Appeals Court: NLRB Got This One Wrong

A new ruling from a federal appeals court is a victory for an employer and a sharp blow to the National Labor Relations Board (NLRB).

The Fifth Circuit appeals court partially vacated a prior NLRB order, including portions of the order that broadly defined the scope of relief in labor law disputes.

In a 2022 decision, the board said victims of labor law violations are entitled to be compensated for all “direct or foreseeable pecuniary harm” that is the result of illegal labor practices (emphasis added).

But on review, the Fifth Circuit threw out that part of the board’s ruling.

The case involved Thryv Inc., which is a marketing agency that sells Yellow Page advertising.

A union represents a unit of Thryv employees who include the company’s outside sales force. That sales force is made up of three kinds of sales employees: senior business advisors, business advisors and new business advisors.

Labor law violation?

Sometime around July of 2019, Thryv began implementing a proposal to lay off all new business advisors in its Northern California region. In late August, it told the union it was laying off the six new business advisors in that region. The company agreed to meet with the union to discuss the move, but it then implemented the six layoffs before all scheduled meetings with the union took place.

The union later asked that Thryv move the six laid-off employees into positions as business advisors, but Thryv did not do so.

An Administrative Law Judge (ALJ) at the NLRB later found that Thryv violated the National Labor Relations Act’s labor law rules when it did not respond to several union requests for information about the layoffs.

The ALJ also determined that Thryv did not violate its statutory duty to bargain when it unilaterally laid off the six employees.

On further review, the board agreed with the ALJ that Thryv violated the NLRA by not responding to the union’s request for information. Disagreeing with the ALJ, that Thryv violated the NLRA by unilaterally laying off the six employees without first properly bargaining with the union.

NLRB discusses remedy

Then, the board moved to a generalized discussion of what the appropriate remedy should be in labor law cases involving NLRA violations.

“We find … that it is necessary for the Board to revisit and clarify our existing practice of ordering relief that ensures affected employees are made whole for the consequences of [an employer’s] unlawful conduct,” the decision reads.

Whenever make-whole relief is proper, the decision explained, that relief is to include relief for all direct and foreseeable pecuniary harms that an employee suffers due to the employer’s unfair labor practice.

Such relief must be specifically calculated, it added, and employers must have the chance to show that claimed damages either were not foreseeable or would have been incurred regardless of the unfair labor practice.

These remedies include traditional ones like reinstatement and back pay, the board said. But there are many other forms of relief that may be proper in particular labor law cases, it added.

Drawing in part from past NLRB decisions, the board said those additional forms of relief may include:

• increases in insurance premiums, co-pays, coinsurance, deductibles, and other out-of-pocket expenses
• extra medical expenses
• expenses incurred in connection with a search for other work
• credit card debt
• interest and late fees on credit card debt
• penalties suffered by employees who are forced to make early withdrawals from retirement accounts; and
• increased transportation or childcare costs.

“Employees are not made whole until they are fully compensated for financial harms that they suffered as a result of unlawful conduct,” NLRB Chairman Lauren McFerran said in a release. “The Board clearly has the authority to comprehensively address the effects of unfair labor practices.”

The fact that implementing such a remedy might be administratively complex does not mean the remedy should be avoided, the board added. The goals of the NLRA should not be sacrificed for the sake of administrative convenience, it advised.

Fifth Circuit: NLRB got it wrong

The Fifth Circuit decided that Thryv did not violate federal labor law when it laid off the six employees.

It said that after Thryv imposed its last, best final offer – which it did before the layoffs — it was no longer obligated to bargain about them.

The appeals court thus negated the board’s ruling with respect to remedies.

Thryv, Inc. v. NLRB, No. 2360132, 2024 U.S. App. LEXIS 12645 (5th Cir. 5/24/24).