November 8, 2012

NLRB Reverses Course On “At-Will” Employment Policies

You may have been surprised when, a few months ago, an Administrative Law Judge (ALJ) for the National Labor Relations Board in Phoenix, AZ turned the world of employment law on its head by finding that an unremarkable at-will employment policy in an employee handbook violated the Act.  In that case, the ALJ held that the absolute at-will provision constituted a waiver of the Section 7 right to engage in concerted activity to change employees’ at-will employment status, and was therefore unlawful.

On October 31, 2012, the NLRB backtracked.  In two different “Advice Memos” the NLRB’s Department of Advice reversed course finding that two at-will policies were consistent with the Act and did not infringe on Section 7 rights.  Those memos focused on whether an at-will employment provision in the handbooks of Rocha Transportation, a California Central Valley shipping company, and SWH Corp., which operated an Arizona restuarant, violated Section 7 of the National Labor Relations Act (the “Act”), which provides employees the right to organize and/or engage in other concerted activities.  The General Counsel concluded that the language did not violate Section 8(a)(1) of the Act, which prohibits rules or policies that would “reasonably tend to chill employees in the exercise of their Section 7 rights.”

The General Counsel concluded that Rocha’s at-will employment language could not be reasonably construed to restrict Section 7 rights because it did not require employees to “refrain from seeking to change their at-will status or to agree that their at-will status cannot be changed in any way.”  The most critical point of the General Counsel’s analysis, however, was that “the provision explicitly permits [Rocha’s] president to enter into written employment agreements that modify the employment at-will relationship….”  The General Counsel stated that this provision allowed for collective bargaining to change the at-will employment, which could result in a collective bargaining agreement that is then ratified by the president of the company.  While this Memorandum does not carry the same precedential effect as a court or NLRB decision, it does provide a window into the NLRB General Counsel’s thinking on the at-will employment issue.  In light of this Memorandum, employers should review their at-will employment policies to ensure that they allow for some senior officer or manager to alter or amend an employee’s at-will employment status.