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  • Rybicki & Associates P.C.

NLRB and Ninth Circuit Expand Potential Unfair Labor Practice Liability

The relationship between employers and unions has never been easy.

Over the past century, federal labor law has replaced actual battles (see a good discussion of this issue here) with tools allowing "economic warfare" when disputes cannot be resolved. These tools traditionally included acts by one party that could pressure the other such as strikes (withholding work by employees), lockouts (withholding work by employers), and picketing (advertising that could hurt an employer's reputation and generate support for workers).

The National Labor Relations Act also provides remedies for violations of labor law ("unfair labor practices") such as refusal to bargain in good faith, refusal to recognize a lawfully certified representative, or worker intimidation. These remedies usually attempt to eliminate the effect of a party's unfair labor practice, even sometimes requiring back pay.

Both sides traditionally funded their own legal costs even when only one party violated the law. This is consistent with both the "American Rule" (where parties typically bear their own legal costs) and the fact that unfair labor practice proceedings technically are prosecuted by the National Labor Relations Board's General Counsel - who does not charge either side for its services.

This traditional relationship is changing. In September 2021, the NLRB General Counsel issued a memorandum titled "Seeking Full Remedies" recommending "a new make-whole remedy to those traditionally ordered" including all "consequential damages" suffered as a foreseeable result of an unfair practice. This might include hard costs by an employee who suffered discrimination or - on a much larger level - lost potential benefits due to an employer's failure to bargain immediately. It may also include the remarkable step of awarding attorneys' fees for costs caused by an alleged unfair labor practice. (The General Counsel memorandum can be viewed here.)

Our Ninth Circuit Court of Appeal recently upheld this broad power even though other courts, particularly the District of Columbia Circuit (which decides far more NLRB issues than any other), had found such awards to be 'punitive' and beyond the NLRB's agency power. Crafting a distinction between "litigation" and "bargaining" costs, the Ninth Circuit panel approved fees incurred by the union during collective bargaining (even though attorneys are not required in bargaining or any other NLRB proceeding). (The Ninth Circuit opinion can be viewed here.)

This poses a radically increased potential cost should an employer disagree with the local NLRB Region's decision in a local election - or in any other situation.

It remains to be seen whether this theory will be adopted by other federal Circuits or survive U.S. Supreme Court review. In any event, employers are well advised to consider the potentially much greater costs likely to be imposed by the NLRB over the coming months, factoring them into their overall risk assessment during any union interactions.


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