A December ruling by the National Labor Relations Board paves the way for broader compensation awards to wrongfully terminated employees and other victims of unfair labor practices.
In a 3-2 decision issued in Thryv, Inc., the NLRB clarified its “make-whole” remedy to include payment for “direct or foreseeable” harm suffered as a result of labor law violations.
In addition to direct costs such as the loss of earnings and benefits, the ruling says victims of unfair labor practices must be compensated for significant financial costs that are a foreseeable result of the unfair labor practices, such as medical expenses incurred because of a loss of insurance coverage.
“‘Make-whole relief’” is more fully realized when it consistently compensates affected employees for all direct or foreseeable pecuniary harms that result from a respondent’s unfair labor practice,” the board wrote in its ruling.
In Thryv, the NLRB ruled the company violated labor law by failing and refusing to respond to requests for information made by the union regarding layoffs, and for wrongfully laying off six employees without notifying the union and giving it an opportunity to bargain. Thryv, Inc. is a marketing and software company that sells Yellow Pages advertising as well as a computer application for small businesses.
According to Bloomberg Law, the decision means the NLRB will consider the economic consequences of labor law violations in any case that calls for make-whole relief, not just the most egregious cases. The general counsel’s office, which prosecutes unfair labor practice cases, will present evidence on economic harm. Employers can challenge the amount, argue that the harm wasn’t direct or foreseeable, or contend that the harm would’ve occurred regardless of the unlawful conduct.
The Thryv ruling cited a previous NLRB case, Voorhees Care & Rehabilitation Center, in which NLRB Chairman Lauren McFerran “listed ‘a myriad of other possible examples’ of unredressed pecuniary harms suffered by affected employees: Following an unlawful discharge, for example, an employee may be faced with interest and late fees on credit cards, or penalties if she must make early withdrawals from her retirement account in order to cover her living expenses. She might even lose her car or her home, if she is unable to make loan or mortgage payments. As a result of an unfair labor practice, discriminatees could also face increased transportation or childcare costs.”
“Employees are not made whole until they are fully compensated for financial harms that they suffered as a result of unlawful conduct,” McFerran said in a release announcing the decision. “The Board clearly has the authority to comprehensively address the effects of unfair labor practices. 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.”
The NLRB decision fell along party lines, with the three board members appointed by Democrats voting in the majority.
The two Republican members dissented, foreshadowing legal challenges to the ruling. They argued that even if the NLRB had the authority to compensate employees for all foreseeable losses indirectly caused by an unfair labor practice, it wouldn’t “be prudent to attempt to do so.”
“Any such effort will inevitably spark a wide-ranging compliance inquiry into a discriminatee’s financial circumstances and past financial decisions,” the dissenters wrote. “Such proceedings would be intrusive and potentially deeply embarrassing for discriminatees. They would also be time-consuming and would unduly prolong compliance proceedings and thereby delay the day when the back pay claimants would receive any relief.
“In our view, the possible benefits of this course of action are too remote and the costs too high to make it worth pursuing, even if it were permissible to do so.”
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