Tread Softly

Changes to federal labor laws will keep employers on their toes.

The re-introduction of the Employee Free Choice Act (EFCA) into Congress on March 10, 2009, has generated significant publicity on issues that labor relations professionals have been watching carefully for years. The bill's provisions to eliminate secret ballot elections and to allow an arbitrator to determine the terms of the first contract when the bargaining parties cannot agree have garnered the most media attention and political opposition. However, the EFCA contains another provision that has largely escaped notice and that could have an immediate and substantial effect on employers.

This overlooked provision would increase penalties against employers for certain violations of the National Labor Relations Act. In fact, tougher penalties against employers are perhaps the most politically viable component to labor law change, comprising a prominent part of the pending National Labor Relations Modernization Act as well.

The EFCA would increase legal penalties against employers in at least two major ways. First, it significantly increases the penalty for discriminating against employees if the violation is committed while workers are seeking union representation or during negotiations for a first labor agreement. Under the current law, the main penalty for discrimination is reinstatement and payment of backpay with interest. Under the EFCA, however, the National Labor Relations Board (NLRB) could order the employer to pay those damages plus twice the backpay amount as liquidated damages.

Second, the EFCA provides for civil penalties against employers, a penalty not currently available under the current National Labor Relations Act (NLRA). More specifically, if the NLRB finds that an employer has “willfully or repeatedly” committed certain unfair labor practices while employees were seeking union representation or during negotiations for a first labor agreement, the NLRB can fine the employer up to $20,000 for each violation.

Discrimination against workers could lead to a civil penalty, but so could violations of a “catch-all” provision of the current law. Under the NLRA, employers cannot “interfere with, restrain or coerce employees” in exercising their federal labor law rights. That provision is very broad and covers many possible employer acts, some of which are far from obvious. As an example, the NLRA prohibits employer statements to employees that disparage a union as well as statements in which an employer promises better benefits to employees if they refrain from union organizing.

To remedy these kinds of violations, the NLRB currently orders an offending employer to cease and desist and requires it to post a notice explaining employees' labor law rights and describing the steps that the employer will take to remedy the unfair labor practices. The addition of civil penalties up to $20,000 per violation represents a significant potential change to the law.

While the penalties are supposed to apply only to “willful or repeated” violations of the law, they still have the potential to take employers by surprise. As interpreted under a number of other employment laws, a “willful” violation is a one in which an employer either knew it was violating the law or acted in reckless disregard of its legal obligations. Thus, the failure of an employer to make efforts to learn about labor law and to train its supervisors on basic dos and don'ts could be regarded as reckless conduct leading to the imposition of substantial penalties.

Examining the issue through the lens of a recent NLRB decision is perhaps the best way to illustrate both the breadth of the current law's catch-all provision and the significant change the civil penalties could create if adopted as proposed. In Ashley Furniture Industries, Inc., a case decided in December 2008, the employer committed classic, but understandable, violations of the NLRA.

The company received no-match letters from the Social Security Administration (SSA) stating that the Social Security numbers of approximately 40 to 50 of its employees did not match the workers' names. The company held meetings with these employees and informed them that they were required to resolve the discrepancy with the SSA. In separate meetings, the company instructed another employee to obtain a new work authorization and disciplined that worker for an assembly error. In each of these communications, the company instructed the employees not to discuss these issues with anyone.

Therein lies the problem. The NLRA gives employees the right to engage in “concerted activities” for mutual aid and protection. This means that the workers must be able to communicate with each other about common problems they are having at work. In other words, if an employee cannot talk to co-workers about a problem, the employee cannot possibly engage with other workers for “mutual aid or protection.”

Accordingly, by instructing the employees not to discuss these issues with anyone, the company violated the law on three separate occasions. Under current law, the company was ordered to cease and desist and to post a notice describing the steps it will take to remedy the unfair labor practices. But the company will not pay a fine.

Now consider the remedy should the EFCA become law in its currently-proposed form. Assume the NLRB found the three violations to be repeated or willful. Further assume that these violations occurred while employees were seeking union representation or during negotiations for a first labor agreement. The resulting remedy also could include $60,000 in civil penalties ($20,000 per violation for each of the three violations). That's quite a change from current law.

In summary, the new law could create considerable liability for employers that violate it. Prudent employers should ensure that they are aware of their obligations and train their supervisors to avoid violating the law.

Daryll J. Neuser
Labor and Employment Counsel
Veolia ES Solid Waste

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