.  The ALJ decided that requiring employees to sign such disclaimers effectively forces employees to relinquish their rights to engage in union representation or collective bargaining in order to change their “at-will” status, and is thus a violation of Section 7 of the Act.  Similar to the situation in Hyatt, the American Red Cross settled this case before taking it through to appeal in federal court.

These types of at-will disclaimers have been in most employee handbooks for decades.  The disclaimers are important protections against a future argument that an employer created an implied, indefinite contract with its employee, either verbally or through the remaining provisions of the handbook.  Given the NLRB’s recent position, however, employers now face the risk that the NLRB will file an unfair labor practice charge against businesses that maintain similar “at-will” disclaimers.  On the other hand, both these cases arose out of the NLRB’s Phoenix regional office, and the federal courts have not yet ruled on the issue.

So how should employers respond?  NLRB’s movement in this direction could serve as a cautionary example, and employers should remain alert to further NLRB action pertaining to at-will disclaimers.  Employers might consider speaking to their labor and employment counsel concerning revisiting employee handbooks.  The solution for employers might be as simple as adding a “savings” clause, which expressly states that the disclaimer will not affect employees’ rights under the Act.