During the past year, the National Labor Relations Board has begun chipping away at the employment at-will doctrine.
Executive Summary: During the past year, the National Labor Relations Board has begun chipping away at the employment at-will doctrine. Based on the activities of one of its regional offices, the Board appears intent on limiting the at-will doctrine by finding that at-will acknowledgments in employment handbooks violate employees' Section 7 rights.[1]
Over the past few years, it has been no secret that the Board has taken an increasingly anti-business approach in its application of federal labor laws. So it comes as no surprise that the Board has begun to take aim at its latest target: at-will employment.
Currently, many states follow the employment at-will doctrine, which essentially states that an employer can terminate an employee for good cause, bad cause, or no cause at all; the cause just cannot be unlawful. An unlawful cause for termination, for example, would be terminating an employee based on his or her membership in a protected group (e.g., race, national origin, age, etc.). At-will employment, however, can be altered by contractual agreement between the employer and the employee. Therefore, most employers include at-will statements in their employment handbooks to ensure that these handbooks are not construed as contracts for employment. Until recently, these at-will acknowledgments have been largely unchallenged.
Unfortunately, the Board recently fired its latest salvo against employers by claiming that many of these at-will acknowledgments may violate employees' Section 7 rights. For example, Hyatt Hotels settled a case with a regional director of the Board after its at-will acknowledgment (along with other policies) was challenged as an unlawful interference with employees' Section 7 rights. As part of the settlement, Hyatt agreed to change its at-will acknowledgment across the country and rescind and revise existing acknowledgments. Additionally, it posted notices informing employees of the changes to the handbook acknowledgments. In the Matter of Hyatt Hotels Corp., Case No. 28-CA0061114.
What is most troubling about this case is that the acknowledgment provided for an exception to the general at-will rule. Hyatt Hotels' exception allowed an employee to change his or her at-will status if both the employee and either the Executive Vice President or President signed an agreement permitting the change. These facts are troubling because this exception inherently recognizes that an employee (or employees) could potentially negotiate with their employer to alter their at-will status, which is the type of concerted activity Section 7 protects.
Moreover, employment at-will still restricts an employer from terminating employees for unlawful reasons. If an employer terminates an employee for engaging in activity protected by Section 7, then the employer can still be charged with – and punished for – an unfair labor practice specifically because the termination was unlawful. Whether the employee who was terminated in violation of Section 7 was employed at-will is immaterial. Therefore, employment at-will in no way inhibits the purposes of Section 7.
Employers' Bottom Line
This latest attempt by the Board to insert itself into an area of law it has previously left untouched, although troubling, is not surprising. Recently, the Board has taken a broad view of Section 7 rights in the workplace by attacking companies' social media policies and arbitration agreements. Accordingly, it should come as no surprise that the Board appears to be taking such a radical position on the employment at-will doctrine. Companies, however, should not immediately rush to change their at-will acknowledgments. At this time, these attacks on the at-will doctrine have been limited to just one of the Board's many regions (Region 28 in Arizona). The Board has not issued any rulings with respect to whether at-will acknowledgments violate Section 7. And, as the federal court system's near universal rejection of the Board's position on arbitration agreements indicates, the courts will be there to operate as a check on the Board's authority in case the Board oversteps its bounds.
If you have any questions regarding this Alert or other labor or employment related issues, please contact the author, Heath Edwards, hedwards@fordharrison.com, who is an attorney in our Atlanta office, or the FordHarrison attorney with whom you usually work.
[1] Section 7 rights include the right to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection. These rights apply equally to unionized and non-unionized workplaces.