NLRB’s Punitive Remedy Allowed

By Scott M. Wich Sep 7, 2016
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Since the passage of the National Labor Relations Act in 1935, federal labor law has been interpreted to require that unlawful conduct be remedied by returning the affected parties to how things would have been absent the unlawful activity. Unlike certain legal actions in court, there has never been a right by the National Labor Relations Board (NLRB) to fashion punitive remedies. However, a recent decision enforced an NLRB order that arguably punished the employer for unlawful activities.

In 2007, Enterprise acquired certain car rental assets from Alamo Rent-A-Car at the Miami International Airport. Employees at Alamo were represented by Teamsters Local Union No. 769 and were employed under a labor contract that ran from 2005 through January 2010. The contract stipulated that employees would receive short-term disability benefits through the Vanguard Short-Term Disability Plan.

In August 2009, Enterprise terminated the Vanguard Short-Term Disability Plan but continued to provide benefits on a self-insured basis through the end of the year. When asked about continuation of the benefits into 2010, Enterprise allegedly told employees that, "because you're union, you can't have short-term disability." When an employee complained about discriminatory treatment, Enterprise allegedly responded, "Don't worry, [we have] very good lawyers." Enterprise also purportedly told an employee that the workers would still have short-term disability benefits if they did not have a union.

Around the same time and in response to the benefits issue, an employee began circulating a petition to decertify the union. Two Enterprise supervisors asked the employee how many signatures he had collected. Upon learning that the employee had not collected signatures from a majority of employees, the supervisors allegedly told him to "go back and get more." Several weeks later, after receiving a decertification petition signed by a majority of its Miami employees, Enterprise withdrew recognition of Local 769, discontinued dues checkoff and made other unilateral changes to employment.

The NLRB's decision, as enforced by the appeals court, found that Enterprise had committed a number of unfair labor practices, including its unilateral change to the short-term disability benefits. It further found that Enterprise could not rely on the decertification petition as evidence of a loss of majority status since the petition was tainted by encouragement by Enterprise supervisors to obtain more signatures. With Local 769 never having lost majority status, therefore, Enterprise's subsequent unilateral actions, including stopping the dues checkoff, were unlawful.

The administrative law judge had originally ordered Enterprise to reimburse the union for the lost union dues. The award was unremarkable in that it reimbursed the union for the dues it would have otherwise received.

But the NLRB, in a split decision, expanded that award to prohibit Enterprise from seeking recoupment of those dues from its employees. The employees, in short, were placed in a better position than they would have otherwise enjoyed had there been no unlawful activity. To wit, the NLRB ordered Enterprise to pay the union dues of its employees. Enterprise argued that the award was punitive in nature—an opinion that was shared in the NLRB's dissenting opinion.

The appeals court, citing a procedural deficiency in Enterprise's arguments, upheld the NLRB's decision.

Enterprise Leasing Co. of Fla. v. NLRB, D.C. Cir., No. 15-1200 (Aug. 5, 2016).

Professional Pointer: In recent years, the NLRB has expanded its definition of "remedial" in fashioning remedies for unfair labor practices. Given the aggressive interpretations in this area, the decision in Enterprise Leasing is a pointed reminder that the remedies for unfair labor practices can be costly and, increasingly, unpredictable.

Scott M. Wich is an attorney with Clifton Budd & DeMaria LLP in New York City.

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