Updates For Exempt Organizations With Employees

Employment law can be so niche, and change so often, that I tend to shy away from talking about it. But the situations below run so counter to what  folks generally believe to be true that I thought it important to at least highlight them. Those with employees will definitely want to pay attention to how these develop, as these have even caused employment professionals to scratch their heads.

As you’ll see, exempt org’s have been included in the mix too. So organizations will want to avoid the “they’re not looking at us” mentality, take a look at how things are currently being done and adjust accordingly.


Employment at-will Disclaimers  In Manuals Under Scrutiny

The folks at the National Labor Relations Board have been busy bees. First the mandatory union poster controversy. Then the social media saga and new focus on confidentiality during internal investigations. Now they’re coming after at-will disclaimers in employment agreements.

A staple in employment law, “at-will” is a doctrine that allows organizations to terminate employees without cause (with exception to discrimination, profiling etc.). More often than not, organizations operating in a state that allows for at-will termination will include a provision in their employment agreements stating that employment may be terminated at any time with or without cause, and that under no circumstances can the at-will status of an employee be changed.

This approach not only puts an employee on notice of their status, but also creates a written record for an organization in the event an employee’s status comes into question. Note, where there is confusion as to  an employee’s status, it could result in an employee arguing they were hired for a term or specific amount of time. If that were the case, then not only would the employer’s ability to terminate be severely restricted, but  the employee’s salary might have to be paid up for the remainder of that term.

Aware of this, the NLRB has taken an “interesting” approach by finding that the use of at-will disclaimers in employment agreements could discourage employees from engaging in certain concerted activities protected under Section 7 of the National Labor Relations Act  (the primary activity in question of concern would be an employee’s ability to change their at-will status through union activity). Consequently, if not careful its use could be a violation of federal law. In fact, an at-will provision in the employment manual of the American Red Cross was recently found to be a violation for this very reason.

Organizations can best protect themselves by ensuring that if at-will disclaimers are used, they are narrow and written in a way that would not lead an employee to believe they cannot engage in concerted activity; especially the one described above.

Cases: N.L.R.B. v. Hyatt Hotels Corp., Case 28-CA-061114 (Region 28, Feb. 29, 2012); N.L.R.B. v. Am. Red Cross Ariz. Blood Servs. Region, Case 28-CA-23443. 

Employment Handbooks May Create Contract Rights For Employees

State courts (including Nevada, Utah, Mississippi and Alaska) have recently found that employment handbooks can create contract rights for employees. In the most recent case, a foreman was able to sue his supervisor based on implied contract theories.

The importance of this is two-fold: One a court could find that an employee was entitled to a bargained for (i.e. negotiated) benefit, and where that benefit hasn’t been received, determine there has been a breach of a “contract”. This breach could not only entitle the employee to damages agreed to in the contract, but allow for the employee to recover damages offered under the state’s.  Secondly, as with damages, certain rights don’t necessarily have to be provided in an agreement for a party to be entitled to them. There are times where a court can “imply” (i.e. assume) rights based upon the state’s law. If a court finds that an employment handbook created  contract rights, an employer could find themselves in a situation where an employee is suing based on claims that were not originally offered or addressed in the employment handbook. That was the situation in the case mentioned above.

One way organizations can protect against unintentionally creating contract rights for an employee is to use a comprehensive disclaimer. When distributing the new edition of a manual or handbook be careful with the language you use. In many states, where employers say that a manual or handbook is intended to become part of an employee’s contract, courts might find that the organization unwittingly extended the contractual relationship to the handbook.

Cases: Cabaness v. Thomas 232 P. 3d 486 – 2010; Stagg v. Vintage Place Inc. 796 NW 2d 312 – 2011

Employer’s May Be Kept From Requesting Confidentiality in Internal Investigations

In addition to coming down on at-will disclaimers, the NLRB has also started to caution against instructing employees to keep discussions had during an on-going internal investigation confidential.
A common practice with HR professionals, confidentiality is usually a preemptive measure taken so that the integrity of an investigation can be maintained as well as avoiding unneccessary drama within the organization.
But the NLRB sees it a little differently, stating that employers may only request employees not to discuss a matter under investigation if the employer has “one of several legitimate and substantial justifications” for doing so.  And as luck would have it,  the integrity of an investigation is not one of those justifications.
Note, neither the threat of discipline, or the lack of union activity, affects this reasoning. But all hope isn’t lost. The board did reject the notion of prohibiting employers from requesting confidentiality wholesale. Rather, whether confidentiality can or cannot be requested is on a case-by-case basis.   Confidentiality may be requested where an employer believes a, “witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, or there [was] a need to prevent a cover up.”

Other Posts You Might Like