November 2012 Volume XI No. 9 Taking Care of Business
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Employment At-Will Policies That Do Not Clarify Their Scope Or Limitations Risk Violating Federal Law Prohibiting The Exercise Of The Right To Organize And Bargain Collectively

Many employers maintain policies in their employee handbooks reinforcing employees’ at-will status. However, such policies should be carefully crafted to ensure that an employee’s federally protected rights to organize and bargain collectively are not infringed. Where an at-will policy merely limits the authority of the company’s representatives to alter employment at-will status, but does not preclude employees from seeking such an alteration or from organizing or attempting to bargain collectively, the policy does not run afoul of federal labor law.

A large number of employees in the United States are “employees at-will”, subject to termination with or without cause or notice at any time by the employer or employee. Many employers maintain policies in their employee handbooks reinforcing the employees’ at-will status. However, such policies should be carefully crafted to ensure that an employee’s federally protected rights to organize and bargain collectively are not infringed by an overbroad at-will policy.

On October 31, 2012, the Office of the General Counsel of the National Labor Relations Board released two Advice Memoranda reviewing language in two employment at-will policies, and providing guidance to employers as to the scope of restrictions such policies can lawfully place on the circumstances under which an employee’s at-will status can be altered. In both situations, the policies were found not to violate the NLRA because employees could not reasonably construe the policy to restrict their Section 7 rights.

Section 7 of the National Labor Relations Act provides that employees have the right to engage in a variety of activities related to collective bargaining and organization, including 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. . .” [29 U.S.C. § 157.] Section 8 of the Act makes it an unfair labor practice for an employer to “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7.” [29 U.S.C. § 158(a)(1).]

A work rule or policy violates Section 8 of the Act if it would reasonably tend to chill employees in the exercise of their Section 7 rights. Rules or policies that expressly restrict Section 7 rights are unlawful. Further, even where a rule or policy does not expressly restrict Section 7 rights, it will be found unlawful if it was promulgated in response to union activity, is applied in a way that restricts Section 7 rights, or would reasonably be construed by employees to prohibit Section 7 activity.

In each of the two polices addressed by the General Counsel’s October 31, 2010 Advice Memoranda, the policy confirmed the employee’s at-will status and expressly provided that no company representatives had the authority to alter an employee’s at-will status. In one policy, the employment handbook stated:

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.

[SWH Corp. d/b/a Mimi’s Café, Case 28-CA-084365.] The General Counsel reviewed the highlighted language for compliance with the NLRA. The policy did not expressly restrict Section 7 rights, and the General Counsel found no evidence that the policy was put in place in response to union activity or was applied to restrict protected activity. Finally, the General Counsel determined that the policy could not reasonably be construed by employees to restrict their Section 7 rights, as it did not prevent employees from seeking to change their at-will status or require employees to agree that their at-will status could never be changed. Rather, it merely stated that the company’s own representatives could not alter the at-will status by agreement. It did not restrict an employee’s right to organize or to bargain collectively. The policy simply reinforced the at-will status, and the fact that neither the handbook nor a company representative could create any type of contract for employment.

In the other Advice Memorandum, the employment handbook contained the following provision:
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.

[Rocha Transportation, Case 32-CA-086799.] Similar to the language in the Mimi’s Café policy, the highlighted portion of the Rocha policy did not explicitly restrict Section 7 rights, and there was no evidence that it was implemented in response to union activity or applied to restrict protected activity. Additionally, employees could not reasonably construe the policy to restrict their Section 7 rights, as it did not preclude employees from seeking a change in at-will status, but merely stated that the only company representative authorized to enter into employment agreements other than at-will agreements was the company president, and only in writing. The General Counsel concluded that an employee could not reasonably construe this language as precluding the exercise of Section 7 rights to organize and bargain collectively.

In both cases, the policies were found to be lawful and in compliance with the NRLA, as neither precluded an employee from exercising their Section 7 rights and could not reasonably be construed as doing so. These memoranda from the General Counsel demonstrate that where an at-will policy clearly defines the circumstances under which at-will status can or cannot be modified, and does not foreclose employees from seeking to modify their status through the exercise of Section 7 rights, the policy has not run afoul of Section 8(a)(1) of the NRLA.

If you have questions regarding the permissible scope of at-will employment polices or are in need of consultation on this or other employment or labor matters, please visit our website at www.hwelaw.com.

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Supreme Court Expected To Weigh In On Definition Of Supervisor For Claims Of Workplace Harassment

Kevin Kerr
Kevin Kerr

The Supreme Court recently heard oral argument on a case which is expected to address a split in the Circuit courts of appeal over how to define a supervisor in cases of alleged workplace harassment. In Vance v. Ball State University, the Seventh Circuit adopted a definition of supervisor as a person who has authority to hire, fire, demote or discipline an employee. This made three Circuits which have adopted this definition. Three other Circuits have adopted a definition which defines a supervisor as a person with day-to-day oversight over the harassed employee which is similar to the standard proposed by the Equal Employment Opportunity Commission.

This definition is important because an employer’s liability for harassment is significantly impacted by whether the harassment results from the conduct of a supervisor or is based on the acts of a co-employee. Applying general principles of agency law, the Supreme Court has held that an employer is generally liable for the acts of a supervisor. So, where a supervisor harasses an employee, the employer is generally liable for the supervisor’s acts. In contrast, where an employee harasses a fellow employee, the employer is liable only if the employer was negligent in allowing the harassment. This will generally require evidence that the employee complained of the harassment and that the employer’s response was negligent.

In Ball State University, an African-American employee complained of racial harassment and physical abuse at work. She asserted that the harassment came from a white co-worker who she viewed as a supervisor and that the general manager did not protect her and treated other workers more favorably. At oral argument the plaintiff’s counsel argued that the supervisor should be defined as a person who can instill fear into an employee or control their work location. In a somewhat unusual twist, Ball State’s counsel did not ask the Supreme Court to affirm the Seventh Circuit. Instead, he argued that the Supreme Court should adopt a definition of supervisor as a person whose control over the employee’s work meaningfully assisted in the harassment. The deputy solicitor general argued on behalf of the federal government that the Supreme Court should adopt the EEOC definition of supervisor.

Several justices expressed frustration with the absence of any party supporting the Seventh Circuit’s definition. As all parties were in agreement that the 7th Circuit (and other circuits' similar definition of supervisor) was too restrictive, some justices seemed concerned about the propriety of a ruling defining supervisor when there was no party arguing for all of the definitions in Court. Justice Alito suggested that the matter be remanded.

The matter is now before the Court and its ruling could either substantially increase or decrease an employer’s exposure to liability for workplace harassment.

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