Iowa Employer Law Blog
Trick or treat? NLRB guidance on “at-will” employment statements
Nov. 26, 2012 – Russell L. Samson, Iowa Employer Law Blog
On October 31, 2012, the Acting General Counsel of the NLRB – the arm of the agency which determines whether to “indict” and then to prosecute either an employer or a union for an alleged violation of the National Labor Relations Act – issued two Advice Memorandums, each on the topic of whether or not to pursue allegations that an employer violated the NLRA by maintaining statements in employee handbooks regarding the at-will nature of the employment relationship.
Each of the Advice Memos observed that it is “commonplace” for employers to include statements about the at-will employment relationship, “as a defense against potential legal actions by employees asserting that the employee handbook creates an enforceable employment contract.” Each Memo cited in support of that statement the decision in NLRB v. Ace Comb Co., 342 F.2d 841, 847 (8th Cir 1965) where the Eighth Circuit (which includes Iowa) stated:
It must be remembered that it is not the purpose of the Act to give the Board any control whatsoever over an employer’s policies, including his policies concerning tenure of employment, and that an employer may hire and fire at will for any reason whatsoever, or for no reason, so long as the motivation is not violative of the Act.
In each of the matters considered in the separate Advice Memos, the Employer’s employment at-will policy did not explicitly restrict activity that might be protected by Section 7 of the NLRA. In addition, in neither situation was there any contention that the employer promulgated its at-will policy in response to union or other protected activity, or that the policy had been applied to restrict protected activity. Given those parameters, each policy was viewed under the standard that the policy or statement would be unlawful only if employees “would reasonably construe” the policy to restrict Section 7 activities. (Those activities include engaging in concerted activities for the purpose of collective bargaining or other mutual aid or protection).
All of the Rocha Transportation’s new employees receive a copy of the company’s Driver Handbook. That Handbook contains a “Statement of At-Will Employment Status”:
Employment with Rocha Transportation is employment at-will. Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the Company. Nothing in this Handbook or in any document or statement shall limit the right to terminate 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. [Boldface added.]
Additionally new employees were required to sign an “Acknowledgement of Receipt” which repeated the language in boldface above, and included the statement, “nothing in the employee handbook creates or is intended to create a promise, contract, or representation of continued employment . . .”
The Advice Memo concluded that the quoted language would not be reasonably interpreted by an employee to restrict his or her rights to engage in concerted attempts to change his or her at-will status, or to agree that the status could not be changed. The Memo continued by noting that because the company’s president is explicitly permitted to enter into written agreements that modify the at-will relationship, the possibility of potential modification through collective bargaining is recognized.
SWH Corporation d/b/a Mimi’s Café
All of the new employees at this restaurant operator — which has locations in 24 states –sign a receipt for a copy of a “Teammate Handbook.” That Handbook provides details about the applicable terms and conditions of employment, and includes the following language:
The relationship between you and Mimi’s Café is referred to as “employment at will.” This means that your employment can be terminated at any time for any reason, with or without cause, with or without notice, by you or the Company. No representative of the Company has authority to enter into any agreement contrary to the foregoing “employment at will” relationship. Nothing contained in this handbook creates an express or implied contract of employment.
Unlike the statements in Rocha Transportation, the Mimi’s Café statement did not have an “exception” for written contracts signed by a company official. Nevertheless, it was concluded that the employer should not be prosecuted for a violation of the NLRA merely because it maintained the statement in its Handbook. Here the OGC noted that the provision does not require employees to refrain from seeking to change their at-will status, or to “agree” that it cannot be changed in any way. Rather, the provision was seen as “simply highlighting the Employer’s policy” that representatives are not authorized to modify the at-will status. It was concluded that, “the clear meaning of the provision at issue is to reinforce the Employer’s unambiguously- stated purpose of its at-will policy: it explicitly states ‘[n]othing contained in this handbook creates an express or implied contract of employment.”
And in both of the October 31, 2012, Advice Memos, the Office of General Counsel ‘s Division of Advice included a footnote observing that it has been the law since a 1944 decision of the United States Supreme Court that regardless of “handbook” provisions, an employer would have an obligation to bargain in good faith with any union selected by its employees, including an obligation to bargain over a “just cause for discipline” proposal.
Treat? Or Trick?
Each of the Advice Memos specifically mentioned the February 1, 2012 decision of an NLRB Administrative Law Judge (part of the adjudicatory arm of the agency) in American Red Cross Arizona Blood Services Region in which it was determined that the employer violated Section 8(a)(1) by requiring employees to sign a form entitled, “Agreement And Acknowledgement Of Receipt Of Employee Handbook.” By that form, employees acknowledge receipt of, and agree to abide by, the rules set forth in the handbook. Among other matter, the acknowledgement form defined an “at-will” employment relationship. That definition contained the statement, “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” That case has apparently been settled, so there will be no decision from the Board itself.
There was no mention in either of the Advice Memos of the Complaint issued on February 29, 2012 by the Regional Director of Region 28 against Hyatt Hotels Corporation, Case 28 CA-061114. There one of the allegations was that Hyatt violated Section 8(a)(1) of the NLRB by maintaining and using the following:
Acknowledgment of Employee Handbook
I acknowledge receiving a copy of part 1 of the [name of hotel handbook] and I agree to comply with it. I also acknowledge that I have received or will be receiving a copy of part 2 of the [employee handbook] and I agree to comply with it. I understand that the Employee Handbook is a guide to the practices and policies of [the named Hotel]. I also acknowledge that if Hyatt does not enforce a policy, guideline or rule, or delays enforcement of a policy, guideline or rule, it does not mean Hyatt has waived its ability to enforce any policy, guideline or rule in the future.
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.
In order to retain flexibility in its policies and procedures, I understand Hyatt, in its sole discretion, can change, modify or delete guidelines, rules, policies, practices and benefits in this handbook without prior notice at any time. The sole exception to this is the at-will status of my employment, which can only be changed in a writing signed by me and either Hyatt’s Executive Vice President/Chief Operating Officer or Hyatt’s President.
[Underlining included in original NLRB complaint.] Reportedly after the complaint in Hyatt Hotels was issued, that case settled as well.
People (e.g., lawyers) who focus on minutia will no doubt have noticed that the “Arizona Red Cross” decision, the Hyatt Hotels complaint, and the Advice Memo regarding Mimi’s Café all came out of claims that arose in NLRB Region 28 – Phoenix, with offices in Las Vegas and Albuquerque. In each of the “Halloween 2012” Advice Memos, all Regional Directors were given the same advice: “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 modifications of an employee’s at-will status.”
Tags: at-will employment, employee handbooks, Iowa at-will employment, National Labor Relations Act, National Labor Relations Board
Practice Area Categories: Employment & Labor Law