Home > Legal Updates > NLRB Dramatically Increases Liability for Unfair Labor Practices with Far-Reaching “Consequential Damages”

NLRB Dramatically Increases Liability for Unfair Labor Practices with Far-Reaching “Consequential Damages”

On December 13, 2022, the National Labor Relations Board (“Board” or “NLRB”) issued a decision that greatly broadens the remedies available for violations of the National Labor Relations Act (“Act”). Prior to this decision, the Board’s “make whole” remedies for more than 80 years have generally included only backpay, reasonable search-for-work expenses, and interim employment expenses.

In a 3-2 decision, the Board found the employer Thryv Inc. violated the Act by laying off workers without first bargaining with their union and by withholding information about the layoff. [1] The NLRB ordered the employer to provide compensation and reimbursement for all traditional remedies and all “direct or foreseeable pecuniary harms” resulting from the violations. The damages at issue in this case include the restoration of the laid off employees’ books of business (their prior customer assignments), compensation for reimbursements for the costs of maintaining a car for use on company business, and out-of-pocket medical expenses incurred by a former employee who had been laid off while on disability leave for a high-risk pregnancy.

Under the new standard, to successfully obtain compensation and reimbursement for direct or foreseeable pecuniary harms, the Board’s General Counsel will be required to present evidence during compliance proceedings proving the amount of alleged financial harm, that the harm was direct or foreseeable, and that it was due to the unfair labor practice. The employer will have an opportunity to rebut the General Counsel’s evidence.

The Board declined to recognize these broader damages as “extraordinary relief” to be provided only in the most egregious cases and explained that this new remedy will be available in any case where the traditional make whole remedy would be considered. The new damages remedy may lead to Board orders requiring employers to provide compensation to charging parties for “out-of-pocket medical expenses, credit card debt, or other costs simply in order to make ends meet” if the costs were direct or foreseeable consequences of the respondent’s alleged unfair labor practice. The ruling expressly states that the Board intends to apply their new “policy” on damages to all pending cases before them.

The Board indicated in its decision that these damages are unlikely to be the end of the expansion of the make whole remedies, and that the new remedies do not reflect the limit of the Board’s statutory remedial authority.

Members John Ring and Marvin Kaplan both dissented from the majority’s ruling, arguing that the new standard “opens the door to awards of speculative damages that go beyond the Board’s remedial authority” and could “invite protracted litigation over causation at compliance.” They also opined that these sweeping remedies could face constitutional challenges.

Liability for “Every Kind of Direct and Foreseeable Cost”

Prior to the issuance of this decision, the Board invited public briefs on the potential expansion of consequential damages, though the Board specifically refused to use the term “consequential damages” for its new remedies in its Tuesday ruling (recognizing using that common law term was likely to add fuel to the inevitable judicial challenges to the new standard). Instead, the Board couched its new remedy as “all direct or foreseeable pecuniary harms,” a distinction that may be of negligible difference.

General Counsel Jennifer Abruzzo (“GC”) submitted a brief on this issue which urged the Board to include in its orders “reimbursement of every kind of direct and foreseeable cost” associated with job loss including, but not limited to:

  • restoring prior health insurance policies or purchasing a new policy with comparable coverage;
  • out-of-pocket health expenditures that would have been covered;
  • compensation for penalties assessed for being uninsured;
  • compensation for penalties associated with prematurely withdrawing money from a retirement account;
  • compensation for damages to an employee’s credit score;
  • compensation for financial losses from having to liquidate a personal savings or investment account;
  • fees and expenses for training or coursework required to renew or obtain a new security clearance, certification, or professional license;
  • legal fees for defending against unpaid bills;
  • expenses related to housing, relocation, transportation, and/or childcare; and
  • costs related to providing relief for victims of labor exploitation or employees targeted for their immigration status.

Although the Board did not expressly adopt the GC’s expansive list, noting “[w]e will not attempt today to enumerate all the pecuniary harms that may be considered direct or foreseeable,” their decision made clear it was because the Board did not want to limit the range of potential costs. Thus, the GC’s list certainly falls within the type of damages contemplated by the Board’s decision. Additionally, though Abruzzo also argued for emotional distress damages in her brief, the Board declined to include those in their remedies at this time. However, the Board also noted in a footnote that its decision does not reflect the limits of the Board’s authority and other relief could be ordered in a future case.

Given the GC’s directive in Memorandum GC 21-07, issued on September 15, 2021, to the Board’s Regional offices to settle for nothing less than the full panoply of remedies, the Board’s Thryv decision will impede the likelihood of settlement and drive up the costs of any potential settlement as employers generally no longer have the option of using settlement discussions to negotiate for a compromise resolution.

Ever since the Board has become more aggressive in seeking unusual remedies, settlement agreements have included compensation to workers for late rent and car payments, interest payments on loans, the cost of baby formula, and the cost of retrofitting a car to make it usable for a new job. [2] Future cases will likely elucidate the reach of remedies for “direct or foreseeable pecuniary harms.”

Employers should take measures to ensure their compliance with the Act and continue monitoring the constant changes to the Board’s practices and challenges to Board precedent. Employers with matters pending in front of the NLRB should be aware of the potential impact the expanded remedies may have on their case.

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[1] Thryv, Inc. and International Brotherhood of Electrical Workers, Local 1269, 20–CA–250250.

[2] GC Abruzzo highlights these, as well as other settlement compensation for derivative economic harm, in Memorandum GC 22-06.