OFCCP Week In Review – December 2022 #3 | DirectEmployers Association

Tuesday, December 13, 2022: US NLRB Expands Financial Remedies for Workers in Unfair Labor Practices Cases

The US National Labor Relations Board (NLRB) had a big week reversing Trump-era decisions. In the first of the four NLRB case decisions we report in this edition of the WIR, the NLRB expanded its traditional make-whole remedy for workers in unfair labor practices (ULP) cases to include monies lost for all “direct or foreseeable pecuniary harm” (Thrive Inc.Case no. 20-CA-250250).

The Board’s traditional remedy for unlawful layoffs or terminations requires that employees be reinstated to their previous or substantially equivalent positions and be “made whole” for their loss of earnings and benefits, along with the search-for-work and interim employment expenses they incurred because of the employer’s prior unlawful conduct which initially led to the employee’s loss of employment.

In the new 3-2 decision, the NLRB majority ruled that employers must also compensate workers for all “direct or foreseeable pecuniary harm,” including credit card debt interest and out-of-pocket medical expenses.

What makes this holding unusual is that courts traditionally view illegal terminations, including those violative of federal statutes, as essentially breach of contract cases. Compensation for “direct or foreseeable” pecuniary harm, rather, is typically a tort remedy. (“Torts” are a cause of action for negligence…for a violation of the usual standard of care the community expects in such circumstances: for example, running a red light, hitting cars and/or persons in an intersection and causing injury to people and/or property).

How We Got Here

In September 2021, we reported that the Biden Administration’s ,NLRB General Counsel Issued a Memo Instructing Staff to Expand Financial Remedies in Enforcement Actions Under the NLRA, Including “Consequential” Damages, For that report, we provided a breakdown of “consequential damages” and connected the dots to the Protecting the Right to Organize Act (PRO Act (HR 842, Among other provisions, the PRO Act would impose additional potential financial penalties as a result of any ULP, such as civil penalties, liquidated damages, and the availability of punitive damages, consequential damages, and attorney’s fees payable in any civil action the Act would permit an employee to file should the NLRB decline to prosecute the employee’s claim.

The House of Representatives passed the PRO Act on March 9, 2021, by a 225-206 largely party-line votebut the bill has been stalled in the Senate Health, Education, Labor, and Pensions Committee since March 11, 2021. “Consequential damages” refers to damages suffered indirectly, or only as a foreseeable and inevitable consequence of an event or incident.

A few months later, in November 2021, the NLRB unanimously agreed to issue a notice and invitation seeking input in the Thrive, Inc. The case, which was then pending before the board. At the time, the Board sought input on whether it should expand its traditional make-whole remedy for discriminated employees to include monies lost for “consequential damages.” See our story here,

Because the PRO Act has not passed into law and will die when this 117th Congress adjourns on Wednesday, December 21, 2022 as currently scheduled, many employers the NLRB seeks to sock with damages demands to compensate “direct or foreseeable pecuniary harm” can be expected to challenge them as lacking a proper delegation of authority from the Congress to the NLRB.

NLRB Majority Abandoned the Term “Consequential Damages”

In an effort to help salvage this new form of compensation demand from the “lack of delegation of authority” attack that can be expected from employers, the Board majority decided to provide some separation from the failed PRO Act’s remedies by not using the PRO Act’s term “Consequential damages.” To set up a Board argument that it was not adopting the failed PRO Act’s terminology authorizing the NLRB to pursue expanded authority, the Board wrote that “consequential damages” is “a term of art used to refer to a specific type of legal damages awarded in other areas of the law and fails to accurately describe the “make-whole remedial policy” provided for in the present ruling.”

Rather, the Board now asserts that it had this remedial power all along and in fact that power has been rooted in the National Labor Relations Act’s Section 10(c) mandate (presumably just discovered now after the last almost 90 years remedies have been available) to[e] into concreteness the purpose of safeguarding and encouraging the right of self-organization,” rather than common law tort [i.e. personal injury] or contract remedies, the majority explained.

Expanded Remedy Applicable to All New & Pending Cases

The Board majority also ruled that it would apply this expanded remedy in every case in which the NLRB’s standard remedy would include make-whole relief for employees. “We decline to treat today’s remedy as ‘extraordinary relief,’ to be issued only in the most egregious cases,” they wrote. Furthermore, the Board will apply this remedy retroactively to all cases currently pending, the majority noted both in its decision and accompanying press release,

Dissenting Members Concerned Standard Will Infringe Employers’ Jury Trial Rights & Lead to Protracted Litigation

Fellow Democrats Gwynne A. Wilcox and David M. Prouty joined Board Chairman Lauren M. McFerran’s majority ruling. Republican Board Members Marvin E. Kaplan and John F. Ring dissented in part, objecting to the majority’s decision to adopt a “direct or foreseeable pecuniary harms” standard. In their view,[t]his standard opens the door to awards of speculative damages that go beyond the Board’s remedial authority.” While they agreed with the majority that employees should be made whole for monetary losses that are a “direct” result of a ULP, they did not agree that all “foreseeable” losses indirectly caused by a ULP are compensable in an NLRB proceeding, regardless of how many steps removed those losses are from the ULP in the chain of causation.

Emphasizing that foreseeability is a core concept of tort law, the dissenters asserted that the majority’s broadened standard could violate employers’ Seventh Amendment constitutional right to a jury trial. Furthermore, the application of this expanded standard will “invite protracted litigation” which will delay “[c]ompliance with make-whole orders awarding monies to which employees are indisputably entitled,” the dissenters feared.

[Note: Member John F. Ring’s tenure on the Board expired on Friday, December 16.]

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