Labor & Employment Law Daily NLRB upholds ‘generous settlement offer’ to discharged union supporter despite ‘colorable basis’ for finding it unlawful
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Friday, January 10, 2020

NLRB upholds ‘generous settlement offer’ to discharged union supporter despite ‘colorable basis’ for finding it unlawful

By Kathleen Kapusta, J.D.

Considering the evidence against its longstanding policy to encourage the compromise and settlement of unfair labor practice charges, the Board found that “public policy favoring settlements warrants letting the settlement stand”–even though the employee had to waive his right to reinstatement.

In what it called “an unusual case warranting careful scrutiny” of an employer’s actions, the NLRB found that while there appeared to be a least a colorable basis for finding the employer’s settlement offer to an unlawfully discharged union supporter—$214,270, which was more than four times the amount of remedial back pay he had accrued—there was also an equally colorable argument that it was a bona fide resolution of multiple claims he had asserted against the employer. Accordingly, the Board, agreeing with an administrative law judge’s conclusion, found the employer did not violate the NLRA when it proffered and entered into the agreement with the employee, which required that he waive his right to remedial reinstatement in exchange for the cash payment (Shamrock Foods Co., January 7, 2020).

Settlement negotiations. After his discharge in April 2015 during an active union campaign, the employee continued picketing and distributing union flyers on behalf of the union. In February 2016, a federal district court issued a Section 10(j) order reinstating him pending the outcome of the Board’s resolution of his discharge. Although the employer initially offered to reinstate him, eight days after the court’s order, it offered him $178,000 if he waived his right to reinstatement. In response, the employee asked for $350,000, which would include settlement of a disability charge he had filed with the EEOC over his discharge along with three years of medical coverage.

Don’t want him back. Two days after the employer’s offer, an ALJ issued a decision finding that the employee had been unlawfully discharged. That same day, the employer increased its offer to $214,270; the official who conveyed the offer to the employee had been told by upper management that the company “did not want [the employee] to return to work.” The employee accepted the offer.

Unlawful bribe? At issue before the Board was whether the settlement offer was an unlawful bribe to prevent the employee from engaging in future organizing activity inside the employer’s facility. Although the ALJ found the settlement was lawful, the Board noted that the employee had been unlawfully discharged, actively supported the union after his discharge, and the employer wanted to prevent him from returning to work. Further, the employer never claimed he performed badly at work or that his reinstatement would cause friction with coworkers or management, which, observed the Board, are the typical defenses against remedial reinstatement. Moreover, it told the official who presented the offer to the employee that it did not want him to return to work.

In addition, the employer knew the employee’s reinstatement was important to his former coworkers and could reasonably have viewed him as a leader of the union campaign such that his return to the workforce could have dramatically impacted that campaign.

Generous offer. As to the employer’s “generous settlement offer,” although it knew its potential financial liability to the employee would be limited essentially to his lost (and unmitigated) pay plus his other related losses, it offered him more than four times the amount he would have received at that time pursuant to a Board order. That, said the Board, together with the other evidence “at least suggests that the [employer’s] motive was to prevent [the employee] from engaging in further union activity” in the workplace rather than to ensure cost savings or employee productivity.

Independent Stave. But, said the Board, it also had to consider the evidence against its longstanding policy, established in Independent Stave and its progeny, to encourage the compromise and settlement of unfair labor practice charges. “And,” wrote the Board, “there is nothing inherently unlawful about settlement in which an employee waives reinstatement in exchange for an enhanced remedial payment from the employer; indeed, the Board has approved many such settlements.”

No waiver of Section 7 rights. Pointing out that it has declined to give effect to settlement agreements that contain a prospective waiver of Section 7 rights, the Board found the offer here was not conditioned on such a waiver but rather required the employee only to agree not to resume employment. Further, the employee independently negotiated with the employer, was not coerced into entering into the agreement, and had the option of refusing any settlement offer, which would have then required the employer to reinstate him or be found in contempt of the outstanding 10(j) decree.

And while the payment significantly exceeded the amount of remedial backpay the employee had accrued, the settlement also resolved a separate claim he had filed with the EEOC, and part of the payment he received represented the value of that claim, the Board explained, finding that “the public policy favoring settlements warrants letting the settlement stand.”

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