National Labor Relations Board Begins Scrutinizing Standard Employment At-Will Disclaimers

October 19, 2012 Advisory

It has for some time now been commonplace for employers to include at-will disclaimers and acknowledgements in employee handbooks, offer letters, and employment applications. These disclaimers typically provide that employment by the company is on an "at will" basis, and as such can be terminated by either the employee or the employer at any time, with or without notice and with or without cause. Such disclaimers are intended to protect employers against wrongful discharge claims alleging breach of an implied or express employment contract, and are generally effective for that purpose.

To the surprise, and dismay, of unionized and non-unionized employers alike, at least one regional office of the National Labor Relations Board, Region 28 in Phoenix, has begun an aggressive campaign to illegalize garden-variety at-will disclaimers on the theory that they interfere with the rights of employees under Section 7 of the National Labor Relations Act (the Act) to engage in protected concerted activity. Region 28's campaign has shown early signs of success.

Thus, on February 2, 2012, an administrative law judge (ALJ) at the NLRB determined that the American Red Cross - Arizona Blood Services Region committed an unfair labor practice by maintaining what the ALJ deemed to be an overly broad provision in its "Agreement and Acknowledgment of Receipt of Employee Handbook" form. The provision simply stated, "I further agree that the at-will employment relationship cannot be amended, modified or altered in any way." According to the ALJ, requiring employees to sign such an acknowledgement violated the Act because it could be reasonably construed by employees as a waiver or relinquishment of their right to engage in concerted activity designed to alter their at-will status through union representation or collective bargaining.

In the immediate aftermath of this decision, Region 28 issued a complaint against Hyatt Hotels Corporation alleging that Hyatt violated the Act by requiring employees to sign an acknowledgement confirming receipt of Hyatt's employee handbook. The complaint alleged that Hyatt's acknowledgment form had a tendency to chill Section 7 activity by its inclusion of statements such as

  • I understand that my employment is "at will."
  • 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 matter settled without a decision.

While the ALJ's ruling in the American Red Cross case is troubling for employers, it is subject to review by the NLRB in Washington D.C., and potentially by a federal court of appeals. Hence, the matter is far from closed. Employers would therefore be well advised to monitor developments in this rapidly evolving area of labor law. In the meantime, there is no compelling reason for employers to shelf at-will disclaimers. Even if the ALJ's decision in American Red Cross holds up on appeal and his analysis ultimately carries the day, employers should be able to come into compliance by modifying their disclaimers to make it clear that employees retain all rights afforded by the NLRA. Further guidance from the NLRB and the courts is essential, though, and should be forthcoming.