December 14, 2022
On November 12, 2022, the National Labor Relations Board (NLRB) ruled 3-2, along party lines, to give itself new power to require payment of "consequential damages" for employer violations of federal labor laws. Through this ruling, the Board has greatly expanded the scope of its power to award remedies when bringing unfair labor practice charges against employers, including the power to award damages related to any "direct or foreseeable" harms resulting from the employer's violation.
Previously, the NLRB's ability to require employers to pay damages was limited to "direct" remedial damages. In today's decision, the NLRB newly determined it can require employers to pay "direct and foreseeable damages," akin to "consequential damages" in civil lawsuits. As the two dissenting Republican-appointee members note, there is potentially no end to what the NLRB may consider "foreseeable" damages for violating federal labor laws. "Consequential damages" could include items such as medical expenses that employees had to pay out of pocket after a wrongful discharge, reimbursement for a late mortgage, rent and car payments, and other costs and living expenses incurred by employees because of the employer's alleged unfair labor practice. These consequential damages would be applied in addition to the traditional make-whole remedies, such as back pay and reinstatement.
According to the National Labor Relations Act, if a violation of federal labor laws is found to exist, the NLRB may issue a cease and desist order and take "other affirmative action" to address the violation, including ordering reinstatement with or without back pay and including payment of direct damages. In this Thryv, Inc. case, NLRB Case #20-CA-250250, all five NLRB members found Thryv, Inc., a yellow pages and marketing company, to have committed unfair labor practices in failing to bargain in good faith with a union over planned layoffs. The split 3-2 decision came on the damages to be awarded. The three-member Democratic-appointed majority of the NLRB determined that the remedies owed by Thryv, Inc. included reinstatement with back pay, which the dissenters did not oppose. However, the 3-member majority went further and adopted a new "direct or foreseeable pecuniary harms" standard, then also ordered Thryv, Inc. to pay compensation for laid-off employees' loss of a "book of business," in addition to reinstatement of the employees, which is potentially duplicative. Additionally, the majority determined under this new "direct or foreseeable pecuniary harms" standard that employees were also entitled to lost reimbursements for the fixed and variable costs of using their private vehicles for work, with employees seemingly arguing they only had a car and insurance because it was required for work if they were to be reinstated (the majority did not appear to question the veracity of this claim). The majority further ordered Thryv, Inc. to pay for one employee's out-of-pocket medical costs incurred while on leave due to a high-risk pregnancy, even though the employee would have been required to pay the same out-of-pocket costs if she had remained employed. The dissenting two Republican-appointee board members objected to these latter awards on the grounds that it exceeds the NLRB's Congressional authority and potentially violates the employer's right to a jury trial to determine "foreseeability." Thryv, Inc. may appeal the decision.
This new, broader standard for damages is likely to be challenged if the NLRB's makeup changes after the next presidential election. For now, employers should expect the NLRB and regional offices to order more types of damages, and employers should be prepared to argue lack of causation and lack of foreseeability, including on an individual-by-individual basis.
Bullard Law's Labor Group will continue to monitor and advise on the impact of this and other NLRB rulings, and the impact on employers as these issues develop. In the meantime, please do not hesitate to contact Bullard Law for guidance and assistance regarding any similar issues or matters you may be addressing as an employer.
The content of this Alert is provided for general information purposes only. It should not be considered legal advice or financial advice or used as a substitute for consulting an attorney for legal advice.