?Takeaway: Employers are at serious risk of contempt rulings when they fail to comply with orders from the National Labor Relations Board (NLRB). Partial compliance is insufficient. Ignoring an NLRB order—as well as subsequent court orders enforcing it—may well lead to a finding of civil contempt.
?Noting that parties ignore court orders at their peril, the 7th U.S. Circuit Court of Appeals held a Wisconsin business in contempt for its refusal to comply fully with a National Labor Relations Board (NLRB) order entered in response to the company’s wrongful termination of an employee who had concerns about COVID-19, as well as its disregard of two earlier orders entered by the court.
An employee had approached the company’s co-owner and director of operations in May 2020 to discuss her concerns that the employer, a spa salon, was not sufficiently protecting her and other employees from COVID-19. The co-owner was not receptive to the employee’s suggestions. The employee then sent a staffwide e-mail criticizing the co-owner’s handling of COVID-19 health risks, and he fired her.
When the co-owner heard that the employee had complained to the NLRB about her termination, he threatened legal action against her and her family.
Following a hearing, an NLRB administrative law judge (ALJ) found the employer had unlawfully terminated and threatened the employee in violation of the National Labor Relations Act. The ALJ recommended that the NLRB order the employer to compensate the employee for lost pay and other expenses, offer to rehire her, notify her that it had removed references to her unlawful termination from her employee file, post notices of employee rights in its store locations and file a sworn certification with the board attesting to its compliance.
The NLRB notified the employer that it would automatically adopt the ALJ’s recommendations unless the company challenged the proposed order. The employer did not do so, so the board asked the 7th Circuit to summarily enforce its order. The court granted the NLRB’s application in September 2021.
At this point, the employer had still failed to satisfy three of the board’s requirements: It hadn’t notified the employee that it had removed references to her termination from its files, posted a notice of employee rights at all locations or filed its sworn certification with the NLRB attesting to its compliance.
The board returned to the 7th Circuit in December 2022, asking that it hold the salon in contempt. The court directed the employer to respond to the NLRB’s petition, but the spa salon did nothing. Similarly, when ordered to show cause for why the petition should not be granted, the business disregarded that order.
The court noted that contempt is warranted if the NLRB establishes by clear and convincing evidence that a court order set forth an unambiguous command, the employer violated that command, the violation was significant, and the employer failed to make a reasonable and diligent effort to comply.
“[The employer’s] conduct meets these criteria,” the court wrote, holding the employer in contempt. “On two prior occasions, we ordered [the employer] to respond to the board’s petition for contempt. [It] has not complied. Indeed, we have not heard a word from [the employer]. And the board’s most recent submission indicates that [the employer’s] strategy is to hope everything somehow goes away by ignoring the board and court. This cannot stand.”
The 7th Circuit further explained that to eliminate the contempt finding, the employer must fully comply with the court’s judgment enforcing the NLRB’s order; post the notices required by the order and provide the NLRB’s regional director with a signed copy of the posted notices, information about where they are posted and access to the notices to verify its compliance; pay the board all reasonable costs and expenses, including attorney fees; and file a sworn statement with the court clerk attesting to the steps it has taken to comply and the dates on which those steps were taken.
The court also ordered the employer to pay a fine of $1,000, to be increased by $150 per day for every day of the following week that it failed to comply, beginning Feb. 28, 2023. The daily fine would increase by $100 each day that the employer failed to comply beyond the first week, increasing to $250 on March 7, $350 on March 8, and so on. The court added that the fines would be forgiven if the employer filed a sworn statement within seven days of the opinion demonstrating full compliance with the board’s order and the court’s requirements. If the employer continues to disregard the court’s orders, the NLRB may seek additional remedies, the court concluded.
National Labor Relations Board v. Haven Salon + Spa, Inc., 7th Cir., No. 21-2413 (Feb. 27, 2023).
Rosemarie Lally, J.D., is a freelance legal writer based in Washington, D.C.
