The National Labor Relations Board ruled that it could hold employers financially accountable to workers for “direct or foreseeable” consequences of an unfair labor practice. The decision unprecedently expands employer liability under the National Labor Relations Act and is the first of several major decisions expected to be handed by the Board in the coming weeks.
Employee remedies under the National Labor Relations Act are traditionally limited to back pay and job reinstatement. The Board’s decision to expand available remedies to include consequential damages significantly expands the scope of costs an employer could be required to pay for unfair labor practices.
New damages standard: Moving forward, in any case involving employee “make whole remedies” (i.e., where an employer would be required to provide back pay or job reinstatement to an employee, at minimum), the Board will also “order that the [employer] compensate affected employees for all direct or foreseeable pecuniary harms suffered as a result of the [employer’s] unfair labor practice.” In short, the Board will potentially hold employers responsible for any direct or foreseeable economic consequences of labor law violations suffered by the employee.
Where do you draw the line? The Board’s new standard means that employers could be on the hook for an employee’s medical expenses paid out of pocket because they lost health insurance as a result of an unlawful termination, for example, or for missed rent payments, interest payments, and more. Under the Board’s “direct and foreseeable” standard, however, it is difficult to know exactly where the line may be drawn on what an employer may be required to pay.
HR Policy filed a brief along with other business groups in the case, Thryv, Inc arguing that the Board does not have the authority to award consequential damages, and that doing so would only lead to more protracted litigation. In its decision in Thryv, the Board rejected the term “consequential damages” and claimed that its expansion of remedies was simply part of its statutorily authorized make-whole relief.
Outlook: Employers can expect General Counsel Abruzzo to aggressively pursue expansive consequential damages in applicable unfair labor practice cases. The Board’s decision in Thryv is the first of its five cases in which it requested amicus briefs on major labor law issues. Major decisions on workplace rules, bargaining unit sizes, independent contractor status, and arbitration agreements are expected to be issued in the coming weeks.
Learn about these developments and more at our upcoming FWPC webinar: Examining NLRB Decisions and the Implications for Employers on January 11, 2023. More information and registration details can be found here.
