Proposal Would Make It More Difficult to Permanently Replace Economic Strikers

​The office of the general counsel for the National Labor Relations Board (NLRB) has recommended adding significant restrictions to when employers may use permanent replacements during economic strikes. An advice memorandum released at the end of last year would permit such replacements only if the employer could show a legitimate reason to do so.

The proposed standard would essentially create a presumption against allowing an employer to use permanent replacements during an economic strike, unless the employer can prove it needs the workers, said David Pryzbylski, an attorney with Barnes & Thornburg in Indianapolis.

Moreover, the memo stated that there is "no realistic basis for the assumption that employers need the option of offering permanent replacements positions in order to weather a strike" due to changes in the nature of employment. These changes include the "steady growth of a flexible contingent workforce" and "easier access to temporary workers."

The proposal "would remove a major tool employers currently have at their disposal to weather a strike, which could affect their leverage at the [bargaining] table," Pryzbylski said. "This is a major issue for employers with unionized workforces to watch."

Economic Strikers vs. Unfair Labor Strikers

Employees who strike for a lawful objective are either economic strikers or unfair labor practice strikers.

Under the National Labor Relations Act, if the objective of a strike is to obtain from the employer some economic concession, such as higher wages, shorter hours or better working conditions, the striking employees are called economic strikers, noted Amber Rogers, an attorney with Hunton Andrews Kurth in Dallas and Houston.

An unfair labor practice strike occurs when an employer commits unlawful actions at the bargaining table. Such actions might include failing to respond to relevant information requests and failing to engage in good-faith bargaining, Pryzbylski said.

"A strike that is economic at its inception may be converted into an unfair labor strike by an employer's subsequent commission of unfair labor practices," said John Ring, an attorney with Morgan Lewis in Washington, D.C., and former chairman of the NLRB.

Current State of the Law

Employers may not use permanent replacements during an unfair labor practice strike or during a lockout, Pryzbylski noted.

"A lockout is the employer's corollary of a strike. A company can lock out its entire union workforce and decline to permit them to return to work until if and when the union agrees to the contract terms desired by the company," he said. "During a lockout, however, a company can only use temporary versus permanent replacements, which means at the end of the work stoppage, all union employees who want to return to work must be permitted to do so."

During an economic strike, employers have the right to continue operations by hiring either temporary or permanent replacements, Ring said.

If an employer decides to use temporary replacements, those replacements are hired only for the period of the strike. When the strike is over, striking employees return to their jobs and the temporary replacements are typically terminated, he said.

"If an employer faced with a strike hires permanent replacements, the permanent replacements—as their name suggests—displace the striking employees and continue in the job after the strike ends," Ring said. "When permanent replacements are used, striking employees do not automatically return to their jobs at the end of the strike. Instead, they are generally rehired only as openings become available." This is called being put on a preferential recall list.

Proposal Would Overturn Long-Standing Precedent

The NLRB general counsel memo is consistent with General Counsel Jennifer Abruzzo's announced intentions to change precedent, Rogers said.

The current standard on permanently replacing strikers "has been in place for roughly 60 years, and this new standard would significantly deteriorate employers' right to hire permanent replacements," she said.

Specifically, the new standard would require employers to show specific business reasons that justify the hiring of permanent replacements. Current precedent does not require this. Instead, it currently is the general counsel's burden to prove that an employer's purpose for hiring permanent replacements was independent and unlawful. The board has said that an independent unlawful purpose includes an employer's intent to discriminate or to encourage or discourage union membership, Ring noted.

The memo's proposal "would dramatically change" existing law, Rogers said. "Under the general counsel's proposal, the burden will shift to the employer."

Effect of Memo

"The general counsel's changes are just that: proposed changes," Ring said.

Only the NLRB can make the changes that have been proposed. "But given the current alignment between the general counsel and board majority, some change is likely," he said.

If the NLRB adopts the position of the general counsel's office, employers will face a high bar to meet the legitimate business justification standard necessary to use permanent replacements. "Employers confronting a potential strike should carefully consider the likely litigation risk and financial exposure involved in using permanent replacements," Ring said.