Stance on at-will clauses modified

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After stirring up the employment bar with two cases finding that at-will employment clauses in non-union workplaces violated federal labor laws by potentially stifling concerted activity, the National Labor Relations Board has issued two guidance memos that offer some relief for employment-side attorneys.

The memos outline two cases in which the language of at-will employment clauses was found not to violate the National Labor Relations Act. The decisions should help ease the concerns of lawyers who earlier this year feared an NLRB crackdown on what has become standard language in employment agreements.

The newly issued memos may eliminate the need for many employers to re-write at-will clauses in countless employment handbooks — a move that would have been time consuming and costly.

Guidance offered

Last summer, two NLRB cases put employers and their attorneys on high alert.

In the first case, an at-will employment clause required employees to “agree that the at-will employment relationship cannot be amended, modified or altered in any way.” In the second, the at-will clause read in part, “I understand my employment is ‘at will.’ … I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will status.”

The NLRB took the view in both cases that the clauses’ language violated Section 7 of the National Labor Relations Act by chilling employees’ ability to communicate with each other about their wages, hours and working conditions or engage in other kinds of protected concerted activity.

Although neither case has precedential value — one only went as far as a hearing before an administrative law judge and the other ended in settlement – they spurred employers and their lawyers to start carefully scrutinizing the language in their employment handbooks for fear that it could lead to NLRB scrutiny.

Apparently aware of the concern the rulings had caused in the employment law bar, NLRB counsel issued a pair of guidance memoranda in October.

One memo, involving California freight company Rocha Transportation, considered an at-will clause that read in part: “Employment with Rocha Transportation is 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.”

In the advice memo, NLRB Associate General Counsel Barry J. Kearney concluded that “employees would not reasonably construe this provision to restrict Section 7 activity.”

This clause was different from those in the previous cases, said Kearney, because the language in those instances “more clearly involved an employee’s waiver of his Section 7 rights than the handbook provision here.”

The second guidance memo involved Arizona restaurant Mimi’s Cafe and a clause that read in part: “No representative of the Company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship.”

Kearney concluded that this language “does not explicitly restrict Section 7 activity. Moreover, there is no indication that the Employer promulgated its policy in response to union or other protected activity or that the policy has been applied to restrict protected activity.”