NLRB Raises Stakes on Make-whole Remedies
On December 13, 2022, the National Labor Relations Board (NLRB) issued a decision expanding remedies available to employees who prevail in an unfair labor practice (ULP) charge. In addition to backpay and reinstatement, employers now may be liable for “make-whole” remedies, which include direct or foreseeable harm suffered as a consequence of their unlawful conduct. Monetary awards will be available to remedy virtually all forms of economic harm, even in the absence of egregious circumstances.
Thryv, Inc., operates a marketing agency engaged in the business of selling Yellow Pages advertising. In July 2019, it proposed to lay off six employees with the title of new business advisors.
Over the course of September and October, Thryv met with the union to discuss and negotiate the reduction in force. In connection with the discussions, the union requested information to assist in developing a proposal to avoid the reduction. The employers produced some, but not all, information requested by the union.
Thryv then unilaterally laid off the six new business advisors. The union filed an ULP charge before the NLRB. The Board found the employer committed a ULP under Section 8(a)(5) and (1) by failing and refusing to respond to the requests for information made by the union. It also found the layoff was unlawful because it was presented as a fait accompli.
The Board’s decision in the Thryv, Inc. case is notable because it establishes a new and expansive standard for awarding a make-whole remedy under the National Labor Relations Act (NLRA). Traditionally, employers were exposed to limited remedies, including backpay and reinstatement.
In its 3-2 decision, the Board wrote it “will expressly order that the respondent compensate affected employees for all direct or foreseeable pecuniary harms suffered as a result of the respondent’s unfair labor practice.” It gave examples of direct or indirect, but foreseeable, losses that it will consider in the future. Examples included:
- Compensation for credit card late fees incurred;
- Legal expenses and fees;
- Penalties on early withdrawals from retirement accounts;
- Expenses for transportation, room, and board;
- Cost of clothes ruined as a result of discriminatory work assignments;
- Medical expenses an employee incurred as a result of an unlawful assignment;
- Compensation for loss of a home or a car that an employee suffered as a result of an unlawful discharge;
- Search for work and interim employment expenses;
- Compensation for lost investment growth in a 401(k) plan for not only lost contributions but also the growth the fund would have experienced during that period; and
- Reimbursement for costs the employee incurred, including any increases in premiums, copays, coinsurance, deductibles, and other out-of-pocket expenses, as well as to pay any still unpaid medical bills directly to the medical providers, in a case where the employee lost health insurance.
The Board went on to note that it doesn’t offer advisory opinions and didn’t provide guidance on the limits of the make-whole remedy. For employers, the new remedy will lead to tremendous uncertainty over the financial impact of litigation with unions. Expect considerable litigation over what the Board will consider to be “foreseeable” damages.
Following the Board’s New Direction
In August 2021, NLRB General Counsel (GC) Jennifer Abruzzo issued her first memo listing her agenda on some priorities.
One of the areas Abruzzo indicated the Board would pursue is to consider the “full panoply of remedies available” (i.e., the make-whole remedy decided in Thryv, Inc.) in addressing the ULPs. This was just one of many priorities, however, identified in the memo to reexamine existing labor law. Thryv, Inc., 372 NLRB No. 22 (Dec. 13, 2022).
Employers that have unions would be well served by reviewing the memo to understand the potential future initiatives the GC looks to be taking to increase union rights and remedies.
This article, slightly modified to note recent updates, was featured online in the Wisconsin Employment Law Letter and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.