?Employers that violate federal labor law must compensate workers to make up for the direct consequences of unfair labor practices, the National Labor Relations Board (NLRB) ruled on Dec. 13. This ruling adds consequential damages to the board’s usual make-whole remedies. The board said it would apply this remedy retroactively to all cases currently pending.
The NLRB has a make-whole protocol for employees who are unfairly discharged, laid off or otherwise discriminated against to fully account for their actual economic losses. Historically, the remedies imposed included reinstatement of employment, backpay, payment of dues and fines, stopping unlawful rules or practices, or a notice posted at the workplace. The board’s recent decision expands that list significantly for employers.
“Employees are not made whole until they are fully compensated for financial harms that they suffered as a result of unlawful conduct,” said NLRB Chairman Lauren McFerran. “By standardizing the board’s make-whole relief to fully include the direct or foreseeable financial harms suffered by affected employees, we will better serve the important goals of the National Labor Relations Act.”
For consequential damages to apply, the NLRB general counsel must present evidence proving the amount of the financial harm, that it was direct or foreseeable, and that it was due to the unfair labor practice. The employer or union could rebut that evidence.
The NLRB’s interest in adding consequential damages comes from a case called Thryv, Inc. and International Brotherhood of Electrical Workers, Local 1269. The lawsuit claimed the marketing and software company Thryv unlawfully laid off six employees without first bargaining to impasse with the union. The plaintiffs requested consequential damages as part of the board’s make-whole remedy.
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New Remedies
Examples of new make-whole remedies cited by the NLRB include:
- Compensation for health care expenses that an employee incurs as a result of an unlawful termination of health insurance.
- Compensation for credit card late fees incurred.
- Compensation for loss of a home or a car that an employee suffered as a result of an unlawful discharge.
- Employer sponsorship of work authorizations for the firing of undocumented workers.
For an employer’s unlawful conduct during a union-organizing campaign, remedies might include:
- Increased union access to employee contact information and employer facilities.
- Reimbursement of organizational costs.
- Publication of notice of rights in the newspaper and other public media forums.
- Visitorial and subpoena power to the board to monitor compliance.
- Training of employees on their right to organize.
- Allowing the union to choose who the employer hires where a discharged individual is unable to return to work.
- Cease-and-desist orders.
For an employer’s unlawful failure to bargain with a union, remedies might include:
- Compensation for losses sustained by employees.
- Bargaining schedules.
- Submission of periodic detailed progress reports to the board.
- Reinstatement of proposals that the board finds to have been unlawfully withdrawn.
- Reimbursement of collective bargaining expenses.
- Reinstatement of a one-year contract bar.
- Cease-and-desist orders.
Discouraging Violations
Applying consequential damages gives the NLRB an additional weapon in its limited arsenal for going after lawbreakers and discouraging unfair labor practices. The agency lacks the power to levy monetary fines or impose punitive damages. NLRB prosecutors have negotiated settlement agreements that pay workers for the economic ramifications of alleged labor law violations. Those deals have included reimbursement of fees for late rent and car payments, interest payments on a loan that a worker took out to cover living expenses, and the cost of baby formula because of the loss of a workplace breast pumping station.
The NLRB’s three Democratic members approved the recent ruling, but the two Republican members dissented. Under the new precedent, the board will consider the economic consequences of labor law violations in any case that calls for make-whole relief, not just the most egregious cases.
Potential Appeals
Employers should expect to see expanded and creative use of special remedies to rectify unfair labor practices. These decisions are likely to be appealed to the applicable circuit court and, potentially, to the U.S. Supreme Court. In the meantime, the NLRB Democratic majority is likely to continue expanding the types of special remedies it orders.
Gauge the Extent of Damages
An employer faced with an unfair labor practice charge must carefully consider the potential extent of damages at issue–in addition to the potential breadth of consequences that may come if the employer does not fully comply with the terms of a NLRB settlement agreement. The prospects of settling disputes will be decidedly more difficult.
Union Ordered to Pay Damages
Earlier this year, the United Mine Workers of America (UMWA) reached a settlement with an Alabama coal mining company after the employer alleged strike misconduct. The NLRB issued calculations for the damages UMWA owed to the employer and to the individuals injured by the alleged strike misconduct, totaling over $13 million. This case suggests that the NLRB is prepared to take an exceptionally broad approach to identifying and remedying downstream economic losses, both to the benefit and detriment of employers and unions alike.
