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NAW News

Legal Update

- January 2013

A Company’s At-Will Employment Policy May Violate Federal Labor Law

The National Labor Relations Board continues its sortie on the content of non-union employee handbooks and policies, including confidentiality policies, social media policies and now at-will employment policies.

Employee handbooks often contain an employment policy that states that the employment relationship with the company is “at-will”, i.e., the relationship may be terminated at any time, with or without cause and/or notice, by either the employee or the company. The legality of these policies under the National Labor Relations Act (Act) has been the subject of several recent cases before the National Labor Relations Board.

Section 7 of the Act states “employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” The law also states that employees have “the right to refrain from any or all such activities.”

An employer may not interfere with, restrain, discipline or terminate an employee—whether or not the employee is a union member—because the employee engages in concerted activities concerning wages, hours, and working conditions or otherwise exercises these “Section 7 rights.” The source of interference may be a policy or work rule that is overly broad and could be interpreted by employees to prohibit activity protected by the Act. An employer who interferes with protected activity may end up defending an employee’s unfair labor practice charge filed with the NLRB.

For example, in American Red Cross Arizona Blood Services Region (NLRB Case No. 28-CA-23433), employees were required to sign an at-will acknowledgment form that included this text: “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” An administrative law judge declared this sentence violated Section 7 of the Act because it could be interpreted by an employee as a waiver of Section 7 rights to engage in concerted activity with others (including a union or other co-workers) to modify the at-will employment status by electing union representation and imposing a collective bargaining agreement upon the employer.

Not all at-will policies need suffer this fate. In two other cases the at-will policies quoted below did not violate the Act or chill employees’ exercise of concerted activity protected by Section 7 of the Act, according to advice memoranda issued by the NLRB Office of General Counsel.

In one case, the driver handbook contained the following Statement of At-Will Employment Status (Rocha Transportation, No. 32-CA-086799):

“Employment with Rocha Transportation is employment at-will. Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the company. Nothing in this handbook or in any document or statement shall limit the right to terminate employment at-will. No manager, supervisor or employee of Rocha Transportation 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 the second case, this at-will clause in an employee handbook stated (Mimi’s Café, No. 28-CA-084365):

“The relationship between you and Mimi’s Café is referred to as ‘employment at will.’ This means that your employment can be terminated at any time for any reason, with or without cause, with or without notice, by you or the company. No representative of the company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship. Nothing contained in this handbook creates an express or implied contract of employment.”

* * * * * * * * * *

Both provisions were acceptable under the Act, according to the advice memoranda, because the clauses do not require employees to refrain from attempting to change their at-will status or to agree that such status cannot be changed in any way.

The memoranda concludes that “the law in this area remains unsettled,” so employees are well advised to consult with legal counsel when adopting or revising employee handbooks, policies and work rules. Nevertheless, a provision that restricts (or could be reasonably interpreted by employees to restrict) the future modification of at-will status through employee concerted activity runs the real risk of being declared unlawful by the NLRB.

NLRB Issues First Decisions Voiding Employer Rules Limiting Social Media Use by Employees

The National Labor Relations Board has issued its first two decisions involving legal challenges to employer policies that restrict employee use of social media. In each case the policies were challenged on the theory that employees would “reasonably construe” them as restricting their Section 7 rights under the National Labor Relations Act (Act) to communicate with co-workers and others (including union representatives) about wages, hours, terms of employment and other working conditions. Under the Act, an employer may not interfere with, discipline or terminate an employee for engaging in such concerted activities.

In Knauz BMW (358 NLRB No. 164), the Board invalidated a “courtesy” provision in an auto dealership’s handbook governing its non-union employees. The rule stated:

Courtesy is the responsibility of every employee. Everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as to their fellow employees. No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.

The rule was unlawful, according to the Board, because it would be interpreted by employees to prohibit protected communications with co-workers, supervisors, managers and third parties that object to working conditions or seek to improve them. In a strong dissent, Board Member Brian Hayes argued the rule is not illegal and it is nothing more than a common-sense behavior guideline for employees.

In Costco Wholesale Corp. (358 NLRB No. 106), the Board held that several provisions in the employer’s Communications and Technology Policy unlawfully restricted employees’ Section 7 rights under the Act, including the following:

Rule that employees may not electronically post any statements “that damage the Company, defame any individual or damage any person’s reputation.”

Rule that sensitive information such as payroll information may not be shared, transmitted or stored for personal or public use without prior management approval.

Rule prohibiting sharing “confidential information” such as “employees’ names, addresses, telephone numbers and email addresses.”

Rule prohibiting an employee from “discussing private matters of members and other employees…such as sick calls, leaves of absence, FMLA call-outs, ADA accommodations, worker’s compensation injuries, personal health information, etc.”

Rule prohibiting the “unauthorized posting, distribution, removal or alteration of any material on Company property.”

The Board did approve the Costco rule that all employees are responsible for communicating “with appropriate business decorum whether by means of e-mail, the Internet, hard-copy, in conversation, or using other technology or electronic means.”

Clearly, these NLRB decisions indicate that employees have rights under the Act to use social media and other means to criticize their employer and their working conditions. An overly-broad policy or work rule that would (not could) be reasonably construed by employees to restrict the exercise of Section 7 rights to organize unions and discuss terms and conditions of employment—even if the policies do not expressly restrict these protected activities—may be ruled unlawful.