Employers Risk Expanded Damage Awards in NLRB Unfair Labor Practice Cases After NLRB Changes Method of Calculating Backpay

In a 3-1 decision, the National Labor Relations Board (“NLRB”) adopted a “new policy of awarding search-for-work and interim expenses” to terminated employees.[1] The new policy announced in King Soopers, Inc. will expose employers to increased damages in unfair labor practice cases involving terminated employees.

NLRB Rejects Its “Traditional” Approach

In the employment law context, out-of-pocket expenses reasonably incurred by a wrongfully-terminated employee relating to her job search efforts are considered compensatory damages and are separate and distinct from the “make-whole” backpay damages.[2] Compensatory damages are not recoverable in cases before the NLRB, which only has authority to provide remedial, or “make-whole,” relief.[3]

In cases preceding King Soopers, the NLRB did not consider job-search expenses to be a separate component of a “make-whole” backpay remedy.[4] Instead, the NLRB would treat job-search expenses as offsets to an employee’s interim earnings (which in turn affected the employee’s back pay award).

In King Soopers, the NLRB held that its “traditional” approach did not fully compensate victims of discrimination from their losses, and that job-search expenses should be considered a separate element of a backpay award.[5] The NLRB rejected the arguments of Member Miscimarra’s concurrence and dissent that the new policy: (1) will create a substantial risk of protracted litigation; (2) would discourage victims of discrimination from seeking legitimate and realistic employment opportunities; and (3) will open the door to abuse and awards of speculative expenses. The NLRB further stated that its policy would apply retroactively.

Employer Takeaways

The NLRB’s King Soopers decision is the latest in a string pro-union rulings. The decision affects unionized and non-unionized employers alike by expanding the amount of damages that may be awarded to terminated employees in unfair labor practice cases.

In order to minimize the risk of an unfair labor practice case, employers should take steps to ensure that disciplinary and discharge decisions are based on legitimate business reasons only, and not because employees have engaged in protected, concerted activities which are protected by Title 7 of the National Labor Relations Act.

[1] King Soopers, Inc., 365 NLRB No. 93 (Aug. 24, 2016); https://www.nlrb.gov/news-outreach/news-story/board-decides-king-soopers-revises-treatment-search-work-expenses.

[2] See https://www.eeoc.gov/employees/remedies.cfm; Citro v. TRW, Inc., C82-2911, 1984 WL 3652, at *2 (N.D. Ohio Oct. 12, 1984) (noting that job search expenses are compensatory damages “and are inconsistent with the ‘make-whole’ provisions of the Americans With Disabilities Act”).

[3] See Republic Steel Corp. v. NLRB, 311 U.S. 7, 11–12 (1940) (citing cases).

[4] King Soopers, 365 NLRB No. 93, at slip op. 5.

[5] Id.