by Tammy Binford
It’s hard to think of anything more sacred to employers than the doctrine of employment at will. Employers have long been advised to make sure their employees are aware of their at-will status, meaning that unless employees have an employment contract, they can be terminated for good reason, bad reason, or no reason at all as long as they’re not terminated for an unlawful reason, such as discrimination based on race, gender, religion, disability, or other characteristic protected by law.
It’s considered routine for employers to adopt at-will statements to make clear that nothing in the employee handbook or any statement from a supervisor or manager can be considered a contract for continued employment. But lately, those at-will statements have come under the scrutiny of the National Labor Relations Board (NLRB).
In recent months, the Board has claimed that some at-will statements may violate employees’ rights under Section 7 of the National Labor Relations Act (NLRA), which gives workers the right to engage in concerted activities, such as taking steps to bring in a union and discussing wages and other terms and conditions of employment.
What’s legal, what’s not?
The Board alarmed employers earlier this year when it signaled that some at-will statements are overly broad and therefore unlawful. But on October 31, some fears were eased when the Board released two advice memos explaining that two at-will statements under the Board’s microscope passed muster.
“I think it’s welcome news,” Kevin McCormick, Employers Counsel Network member and chair of the labor and employment section at Whiteford, Taylor & Preston, L.L.P. in Baltimore, Maryland, said about the NLRB’s latest word on the issue. “I think that the Board is attempting to get some reality here.”
As long as the policy is phrased correctly, McCormick says, employers should rest assured that they’re doing the right thing by including an at-will statement in their handbook.
Companies need to have at-will language “to make sure there’s no ambiguity” that would allow employees to claim that a handbook or other statement promised them a job for a set period, McCormick says.
The NLRB’s October 31 announcement provided a “Halloween treat” by saying that “standard boilerplate language” phrased correctly is OK, McCormick says. The Board’s concern is that broadly stated at-will policies may lead employees to believe they’re prohibited from taking steps to form a union.
McCormick says the difference between at-will statements found objectionable and the ones the Board has approved may be tricky to decode. The Board called a statement in the American Red Cross Arizona Blood Services Region’s handbook overly broad because it included “I” language. The statement said, “I further agree that the at-will employment relationship cannot be amended, modified, or altered in any way.”
“That was essentially a waiver of a concerted right,” McCormick says. But language from the perspective of the company – instead of requiring the employee to sign an “I agree” kind of statement – seems to be OK.
McCormick calls it “a distinction without a difference,” but the latest word from the Board does clarify a problematic area. “The Board has given us some language that we can live with,” he says.
In addition to the Red Cross case, the at-will disclaimer from Hyatt Hotels Corp. was questioned. Hyatt settled the case by agreeing to revise its disclaimer. Among the issues being questioned was the following statement: “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.”
50 Employment Laws in 50 States, including at-will employment
Examples of acceptable policies
The latest NLRB advice memos provide examples of statements found acceptable. The at-will statement in the handbook from Rocha Transportation in Modesto, California, contained the following statement: “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,” It went on to say, “Only the president of the Company has the authority to make any such agreement and then only in writing.”
According to a statement from the NLRB, Rocha’s language “explicitly states that the relationship can be changed, and so employees would not reasonably assume that their NLRA rights are prohibited.”
The other case included in the October 31 advice memos concerned the at-will statement from Mimi’s Café in Casa Grande, Arizona. The handbook said “No representative of the Company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship.”
The NLRB statement said that language was acceptable because it “does not require employees to agree that the employment relationship cannot be changed in any way, but merely highlights that the employer’s representatives are not authorized to change it.”
“Developing area”
The Board says its latest advice memos “are provided as guidance for employers and human resource professionals in a developing area that has drawn considerable attention recently.”
The Board says the memos distinguish the language in the Rocha Transportation and Mimi’s Café cases from the Hyatt case, which the Board points out was found unlawfully broad by an NLRB administrative law judge and was settled before going to the Board for review.
Since the issue remains unsettled, the Board says its acting general counsel is asking all NLRB regional offices “to submit cases involving employer handbook at-will provisions to the Division of Advice for further analysis and coordination.”
The article is very good and has given a lot information on what the HR should and should not do. The challenge for HR has been gaining support from the CEO and other senior colleagues – on whom HR relies for support in order to co-ordinate HR activities in the organization. For instance, an organization has a policy of conducting performance appraisal at certain times and this is known in the entire organization. The CEO at management meeting affirms this, but does not practice it in that he/she does not do his/her managers reports on time and since these are supposed to do the same for their staff, since theirs have not been done, they in turn do not do it and now it is left to the HR Manager to try and persuade the senior management to do it. Another reason is politics. Since HR is only a co-ordinator of the exercise, some managers mishandle the exercise and HR is told not to interfere. The result is demotivation of performing staff and the blame game is thrown back at HR. In the end HR may give up. This is one reason. But HR also need to ensure that they add value to what they do in providing consultancy service and effectively marketing the department and learning and understanding the business so that they can match understand how to align the people and the business.
Employment at will is very tricky and HR needs to be careful when taking on staff. The challenge for HR is when hiring staff, they do not take time to ensure that the staff understand the terms and conditions on which they are hired and if these are temporary staff say for a period of a month or three months, they may not give a written contract. So should a holiday fall in during the period of this short contract, the employee assumes he/she is entitle to payment, while HR maintains that he/she is not. Had this been done at an initial stage, there would be no problem. HR need to ensure that cases like this are dealt with at the beginning to keep the organization safe from litigation. Taking a few minutes to explain a contract of employment is worth it rather than hiring lawyers to defend the organization at a tribunal.
How does “Probationary Periods” of 30 or 90 days play into this? Should new employees be paid for holidays during this probationary period? My understanding is that using probationary periods can lead to implied contract of employment after the 30/90 days of probation.