Under a new National Labor Relations Board (NLRB) rule, employers must compensate workers to make up for the direct consequences of unfair labor practices. This ruling could be expensive for employers, adding consequential damages to the board’s usual make-whole remedies. Here’s what that means as a practical matter.
The NLRB has a make-whole protocol for employees who are unfairly discharged, laid off, or otherwise discriminated against to account for their actual economic losses fully. Historically, the remedies imposed included reinstatement of employment, back pay, payment of dues and fines, stopping unlawful rules or practices, or a notice posted at the workplace. The board’s recent decision expands that list significantly for employers.
“That means the board is going to start going after employers for things like credit card interest, late fees, and early withdrawal penalties,” said Grant Pecor, an attorney with Barnes & Thornburg in Grand Rapids, Mich. “If an individual can show they lost their car or home because they could no longer afford to make payments, the employer involved may be on the hook for the cost of a replacement.
It’s a big change, according to Dan Altchek, an attorney with Saul Ewing in Baltimore. “The NLRB has redefined its traditional remedy for employer violations of the National Labor Relations Act [NLRA],” he said. “Employers need to understand that the cost of violating the NLRA could be much higher than it was before this ruling. That reality should inform a lot of decision-making when it comes to taking disciplinary action, including discharging employees. Employers will need to give more serious consideration to the risk of committing a violation because the magnitude of that risk is now much greater.”
The stakes are higher “even if an employer’s violation is inadvertent,” said Liz Mincer, an attorney with Duane Morris in Philadelphia. Certainly, noncompliance is “going to be more costly than ever before,” said Marissa Mastroianni, an attorney with Cole Schotz in Hackensack, N.J.
For consequential damages to apply, the NLRB’s general counsel must present evidence proving the amount of the financial harm, that it was direct or foreseeable, and that it was due to an unfair labor practice. The employer or union could rebut that evidence.
