Employment Law Daily NLRB failed to order make-whole remedy for defunct employer’s unilateral rescission of dues checkoff
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Thursday, March 1, 2018

NLRB failed to order make-whole remedy for defunct employer’s unilateral rescission of dues checkoff

By Brandi O. Brown, J.D.

In a case on appeal to the Ninth Circuit for the fourth time, and spanning nearly two decades, the appeals court found the NLRB clearly abused its discretion by declining to award the standard remedy of make-whole relief in a case involving an employer that unilaterally ceased union dues-checkoff after expiration of the collective bargaining agreement. The Board improperly concluded that the employer had “correctly” believed that they were following settled law at the time they ceased the dues-checkoff. The Board’s prospective relief, moreover, was the same as no relief at all under the circumstances. The appeals court vacated the order and remanded, urging the Board to “move swiftly on remand” to award the standard remedy for the section 8(a)(5) violation (Local Joint Executive Board of Las Vegas v. NLRB, February 27, 2018, Paez, R.).

Unilateral termination of dues-checkoff. A CBA previously in place between several now-defunct Las Vegas hotels and the Culinary Workers and Bartenders unions required the hotels to deduct union dues from the paychecks of union member employees who had authorized them to do so. The CBAs did not include union security clauses conditioning employment upon union membership because such clauses are prohibited in Nevada. One year after the last CBA expired, the employer unilaterally terminated the dues-checkoff. The union filed unfair labor practice charges.

In July 2000, the Board issued an order dismissing the complaints, finding the employer did not violate Section 8(a)(5). The Board reasoned that the result was compelled by Bethlehem Steel Co.’s then-existing exception to the unilateral change doctrine, as well as Tampa Sheet Metal Co., which applied that doctrine in a right-to-work state, although without explanation and in a footnote. The union petitioned for review, and the Ninth Circuit called into question the Board’s precedent resting on Bethlehem Steel and remanded the case for the Board to “either articulate a reasoned explanation for its rule or adopt a different rule with a reasoned explanation to support it.”

Remands. The Board issued a supplemental decision affirming its finding that the employer did not violate Section 8(a)(5), but on different grounds: that the union had waived its right to dues-checkoff beyond expiration of the contract. Once again, the appeals court vacated the order, finding there was “simply no clear and unmistakable waiver” of the right to dues-checkoff. On the second remand, the Board again dismissed, this time concluding without explanation that Bethlehem Steel and Tampa Sheet Metal compelled it to do so. Once again, the appeals court vacated the ruling, explaining that where “dues-checkoff provisions do not implement union security… but instead exist as a free-standing, independent convenience to willingly participating employees, the reasoning of Bethlehem Steel loses its force.”

Cease and desist order. On remand, the Board accepted as the law of the case the Ninth Circuit’s finding that the employer violated Section 8(a)(5) by ceasing dues checkoff without bargaining to impasse. The Board ordered the employer to cease and desist the activity found unlawful by the court, to bargain with the union, to rescind the unilateral changes, and to post a remedial notice. However, with respect to whether make-whole relief was warranted, the Board determined that it was not appropriate because of the employers’ reliance on Bethlehem Steel. The union filed another petition for review.

Reliance was not reasonable. First, the appeals court held that the Board failed to provide a valid explanation for departing from its standard remedy in dues-checkoff cases. While the Board has discretion to deviate from the standard remedy, it must give a rational reason for doing so. The Board’s primary explanation—that the employer had reasonably relied upon Bethlehem Steel—was improper, the appeals court explained, because it was not reasonable for the employer to do so when the precedent had never been applied in the absence of a union security clause.

Contrary to the Board’s contention, the court’s previous decision in the matter was not contrary to Bethlehem Steel, but rather, had demonstrated that the rule in Bethlehem Steel was not applicable. The Board’s reasoning in Bethlehem Steel had been linked to the presence of a union security clause, and has been applied only on one occasion since to an agreement that did not include such a clause. That application (in Tampa Sheet Metal) did not provide a rationale for doing so and was an “isolated and unexplained extension of the rule” that could not reasonably be relied upon.

Make-whole relief is warranted. The Board had explained that an award of make-whole relief would require an excessive amount of compound interest be paid on all amounts due because of the protracted nature of the litigation. The appeals court was sympathetic but unmoved. The Board also argued that make-whole relief was not necessary because deterrence was not needed in this instance, and the court demurred with that assessment. Although the deterrent effect is a “proper remedial consideration,” the court explained, “the main purpose of make-whole relief is to ‘recreate the conditions and relationships that would have been had there been no unfair labor practice.’”

Prospective relief is no relief. The Board also abused its discretion by ordering prospective-only relief against entities that are now defunct. The union’s arguments in this vein were not premature, and the relief did not effectuate the policies at issue. In addition to having no interest in delaying “any further” relief for an unfair labor practice that happened over two decades ago, the appeals court explained that it could “review a legal challenge to the Board’s remedial order where, as here, predicate factual questions are capable of clear resolution on the record.” Where an employer is functioning, prospective-only relief provides relief for the union and its members. However, when the employer or union no longer exists, such relief “amounts to no relief at all.” That understanding applied in this case; the employers ceased operations in the 1990s and, while the parent company of those entities still exists, it no longer owns unionized operations or hotels in Las Vegas.

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