Do At-Will Employment Disclaimers Violate the NLRA?

This summer the National Labor Relations Board (NLRB) has taken the position that commonly used at‑will employment disclaimers could be a violation of the National Labor Relations Act (NLRA).  Section 7 of the NLRA guarantees employees the right to engage in “concerted activities for the purposes of collective bargaining or other mutual aid or protection.”  The NLRB’s recent actions continue a trend of stringent enforcement of employee’s Section 7 rights that many times brings non‑union employers within the jurisdiction of the NLRB.

In the two cases at issue, both of which arose in the Arizona region, the NLRB argued that disclaimers contained in employee handbooks informing employees of their at-will employment status were too broad and violated the employee’s rights.  Specifically, a complaint against Hyatt Hotels Corp. was settled in May.  That charge alleged that the company’s policy that stated the employee’s at-will status could not be changed except by written agreement signed by the employee and particular executives was too broad.

The complaint [pdf] against Hyatt Hotels Corp. was settled shortly after an administrative law judge ruled [pdf] in another case that the American Red Cross’s disclaimer that the employee’s at-will employment “cannot be amended, modified or altered in any way” was too broad and violated Section 7 of the NLRA.

The administrative law judge in the American Red Cross case found that when the employer informs its employees that their at-will status cannot be changed, it chills the employee’s rights to band together concertedly and seek to alter their employment status through collective bargaining.  In essence, the NLRB is telling employers that while it may be permissible to inform employees they are employed at‑will, employers are going too far when they tell employees their status can never be changed.

Many employers have disclaimers with similar language.  Should employers immediately change their handbooks?  At this point in time, changes to handbooks do not seem to be called for.

First, these enforcement actions have not yet spread beyond the Arizona region.  Although the NLRB is a nationwide agency, the NLRB’s position has only been adopted by an administrative law judge.  A court has yet to rule upon the NLRB’s position.  Such a drastic change in policy will likely end up before a court to determine whether the NLRB’s position is supported by the language of the NLRA.  Further, including disclaimer language in handbooks can defeat other possible claims by employees, such as breach of contract or promissory estoppel.

However, labor law is rapidly changing and the NLRB has drastically increased its activity.  Specifically, the NLRB is finding more and more ways in which they believe an employer’s actions or policies violates an employee’s rights to concerted activity under Section 7 of the NLRA.  Accordingly, employers should pay close attention and monitor these types of enforcement actions.