NLRB modifies make-whole remedy to require full compensation for search-for-work and interim employment expenses
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Friday, August 26, 2016

NLRB modifies make-whole remedy to require full compensation for search-for-work and interim employment expenses

By Ronald Miller, J.D. After finding that an employer twice suspended and discharged an employee for engaging in protected, concerted activity, the NLRB, in a 3-1 decision, modified its current make-whole remedy to require respondents to fully compensate discriminatees for search-for-work expenses and expenses incurred in connection with interim employment. As a result, the Board will discontinue its traditional practice of treating discriminatees’ reasonable search-for-work and interim employment expenses as an offset that reduces the amount of interim earnings deducted from gross backpay. Moreover, the new policy will be retroactively applied in this case and in all pending cases, in the absence of any "manifest injustice" in doing so. Member Miscimarra filed a separate opinion concurring in part and dissenting in part (King Soopers, Inc., August 24, 2016). Manager directive. The employee worked as a barista at a Starbucks located in a grocery store. She was covered by the meat contract between the grocery store and a union. On May 9, 2014, the store manager called for employees, and specifically baristas, to assist with bagging in the front of the store. The employee walked to the front of the store and attempted to tell the manager that she needed to take her lunch break since she would be leaving at 2 p.m. The manager stated that the employee needed to do as directed and not worry about her lunch. The employee next inquired whether she should be performing those duties because she belonged to a different bargaining unit or union. The manager repeated her directive. The employee turned to bag, raised her hands in the air and stated that she was just asking about her lunch. She then walked toward the check stands to bag groceries. At that point, the manager called her back, saying they needed to talk. The manager then accused the employee of refusing to bag groceries. The employee denied refusing to bag groceries and said she had only inquired about her lunch break and whether the union’s contract permitted her to perform bagging work. She was placed on a five-day suspension. Ultimately, she was discharged for gross misconduct. Protected, concerted activity. Pursuant to the Board’s Interboro doctrine, an individual employee’s assertion of a right grounded in a collective bargaining agreement constitutes protected, concerted activity. As the Supreme Court explained in NLRB v. City Disposal Systems, Inc., "an honest and reasonable invocation of a collectively bargained right constitutes concerted activity, regardless of whether the employee turns out to have been correct in his belief that his right was violated." Here, the Board agreed with an administrative law judge that the employee engaged in protected, concerted activity when she questioned whether she should be bagging groceries because the work belonged to a different bargaining unit or union. In particular, the Board found that the employee’s interpretation of the CBA was honest and reasonable. In fact, the store manager admitted that her duties did not include bagging groceries. Thus, the Board determined that the employee’s question whether she should perform bagging work was sufficiently grounded in the contract to be covered by the Interboro doctrine. Remedial changes. The General Counsel proposed that the Board discontinue its traditional practice of treating discriminatees’ reasonable search-for-work and interim employment expenses as an offset that reduces the amount of interim earnings deducted from gross backpay. Having found the employee’s suspension and discharge unlawful, the Board turned to consider the remedial changes urged by the General Counsel. Here, the Board found that the requested remedial changes were clearly warranted in order to satisfy its statutory obligation to provide meaningful, make-whole relief for losses incurred by discriminatees as a result of a respondent’s unlawful conduct. Here, the Board concluded that the current treatment of search-for-work and interim employment expenses failed to fully compensate discriminatees for losses incurred as victims of unlawful conduct. Foremost, it observed that the individual most harmed by an employer’s unlawful discharge is the discriminatee, who is deprived of his or her job, causing a loss of income and employment benefits. Under the duty to mitigate, the discriminatee is then required to find and maintain interim employment, potentially causing the discriminatee to endure additional, significant financial hardship—hardship that is traceable to the employee’s activity protected by the NLRA. The practical result of the Board’s traditional approach has been less than make-whole relief for the most seriously aggrieved victims of unlawful conduct, contrary to the central remedial principle underlying the Act. Further, under the Board’s traditional approach, discriminatees, who have already lost their source of income, risk additional financial hardship by searching for interim work if their expenses will not be reimbursed. Additionally, awarding search-for-work and interim employment expenses separately from taxable net backpay, with interest, will avoid potential tax complications caused by the Board’s traditional approach. Therefore, the Board determined that it was vitally important that it ensure that the make-whole remedy fully compensated unlawfully discharged employees for the losses they incurred and "deter[s] further encroachments on the labor laws." Concurrence in part and dissent in part. Member Miscimarra dissented from the Board’s finding that the employer acted unlawfully when it suspended the employee on May 9, 2014. He argued that the employee’s conduct was not protected. On the other hand, he agreed with the majority that the employer violated Sec. 8(a)(1) when the store manager questioned the employee about a protected conversation she engaged in with a union steward. Similarly, the employer acted unlawfully when it suspended the employee on May 14, and later discharged her a week later. Nevertheless, Miscimarra dissented from the changes adopted by the majority regarding the remedial treatment of search-for-work and interim employment expenses. He argued that the Board’s traditional approach to compensating claimants for search-for-work and interim employment expenses makes claimants whole in most cases. Further, he urged that the new standard did not adequately safeguard against the risk that awarding search for-work and interim employment expenses, divorced from interim earnings, and would tend to produce more protracted Board litigation over such expenses. Finally, he argued that the Board’s traditional approach was consistent with other statutes that deal with such expenses as a component of backpay.

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