As we’ve recently informed our readers, the National Labor Relations Board (“NLRB” or the “Board”) ended 2022 with a series of consequential decisions for employers. One such decision – issued on December 13, 2022, dramatically expands the scope of remedies available to workers who succeed on claims of labor law violations. In that case, Thryv, Inc. and the International Brotherhood of Electrical Workers, Local 1269, the NLRB (in a 3-2 split) ruled for the first time that consequential damages unquestionably are available under the National Labor Relations Act (“NLRA” or the “Act”) as part of the “make-whole” remedies that the Board is empowered to award.
Consequential damages have not previously been a common form of remedy in the labor law arena, and go far beyond the remedies like back pay and reinstatement that the Board has historically awarded when fashioning relief to address a suspected or established unfair labor practice. While revolutionary, the Board’s move was far from unexpected.
The Board’s recent decision follows a memorandum that Board General Counsel, Jennifer Abruzzo, issued on September 15, 2021, urging NLRB field offices to seek all available remedies to fully address conduct that violates the Act, including compensation for any consequential damages. In connection with the General Counsel’s memorandum, the Board noted that the policy shift is based on the belief that traditional monetary remedies like back pay and lost benefits frequently fail to make whole the victim of an unfair labor practice. Given President Biden’s outspoken stance in favor of expanding workers’ rights under a wide range of federal laws, labor law practitioners anticipated that federal agencies would seek new means of obtaining relief for employees.
The Board’s decision in Thryv, Inc. is only one recent—but significant—example of this initiative operating in full swing. As we’ve noted, in the span of one week, the Board also issued decisions that expand employees’ rights to protest on third-party property, that restrict employers’ ability to interview employees while an unfair labor practice charge is pending, and that promoted employees’ ability to organize smaller cohorts of employees within larger workplaces. Taken together, these employee-friendly rulings signal a stark shift in the Board’s ideology and priorities, as compared to the more employer-friendly decisions we saw the Board produce under the prior administration. Employers should expect this trend to continue so long as President Biden remains in command of the Board’s direction, given his alignment with Secretary of Labor, Marty Walsh, on scaling up employee and union rights under the NLRA.
Under longstanding precedent, the Act’s remedial provisions generally are aimed at restoring an employee to the position they would have obtained but for the employer’s unlawful conduct. It is from that foundational principle that the Board derived this “direct or foreseeable” consequential damages remedy. In the Board’s view, Thryv, Inc. only makes clear what has long been available in the arsenal of tools for prior Boards that have fashioned similar relief for violations. Pursuant to the Board’s clarified standard, for consequential damages to be awarded, the Board must present sufficient evidence to prove the amount of the financial harm the employee suffered, that it was a direct or foreseeable result of the employer’s unlawful action, and that the financial harm was attributable to the unfair labor practice that the employer committed.
When faced with a threatened or actual unfair labor practice charge, employers must now ensure that they evaluate the universe of potential direct or foreseeable financial harms that a particular employee could experience in connection with an alleged violation. The Board provides the following examples of potential consequential damages: health insurance coverage; medical, legal or moving expenses; detrimental effects to credit ratings; having to liquidate a bank account to cover living expenses; and training or coursework required to obtain or renew a certification or license. While instructive for employers, this list is certainly not exhaustive.
In sum, labor law violations have just gotten a lot more costly for employers. Going forward, employers should expect the Board to include additional categories as a means of gaining leverage to achieve a final settlement agreement that provides relief to an aggrieved employee. To that end, employers should evaluate the unique circumstances applicable to each employee in determining the scope of potential damages, with the understanding that the Board will take a liberal view of what may be encompassed.