NLRB Beefs Up Penalties Pressure

The National Labor Relations Board is pushing to seek more expansive remedies for employees found to be victim of unfair labor practices — just in case you didn’t have enough regulatory enforcement pressures to worry about. 

The policy shift was announced by NLRB general counsel Jennifer Abruzzo in a memo published Wednesday. She encouraged the agency’s regional investigators to seek “the full panoply of remedies available” to assure that employees are made whole when their employer violates their rights under the National Labor Relations Act. (Typically that involves unionization or collective bargaining efforts). 

The “new and alternative remedies,” Abruzzo wrote, could include giving unlawfully fired employees restitution for interest or late fees on credit cards they use to cover living expenses, penalties paid when they prematurely tap retirement accounts, and even front pay for employees who can’t return to their old jobs. 

The bottom line: the NLRB is raising the potential costs for employers who violate the National Labor Relations Act, which means the importance of not violating those labor practices just increased to the same degree. Compliance officers, take note.

In truth, the NLRB has been moving toward this position since the Biden Administration arrived in January. Abruzzo published a previous memo on Sept. 8 outlining the board’s view on full remedies, for both unlawful termination of employees and unlawful refusal to bargain with union organizers. This week’s memo is more specific in what the NLRB’s regional offices should seek in formal and informal settlement agreements. 

More vigorous NLRB enforcement hasn’t shown up in the statistics yet; the number of unfair labor practice charges, settlements, and complaints all trended downward during the Trump Administration. (See Figure 1, below.) That should surprise nobody, given the Trump Administration’s anti-labor posture. The question now is whether we’ll see more vigorous enforcement during the Biden Administration. 


Source: NLRB

The NLRB and ‘Fuller Penalties’

The point of settlements for unfair labor practices, Abruzzo said, is to make the victim of the unfair labor practice whole. The problem, however, is that… 

A monetary remedy comprised only of backpay and lost benefits often fails to truly make whole victims of an unfair labor practice, particularly those who have been unlawfully discharged and struggle afterwards to find comparable employment in order to mitigate their loss of earnings. Therefore… in addition to seeking no less than 100 percent of the backpay and benefits owed, [NLRB regional offices] should always make sure to seek compensation for any and all damages, direct and consequential, attributable to an unfair labor practice. 

Abruzzo then continued with several more examples of what might be covered in that more expansive view of damages: moving expenses, fees for training or coursework the employee takes to maintain licenses or certifications, the cost of obtaining comparable health insurance, legal fees, and more. 

The memo also talked at length about reinstating an unlawfully fired employee to his or her old job. 

First, Abruzzo said, reinstatement is an important goal for the NLRB (“I cannot underscore enough the importance of the remedy of reinstatement”) because it sends a clear signal to other employees at the offending company that they can exercise their labor rights and be protected. 

penaltyThat said, Abruzzo continued, “there are instances, of course, where unlawfully fired employees may understandably not wish to return to work” even with an unconditional offer of reinstatement. So in addition to seeking back pay and benefits owed, and all those other costs we mentioned already, NLRB offices should also include “front pay” as part of their settlement calculations where reinstatement won’t be happening. 

Front pay isn’t a new concept in labor litigation; federal courts hearing wrongful termination lawsuits award it from time to time. For example, in 2016 a federal judge awarded $2.23 million to a whistleblower in a retaliation case — plus another $2.7 in front pay, estimating the earnings the whistleblower (then 58 and permanently exiled from his profession) would have received until retirement in 2024.

Victim employees not returning to work could also seek outplacement services and neutral references from their former employer, Abruzzo added. For victims who are returning to the job, the NLRB should seek a formal letter of apology from the company to the worker. 

The Compliance Challenges

Obviously if your company is under investigation by NLRB offices, the damage has already been done and your legal team is running the show. For compliance officers, the question is how to avoid reaching that point in the first place. Which is really a question of policies, procedures, and training.

For example, clear policies and training are essential, so that managers in local business units know how to handle a potential unionization drive or a complaint from a union leader in your workforce. My big fear would be that an improperly trained manager at a local plant believes he or she is “helping” the company by keeping union forces at bay, when actually the manager is doing more harm than good.

Second, and as always, use your whistleblower hotline as a tool to nip unlawful labor practices in the bud. Be sure your hotline call centers know how to handle such complaints, and that your own investigation protocols include policies and procedures for complaints about unfair labor practices. 

I would even go so far as to recommend telling managers: when you stumble onto a potential NLRB issue, alert the compliance and legal teams immediately; if you don’t, and we hear through the hotline that you sat on an issue, expect a very difficult conversation to follow. It’s a great strategy to compel managers to take compliance seriously.

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