NLRB Ends 2022 in Blistering Fashion
The National Labor Relations Board (NLRB) closed out a busy 2022 with four labor-friendly decisions that will reshape the employment landscape in 2023.
NLRB Adds Consequential Damages Remedy
In its most far-reaching opinion, Thryv, Inc., the NLRB held that consequential damages can now be sought as a component of the Board’s usual “make-whole” remedies, like reinstatement or back pay. This dramatic change from prior practice means that employers found to have violated federal labor law may now find themselves ordered to pay workers for a wide range of potential consequences of the violation, such as reimbursement of fees accrued due to late rent or interest payments on a personal loan taken to cover living expenses. Though the NLRB eschewed the term “consequential damages” in its own opinion—instead calling the remedy “compensation for direct or foreseeable pecuniary harms”—the legal effect is the same. Employers now need to be aware of an additional tool in the NLRB make-whole relief toolkit.
The Thryv, Inc. decision follows on the heels of Memorandum GC 21-06 and Memorandum GC 21-07, in which General Counsel Jennifer Abruzzo implored Board Regions to seek “the full panoply of remedies available to ensure that victims of unlawful conduct are made whole for losses suffered as a result of unfair labor practices.” In Memorandum GC 22-06, she provided an update on these efforts, stating that Regions had successfully “secured compensation for derivative economic harm” in forms as wide ranging as fees accrued from late rent, to the cost of baby formula due to the loss of a workplace breast pumping station or the cost of retrofitting an ex-employee’s car to make it usable in a new job.
The Thryv, Inc. decision also emphasized that the NLRB will consider the economic consequences of labor law violations in any case, “regardless of the egregiousness of the violation or the respondent’s past conduct.” Such a warning should put employers of all sizes on notice.
NLRB Eases “Micro-Unit” Union Organizing Test
In American Steel Construction, Inc., the NLRB reinstated the standard established in its 2011 Specialty Healthcare opinion, allowing labor unions to organize smaller groups of employees (sometimes termed “micro units”). The test the NLRB (re)adopted is used to determine whether additional employees (in practice, often employees who would not support the union and would cause the union to lose majority support) must be included in a petitioned-for unit for the unit to be appropriate as a bargaining unit. Under this framework, the NLRB must first consider three elements: (1) whether the employees in the proposed unit “share a community of interest”; (2) whether the petitioned-for unit is “readily identifiable as a group” as by “job classifications, departments, functions, work locations, skills, or similar factors”; and (3) whether the petitioned-for unit is “sufficiently distinct” from the excluded employees. Then, when a party argues that a petitioned-for unit satisfying these elements must include additional employees to be an appropriate unit, the burden is on that party to meet the high bar of showing that the excluded employees share an “overwhelming community of interest” with the petitioned-for unit, such that they must be included. As we saw before Specialty Healthcare was overruled by a Republican-majority Board in 2017, satisfying this burden is exceedingly difficult.
In addressing the scope of the American Steel decision, NLRB Chair Lauren McFerran explained that “[t]he Board’s task in assessing the appropriateness of bargaining units is to ensure that workers enjoy . . . full freedom of association.” Chairman McFerran went on to note that “[r]eturning to the Specialty Healthcare standard is consistent with this principle, ensuring that workers have the ability to organize in the unit of their choosing, so long as it is not arbitrary and irrational.”
American Steel will aid union organizing efforts, making it easier for a union to establish majority support within a smaller unit of employees.
NLRB Reaffirms Longstanding Restrictions on Union Activity Questioning
In Sunbelt Rentals, Inc., the NLRB reaffirmed a 1964 decision, Johnnie’s Poultry, a decision which the NLRB’s previous Republican majority had sought to overturn in 2021. The Johnnie’s Poultry standard, which applies to an employer interrogation of an employee done in the course of preparing an unfair labor practices (ULP) defense, requires employers to: (1) explain the purpose of any interrogation questioning, (2) assure workers that they are not subject to retaliation from participation in the questioning, and (3) obtain employee participation on a voluntary basis. Because of the “inherent danger of coercion” present in ULP interrogations, the NLRB saw the “bright-line” approach of the Johnnie’s Poultry standard as a necessary means of balancing the competing interests of the employee and employer.
Though Johnnie’s Poultry had been a relatively well-settled rule under NLRB precedent, it was not consistently applied by reviewing courts. After this most-recent reaffirmance, employers should remember to give adequate Johnnie’s Poultry assurances—ideally in writing—or risk facing another ULP.
NLRB Reinstates Relaxed Standard for Access to Property
In its Bexar County Performing Arts Center Foundation (Bexar County II) decision, the NLRB scrapped a 2019 rule (Bexar County I) that had made it easier for employers to bar off-duty employees of an onsite contractor. Now, under the revived New York New York standard, property owners may exclude off-duty employees of an onsite contractor “only where the owner is able to demonstrate that their activity significantly interferes with his use of the property or where exclusion is justified by another legitimate business reason.” The NLRB described the need to “maintain production and discipline” as examples of legitimate business reasons under the standard. The reinstated New York New York standard flips the focus of Bexar County I, now emphasizing the impact of the worker activity rather than the interests of the property owner.
This is another dramatic shift, as the Bexar County I standard had allowed employers to bar off-duty employees of an onsite contractor from accessing physical property for the purposes of engaging in NLRA Section 7 activities unless those workers “regularly and exclusively” worked on the property and the owner failed to show the workers had a “reasonable and nontresspassory alternative” to communicate their message.
The NLRB’s Bexar County II ruling greatly expands the ability of contract workers to engage in bargaining and organizing activities protected by NLRA Section 7 on a property where they work. This standard applies regardless of whether the workers’ employer owns the property. Employers and owners of property used by employers should review any agreements they may have with contractors regarding potential worksite disruptions.
Taken together, the NLRB’s decisions clearly signal a pro-labor Board eager to expand worker protections. The changes in law brought on by the NLRB’s Thryv, Inc., American Steel, and Bexar County II decisions are likely to be felt by employers almost immediately. Because the Sunbelt Rentals, Inc. decision merely reaffirms Johnnie’s Poultry, its effects are more muted. Nonetheless, employers should be cognizant of the pro-labor scope of each decision, as it signals what can be expected in 2023.