United States: The NLRB Ends 2022 With Significant Decisions

Two recent late-year decisions from the National Labor Relations Board ("NLRB") have the potential to significantly impact private sector employers across all industries.

1. The NLRB Expanded its Authority to Order Consequential Damages in all Cases in which "Make-Whole" Relief is Appropriate. Thryv, Inc., 372 N.L.R.B. No. 22 (Dec. 13, 2022).

In Thryv, Inc., the NLRB expanded its power to order damages for "all direct or foreseeable pecuniary harms" resulting from unfair labor practices in all cases in which "make whole" relief is appropriate. The Board made clear this new remedy is not "extraordinary relief," and will be issued in appropriate cases regardless of the egregiousness of the unfair labor practice violation.¹

Prior to this decision, make-whole remedies traditionally included pay for lost earnings and other benefits. Employers may now be required to also pay the costs of "foreseeable harms" – i.e., costs which the employer "knew or should have known would likely result from its violation" of the National Labor Relations Act. These costs may include, among other things, employees' out-of-pocket medical expenses, credit card debt, and missed mortgage and rent payments.

The dissenting Board members questioned whether the NLRB has the authority to adopt a "direct or foreseeable pecuniary harms" standard and expressed concern the standard would "permit recovery for any losses indirectly caused by an unfair labor practice, regardless of how long the chain of causation may stretch from unfair labor practice to loss, whenever the loss is found to be foreseeable." The dissent also argued this new standard opens the door to awards of speculative damages.

The majority noted that, although these new damages will be available in appropriate cases, the Board will not issue remedial orders for harms which are "unquantifiable, speculative, or nonspecific." It stated that "[a]ny claimed damages must be supported by evidence; harm will not be presumed compensable, but we will include in our orders standard language required the [employer] to compensate an employee for any covered harm that meets our standard of proof in compliance."

In its decision, the NLRB outlined procedures for determining compensation for direct or foreseeable pecuniary harm: The General Counsel must first present evidence establishing the amount of pecuniary harm alleged, and demonstrate the pecuniary harm was either "(a) directly caused by the unfair labor practice; or (b) foreseeable at the time of the unfair labor practice, and was incurred as a result of the unfair labor practice." In response, the employer can challenge the amount of harm claimed, and present evidence demonstrating the harm would have occurred even absent the unfair labor practice and/or that the harm was not foreseeable at the time the unfair labor practice occurred. The dissent argued this process will result in protracted litigation over causation and potentially humiliating inquiries into employees' personal financial circumstances.

It is possible that this decision will be tested on appeal, but in the meantime, employers are on notice that unfair labor practice claims may lead to significantly increased liability.

2. The NLRB Made it Easier for Unions to Organize Smaller Units and More Difficult for Employers to Challenge the Appropriateness of a Petitioned-for Unit. American Steel Construction, Inc., 372 N.L.R.B. No. 23 (December 14, 2022).

In American Steel Construction, Inc., the NLRB overruled Trump-era precedent² and reinstated the standard set during the Obama administration under Specialty Healthcare & Rehabilitation Center of Mobile, 357 N.L.R.B. 934 (2011) ("Specialty Healthcare"), making it easier for unions to strategically determine the group of employees they seek to represent in a bargaining unit, and more difficult for employers to challenge the appropriateness of petitioned-for units. This decision may result in an uptick in union petitions for "micro units" tailored to pro-union employees.

Under the Specialty Healthcare framework, the NLRB will approve a petitioned-for unit if it: (1) shares an internal community of interest; (2) is readily identifiable as a group based on job classifications, departments, functions, work locations, skills, or similar factors; and (3) is "sufficiently distinct" from excluded employees. If an employer contends that a petitioned-for unit is not "sufficiently distinct" (i.e., that the smallest appropriate unit contains additional employees), it must establish there is an "overwhelming community of interest" between the petitioned-for unit and any excluded employees not named by the union's election petition, such that there is no rational basis for the exclusion.

Employers with pending claims relating to challenges over proposed bargaining units should be aware that the NLRB's reinstatement of the Specialty Healthcare framework applies retroactively to all pending cases.

Footnotes

1. This new policy will also be applied in "all pending cases in whatever stage given the absence of any manifest injustice in doing so."

2. PCC Structurals, Inc., 365 N.L.R.B. No. 160 (2017).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.