Why Does the NLRB Care About The At-Will Disclaimer in Your Employee Handbook? New Memoranda Provide Insight

If you have an employee handbook, you probably also have a disclaimer in it to let employees know that the handbook isn't a contract, and that the employment relationship is terminable "at-will."  Typically, these disclaimers are pretty standard, and until recently, fairly noncontroversial.

As others have reported, however, actions from the NLRB earlier this year have raised eyebrows.  In one, an administrative law judge for the NLRB held that an at-will disclaimer in the Red Cross' employee handbook was unlawful because it violated Section 7 of the NLRA.  In another reported development, a complaint issued against the Hyatt hotel chain alleging a similar violation.  Both of these cases settled, however, depriving the NLRB of an opportunity to rule on this issue.

On October 31, 2012 the NLRB released two memoranda from the Division of Advice, a part of the General Counsel's office responsible for advising the NLRB's Regional Directors on whether ULP complaints should be issued in particular cases.  Like the AGC's memoranda on social media, these advice memoranda reflect the "prosecutor's" view of the statute, and the circumstances under which a ULP complaint might be issued.  In one memorandum (pdf), the Division of Advice found that the following language in a handbook was lawful:

No representative of the Company has authority to enter into any agreement contrary to the foregoing "employment at will" relationship.

In the other memorandum (pdf), the Division of Advice found the following language in a handbook was lawful:

No manager, supervisor, or employee of [employer] 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 both cases, the Division of Advice distinguished the ALJ's ruling in the Red Cross case.  The waiver in that case required an employee to sign an acknowledgement form confirming that the employee agreed, using the personal pronoun "I," that at-will status could not be changed in any way.  This amounted to a "waiver" of the employee's right to engage in concerted activity for the purpose of changing the at-will status (for example, by organizing a union).  

For the labor professional, the advice memoranda are generally a welcome development.  They provide some helpful guidance about when an at-will disclaimer will be considered unlawful. 

At the same time, however, the memoranda raise some concern.  First, the distinctions drawn in them are at times elusive.  Given the importance of context in evaluating employee handbook policies, the language of any particular disclaimer may be subject to challenge.  Second, both memoranda conclude with an instruction to the regional offices to submit cases involving at-will disclaimers to the Division of Advice.  These memoranda thus do not signal the "all clear" on this issue to employers.  To the contrary, they reveal that the AGC will continue to evaluate at-will disclaimers, and may direct the issuance of ULP complaints in appropriate cases in the future.

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