NLRB Expands Standard Remedies Available to Victims of Unfair Labor Practices
- In Thryv, Inc., the National Labor Relations Board (NLRB) held that to best effectuate the purposes of the National Labor Relations Act (NLRA), the standard make-whole remedy must compensate affected employees for "all direct or foreseeable pecuniary harms" that they suffer as a result of an unfair labor practice.
- The decision could substantially increase the financial exposure of employers faced with unfair labor practice charges, as it opens the door to a host of potentially costly and speculative monetary awards that go far beyond the typical make-whole remedies of reinstatement and back pay.
- Although the Thryv decision stems from the laudable goal of ensuring that victims of unfair labor practices are made whole for their losses, as a practical matter, it makes the calculation of potential damages much less predictable for employers, and almost certainly will complicate and prolong compliance proceedings.
In Thryv, Inc., 372 NLRB No. 22 (2022), the National Labor Relations Board (NLRB or Board) held that to best effectuate the purposes of the National Labor Relations Act (NLRA), the standard make-whole remedy must compensate affected employees for "all direct or foreseeable pecuniary harms" that they suffer as a result of an unfair labor practice. This opens the door to a host of potentially costly and speculative monetary awards that go far beyond the typical make-whole remedies of reinstatement and back pay. The decision, issued on Dec. 13, 2022, applies retroactively to every case in which the Board's standard make-whole remedy is invoked and could substantially increase the financial exposure of employers faced with unfair labor practice charges.
The Board's Decision
In Thryv, the NLRB held that the employer violated the NLRA by unilaterally laying off six employees in violation of the statutory duty to bargain. It then used the case "to revisit and clarify [the Board's] existing practice of ordering relief that ensures affected employees are made whole for the consequences of a respondent's unlawful conduct." Toward that end, the Board concluded that in all cases in which its standard remedy would include make-whole relief, 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." (Emphasis in original.)
"Direct harms" are those in which an employee's "loss was the direct result of the [r]espondent's illegal conduct." "Foreseeable harms" are those "which the respondent knew or should have known would be likely to result from its violation of the Act, regardless of its intentions." Any such relief must be specifically calculated and requires the Board's General Counsel to present evidence at the compliance stage of the case demonstrating the amount of pecuniary harm, the direct or foreseeable nature of that harm, and why that harm is due to the respondent's unfair labor practice. The respondent, in turn, will have the opportunity to present evidence challenging the amount of money claimed, argue that the harm was not direct or foreseeable, or show that it would have occurred regardless of the unfair labor practice.
In reaching its decision, the Board reviewed prior cases in which it allegedly recognized that employees cannot be made fully whole without consideration for all direct or foreseeable pecuniary harms – while acknowledging that it may not have always made clear that it defines make-whole relief to include such harms. For example, the Board noted that it has awarded expenses for transportation, room and board that wrongfully terminated employees would not have incurred had they continued working for the respondent; legal expenses and fees incurred by an employee as a result of the respondent's unlawful conduct; monetary reimbursement for clothes ruined as the direct result of the respondent's illegal conduct of assigning the employee to a dirty job; costs incurred by a wrongfully terminated employee in searching for work and securing interim employment; compensation for investment growth employees would have received had the employer not unlawfully withheld their 401(k) contributions; and reimbursement of costs (including increases in premiums, co-pays, unpaid medical bills and other out-of-pocket expenses) incurred by employees whose healthcare coverage was unlawfully discontinued.
