At-will employment clauses are one of the most common provisions in employment agreements and employee handbooks. The concept that an employer can terminate an employee for any reason or no reason at all (subject, of course, to prohibitions based upon legally protected classifications) has long been an important concept in employment law. In addition to being an element of contract between the employer and employee, the concept of at-will employment is firmly embedded in the statutory and common law of most states.
While at-will employment provisions may appear harsh on their face, in reality they are a necessary tool that enables employers to adjust their workforce to meet changing labor demands. This is especially relevant to contingent staffing relationships which, by their very nature, serve to facilitate labor flexibility. Further, the rights afforded by the at-will employment relationship are not unilateral — employees are also free to leave their positions voluntarily any time they wish.
At-will employment has long been a function of both contract law and state employment laws. That history, however, may be about to change. In two recent cases out of Arizona, the National Labor Relations Board (NLRB) has signaled that certain elements of at-will employment clauses may run afoul of Section 7 of the National Labor Relations Act (NLRA), which protects an employee’s right to engage in concerted and certain collective bargaining activity.
Specifically, in one case, a company’s employment agreement provided the at-will provision could not be modified unless signed by the company’s CEO. An administrative judge ruled that provision violated Section 7 because it could lead employees to believe their rights under the NLRA were superseded by the at-will language. In light of this ruling, an employer in another case promptly settled a suit brought against it.
In recent years, the NLRB has sought to aggressively expand the scope of the NLRA’s protected activity provisions. These cases may signal a trend toward interjecting federal labor law into traditional state law employment matters. Given the importance of the at-will employment relationship in the contingent staffing industry, staffing companies would be wise to re-visit their at-will employment clauses in light of this potential trend. Although the impact of these cases remains to been seen, prudence dictates that employers may want to revise their at-will employment clauses to make clear that those provisions do not limit an employee’s right to engage in concerted activity or collective bargaining under the NLRA. As always, it is best to review such changes with counsel.