NLRB Limits Right to Permanently Replace Strikers

Employers and unions each have their own weapons to use when collective bargaining talks break down. For unions, there are strikes, while employers may resort to “permanently replacing” striking employees. This means that after the strike is over, the employees will not return to their jobs but will instead be placed at the top of a rehire list. The National Labor Relations Board (NLRB) on May 31 restricted employers’ right to permanently replace employees, with a focus on the employer’s intent.

An employer that intended for the permanent replacements to be a way to punish striking employees and avoid future strikes was found by the board to have acted for an “independent unlawful purpose.”

The board’s decision “puts greater pressure on employers to ensure that their motives in permanently replacing economic strikers are pure, in that it should be to ensure continuous operations, as opposed to avoiding any future strikes or teaching strikers a lesson,” noted Peter List, CEO of Kulture, a national labor-employment consultancy based in the Charleston, S.C., area. (If the object of a strike is to obtain some economic concession from the employer such as higher wages, shorter hours or better working conditions, the striking employees are called economic strikers, according to the NLRB.)

However, when there is a strike, “Everyone is motivated to damage the other side,” said Phillip Wilson, president and general counsel of the Labor Relations Institute, a labor relations consulting firm based in Broken Arrow, Okla. “That is the whole point of a strike. In some cases the union may even be motivated to destroy a company operation, even if it leaves members at that location without a job, in order to achieve a bigger bargaining goal elsewhere.”

Short Strike

American Baptist Homes of the West, doing business as Piedmont Gardens, operates a continuing care facility in Oakland, Calif. Since March 2007, the Service Employees International Union, United Healthcare Workers—West has represented nonprofessional employees in various departments of Piedmont Gardens.

The most recent collective bargaining agreement was effective from March 1, 2007, to April 30, 2010. As of May 2010, the parties remained at odds over several issues, including health care, pensions and disciplinary policies. Picketing took place on May 25, 2010. On Aug. 2, approximately 80 of the 100 unit employees went on strike.

The facility extended temporary employment offers to approximately 60 to 70 workers provided by a staffing agency, at a cost of more than $300,000. The board noted that it would have cost the facility $250,000 over the three-year life of the contract to fully implement the union’s proposals on wages, health insurance and pensions.

On Aug. 3, the facility began permanently replacing the striking employees. From Aug. 3-6, it made approximately 44 offers of permanent employment. The executive director said she “assumed that because these people were willing to work during this strike, they’d be willing to work during the next strike.”

On Aug. 6, the fifth and final day of the strike, the facility’s attorney informed the union’s attorney that the facility “wanted to teach the strikers and the union a lesson. They wanted to avoid any future strikes, and this was the lesson that they were going to be taught.”

The board had a lesson of its own for the facility, ruling that it hired the permanent replacements for an independent unlawful purpose in violation of the National Labor Relations Act.

Dissent

In the dissenting opinion, Member Philip Miscimarra, said, “The act does not require parties to maintain Spock-like objectivity towards one another when resorting to economic weapons. Nor is it realistic to believe that parties in these circumstances will remain in a dispassionate state of cool detachment. Yet, under the majority’s decision today, if the employer hires permanent replacements, it appears that any evidence of anti-strike animus will render unlawful the employer’s actions, resulting in potentially debilitating back pay liability.”

“The dissent’s comments are critical, as again we see this board reversing decades of established legal precedent,” said Michael Lotito, an attorney with Littler and co-chair of its Workplace Policy Institute, the firm’s lobbying branch. “Both employers and unions have been able to behave in a way developed by many years of interpretation. This reversal invites more and more litigation.”

Weigh the Options

However, Charles Wilson, an attorney with Cozen O’Connor in Houston, noted that employers might be wise to consider whether the cost of implementing union proposals is cheaper than obtaining replacement workers.

Some think the decision will result in less communication between employers and unions, to each side’s detriment. “Sadly, the board has established a dynamic whereby an employer electing to [permanently replace workers] would be well-advised not to provide any detail regarding its motives and limit itself to simply warning of its intention to engage permanent replacements and then doing so, rather than having the frank discussions that are generally necessary for parties to settle the issues standing in the way of reaching a contract,” said James Hays, an attorney with Sheppard Mullin in New York City.

This decision is American Baptist Homes of the West, 364 NLRB No. 13.

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.