The Board was careful to note that it was not including relief for "consequential damages" as part of its make-whole remedy. It appeared to acknowledge that such damages would be outside the scope of its remedial authority. At the same time, however, the Board explained that by expressly including all direct or foreseeable pecuniary harms within the standard make-whole remedy, it was not concluding that "this reflects the limits of the Board's statutory remedial authority or that some other form of make-whole relief might not also be necessary in a future case." The Board noted that unlawfully terminated or laid-off employees "may be forced to incur significant financial costs, such as out-of-pocket medical expenses, credit card debt, and other costs simply to make ends meet" and that it could not fairly say that employees have been made whole until they are fully compensated for these kinds of pecuniary harms if they were a direct or foreseeable consequence of the respondent's unfair labor practice. In Thryv, for example, the charging party was seeking 1) restoration of the books of business that previously had been afforded to each of the laid-off sales employees, 2) compensation for reimbursements the employees previously had received for costs associated with maintaining their cars for use on company business and 3) out-of-pocket medical expenses incurred by employees while laid off.
The Board also specifically declined to treat this broader concept of a make-whole remedy as "extraordinary relief" to be issued only in the most egregious cases. Instead, it applies in every case in which the Board's standard remedy would include make-whole relief, regardless of the egregiousness of the violation or the respondent's past conduct. The Board also rejected the suggestions that it should avoid ordering such a remedy simply because it may be administratively complex or unduly prolong compliance proceedings. It noted, for example, that nothing in its decision should be read to prevent parties from stipulating to the immediate payment of certain monies in a compliance specification, such as calculated back pay, while the respondent continues to challenge other elements of the specification, such as other direct or foreseeable damages.
The Board also attempted to allay other concerns by observing that "[a]s in the past, [it] will not issue remedial orders for harms which are unquantifiable, speculative, or nonspecific." It noted that any claimed damages must be supported by evidence and that harm will not be presumed compensable. According to the Board, evidence of pecuniary harm may be established by, among other things, available documents, such as receipts, invoices, medical bills, and credit card and other financial statements. The evidence should establish specific, defined costs that would not have been incurred but for the respondent's unlawful conduct or were the foreseeable consequence of that conduct, and should explain how those costs are due to the unfair labor practice. At the same time, however, the Board noted that
"[u]ncertainties or ambiguities in the evidence" may be "resolved against the respondent whose unlawful actions created the dispute."
A Partial Dissent
The NLRB's two Republican members concurred in part and dissented in part. They agreed that the Board should continue to order respondents to make employees whole for monetary losses (other than back pay) suffered as a direct result of an unfair labor practice, which they described as the first link in a chain of events beginning with the unfair labor practice. They also said that employees should be made whole for losses indirectly caused by an unfair labor practice where the causal link between the loss and the unfair labor practice is sufficiently clear.
However, they disagreed with the majority's expansion of the make-whole remedy to include foreseeable pecuniary harms. According to the dissent, this would permit recovery for any losses indirectly caused by the unfair labor practice, "regardless of how many steps removed the losses are from the unfair labor practice in the chain of causation, so long as the losses are deemed 'foreseeable.'" As such, they said, it improperly opens the door to awards of "speculative," "tort law" damages that go beyond the Board's remedial authority.
Conclusion and Considerations
Although the Thryv decision stems from the laudable goal of ensuring that victims of unfair labor practices are made whole for their losses, the "foreseeability" component may go too far as a matter of law. As a practical matter, it makes the calculation of potential damages much less predictable for employers, and almost certainly will complicate and prolong compliance proceedings. It also may negatively impact the settlement process as the NLRB General Counsel and the alleged victims may be unwilling to compromise, let alone forego, potentially costly damages that allegedly were foreseeable and recoverable under the standard established in Thryv.
This likely is only the beginning, not the end, of what the current Board will do as it relates to the expansion of remedies at the urging of General Counsel Jennifer Abruzzo. As a reminder, she previously issued two memoranda on the subject – one counseling NLRB Regions to request the "full panoply of remedies available" in unfair labor cases (Memorandum GC 21-06); the other encouraging the Regions to do the same when seeking settlement agreements (Memorandum GC 22-06). In both, General Counsel Abruzzo provided a significantly expanded list of the types of remedies that she believed were appropriate under the Act, including "consequential damages," which even the Thryv Board tried to stay away from instituting.
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