Employment Law Daily 2-1 NLRB finds employer’s permanent replacement of economic strikers was for unlawful purpose
Friday, June 3, 2016

2-1 NLRB finds employer’s permanent replacement of economic strikers was for unlawful purpose

By Ronald Miller, J.D. An employer acted unlawfully by permanently replacing striking employees and later failing to reinstate or belatedly reinstating them, ruled a divided three-member panel of the NLRB. Because the employer replaced the strikers to punish them and the union--and to avoid future strikes, the Board found that both reasons were independently unlawful within the meaning of Hot Shoppes, Inc. Member Miscimarra dissented in part (American Baptist Homes of the West dba Piedmont Gardens, May 31, 2016). Strike call. The union served as bargaining representative of a unit of nonprofessional employees at the employer’s continuing care facility. In February 2010, the parties commenced negotiations for a successor agreement. As of May, they remained at odds over several significant issues, including health care, pensions, and the employer’s disciplinary policies. On May 25, the union conducted picketing outside the employer’s facility. In mid-June, the employees authorized the bargaining committee to call a strike. Thereafter, the union sent two letters to the employer. The first letter notified the employer that the employees would commence a strike on August 2 and continue “unless and until a mutually agreeable resolution has been reached.” The second letter advised the employer that all of the striking employees “unconditionally offer to return to work at or after 5:00 a.m. on Saturday, August 7, 2010.” On August 2, approximately 80 of the 100 unit employees went on strike. Permanent replacements. To prepare for the anticipated strike, the employer engaged a staffing agency. It extended temporary employment offers to approximately 60 to 70 employees provided by the agency and informed the agency the jobs would be for three days. On August 3, the employer began permanently replacing the striking employees. It made approximately 44 offers of permanent employment. Almost three days after it began permanently replacing employees and less than 24 hours before employees were set to return to work, the employer began contacting the employees who had been permanently replaced notifying them of their status and informing them that they would be placed on a preferential rehire list. When the union asked why the employees were being permanently replaced rather than locked out, the employer’s attorney said the employer “wanted to teach the strikers and the Union a lesson. They wanted to avoid any future strikes, and this was the lesson that they were going to be taught.” The NLRB General Counsel alleged that the employer violated Section 8(a)(3) by permanently replacing and thereafter failing to reinstate, or belatedly reinstating, striking employees in order to restrain them from exercising rights protected by the Act. The General Counsel argued that the employer’s decision to permanently replace the striking employees was motivated by an “independent unlawful purpose” within the meaning of Hot Shoppes. An administrative law judge rejected this argument, finding that an “independent unlawful purpose” is established only when an employer’s hiring of permanent replacements is “unrelated to or extraneous to the strike itself.” Here, the ALJ concluded that the employer’s motive—to teach the strikers “a lesson” and ensure that employees would not strike again—was related to the underlying strike and, therefore, did not constitute an “independent unlawful purpose” under Hot Shoppes. Application of Hot Shoppes. The Board disagreed, and found that the employer’s permanent replacement of the strikers was unlawful. This case turned on the interpretation and application of the principles articulated in Hot Shoppes, observed the Board. In analyzing the meaning of “independent unlawful purpose,” the Board first considered the context in which the phrase was used in Hot Shoppes. In Hot Shoppes, the Board found that the alleged unlawful motivation was not established, and so it did not address whether the motivation at issue would have qualified as an “independent unlawful purpose.” The Board used the phrase “independent unlawful purpose” in the context of discussing the Supreme Court’s decision in NLRB v. MacKay Radio & Telegraph Co. Specifically, the Board stated that MacKay established that employers may permanently replace economic strikers at will. The Board’s reference to replacing economic strikers “at will” is consistent with the employment-at-will doctrine. This analogy served as a basis for the Board’s holdings that an employer may hire permanent replacements for any reason at all, unless there is evidence that the employer was motivated by a purpose otherwise proscribed by the Act. Thus, the Board concluded that the phrase “independent unlawful purpose” includes an employer’s intent to discriminate or to encourage or discourage union membership. Unlike the ALJ, the Board ruled that the phrase “independent unlawful purpose” does not require that the unlawful purpose be unrelated or extrinsic to the parties’ bargaining relationship. Here, the employer’s counsel stated that the employer wanted “to teach the strikers and the union a lesson.” This statement evinced an intent to punish the striking employees for their protected conduct, and plainly revealed a retaliatory motive prohibited by the Act. Partial dissent. Member Miscimarra disagreed with the majority’s interpretation of “independent unlawful purpose.” He argued that the majority read “independent” out of the phrase entirely and, in so doing, effectively overruled the central holding of Hot Shoppes, which renders irrelevant an employer’s motive in hiring permanent replacements. More fundamentally, the dissent argued that the majority’s decision effectively invalidated an economic weapon that the Supreme Court declared lawful more than 75 years ago. According to Miscimarra, the Board gave inadequate consideration to the fact that Congress made the decision to protect this weaponry, and has changed the manner in which Congress chose to balance the interests of employees, unions, and employers.

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