“At-Will” Employment Disclaimers Can Violate National Labor Relations Act

According to two recent National Labor Relations Board (“NLRB”) decisions, requiring an employee to sign an “at-will” acknowledgement form violates the employee’s right to engage in concerted activity under Section 7of the National Labor Relations Act (“NLRA”). In the first case, American Red Cross Arizona Blood Services Division, Lois Hampton, a Donor Recruitment Representative with the American Red Cross, was terminated for alleged performance issues. As a condition of employment, Hampton was required to sign a document titled “Agreement and Acknowledgement of Receipt of Employee Handbook” which stated in part, “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” The NLRB alleged in a complaint that language was a violation of Hampton’s Section 7 rights. In analyzing this language, the Administrative Law Judge (ALJ) acknowledged that it was questionable whether the language expressly restricted Section 7 activity, but held that there was “no doubt” that it violated the Act because employees would reasonably construe the language to prohibit Section 7 activity. Specifically, the ALJ reasoned that by signing the form the employee waived her right to individually attempt to change her at-will status. The language, however, could be interpreted by employees as also waiving the right to engage in concerted activity in an attempt to change that status. For these reasons, the ALJ concluded that the acknowledgement form contained “overly-broad and discriminatory language that had a chilling effect on the employee’s Section 7 rights,” and violated the NLRA. The American Red Cross was ordered to remove or revise the language, notify all employees in writing that the provision had been revised or rescinded, and post a notice advising employees of their rights under the NLRA, and assuring them it would respect those rights. In the second case, NLRB v. Hyatt Hotel Corp., the NLRB’s Acting General Counsel filed an unfair labor practice complaint against Hyatt Hotels in Phoenix, Arizona stating that its at-will provisions also violated the Act because it required employees to acknowledge that their at-will employment status could not be altered unless it was in writing and signed by a top Hyatt executive. Specifically, the provisions at issue provided:

“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.”
“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.”

At-Will” Employment Disclaimers Can Violate National Labor RelationsThe Acting General Counsel took the position that these provisions constituted employer interference, restraint and coercion with respect to an employee’s exercise of their right to engage in concerted activity should they want to change the status of their employment, as guaranteed by the Act. The case settled before the matter was presented for hearing, and Hyatt agreed to modify its at-will employment policies on a nationwide basis. Similar to the American Red Cross directive, the settlement required Hyatt to revise the at-will provisions, rescind the acknowledgement forms that included the challenged at-will provisions and post written notices in all Hyatt hotelsacross the country that the at-will language at issue would no longer be in effect.

These cases indicate that the Board is expanding its focus to include commonly used at-will employment provisions, and applying Section 7 very broadly to find such provisions unlawful under the Act. Therefore, employers should take great care and consider consulting with counsel when drafting at-will employment provisions.