NLRB Issues Guidance Memo on Retroactive Modification of Board Orders to Incorporate Latino Express Remedies | Practical Law

NLRB Issues Guidance Memo on Retroactive Modification of Board Orders to Incorporate Latino Express Remedies | Practical Law

The Office of the General Counsel of the National Labor Relations Board (NLRB) has issued an internal guidance memorandum discussing the retroactive modification of pending NLRB orders to include the tax remedies provided in the NLRB's recent decision in Latino Express, Inc. 

NLRB Issues Guidance Memo on Retroactive Modification of Board Orders to Incorporate Latino Express Remedies

by PLC Labor & Employment
Published on 05 Apr 2013 • USA (National/Federal)
The Office of the General Counsel of the National Labor Relations Board (NLRB) has issued an internal guidance memorandum discussing the retroactive modification of pending NLRB orders to include the tax remedies provided in the NLRB's recent decision in Latino Express, Inc.
On April 4, 2013, the NLRB's Associate General Counsel issued a memorandum to internal personnel discussing the retroactive modification of pending orders to include the tax remedies provided in Latino Express, Inc.
In its December 18, 2012 decision in Latino Express, Inc., a three-member panel heading the NLRB's judicial functions (Board) held that the NLRB now requires respondents that owe backpay to:
  • Reimburse backpay recipients for any excess income taxes they may owe because their backpay award was paid as a lump sum rather than allocated to the year in which the income would have been earned if the respondent had not violated the NLRA.
  • Report backpay awards to the Social Security Administration (SSA) so they are allocated to the year in which the income would have been earned rather than recorded as a lump sum taxed in the year in which they are received.
For more information on the Latino Express, Inc. decision, see Legal Update, NLRB Adopts Expanded Remedies for Backpay Awards.
On February 15, 2013, the Acting General Counsel issued a memorandum discussing how NLRB personnel should calculate excess income taxes on backpay awards (see Legal Update, NLRB's Acting General Counsel Rolls Out Plan to Adjust Backpay Awards for Excess Income Taxes and Reports to the Social Security Administration).
The April 4 memorandum notes that in Latino Express, Inc., the Board applied its new policy retroactively, to all pending cases. The memorandum also refers to the Board's recent decision in Lee's Industries, Inc., in which the Board noted that "nothing in Latino Express prevents the Acting General Counsel from requesting that the Board modify a previously issued order in a pending case to include an applicable remedy, at least where the Board still has jurisdiction to do so." Therefore, the memorandum instructs NLRB Regions to review all pending compliance cases in which a Board order:
  • Was issued prior to December 18, 2012 (the date of the Latino Express, Inc. decision).
  • Required backpay, for which the discriminatee could receive the excess tax liability reimbursement and the backpay reporting remedies provided by Latino Express, Inc.
In each case, the Region should consider whether the respondent has complied with the Board's order or is in serious discussions with the Region regarding compliance efforts. These signs of cooperation will affect whether the Region files a motion to modify the remedial provisions with the Board. For cases pending before an appellate court, the Region should consult with the NLRB General Counsel's office on whether to withdraw the case before the court and file a motion to modify. The memorandum also includes a sample Motion to Modify Remedial Order that Regions can use to ask the Board to modify an order under Latino Express, Inc.
In response to questions that have been received by the NLRB, the memorandum also:
  • Provides that the excess tax liability reimbursement and the obligation to report backpay awards to the SSA should be included in all informal and formal settlements in which the backpay period spans two or more years, or where backpay is being paid in a different year from when it was earned. The tax liability reimbursement and SSA reporting obligation have been incorporated into the NLRB's Informal Settlement Agreement template and the optional paragraphs for the Notice to Employees.
  • Instructs Regions that the excess tax liability reimbursement should be calculated and collected in every case where there is liability, no matter how small it is, to ensure that discriminatees are made whole. If a case involves such a large number of discriminatees that it would be burdensome to calculate each one's excess tax liability, Regions may apply the tax liability of a random sample of discriminatees to the entire group.
  • Clarifies reporting of backpay to the SSA in cases involving installment payment plans. Backpay reporting in those cases should be done at the end of the installment plan, once all of the backpay has been paid.
On April 29, 2013, the NLRB General Counsel's office released a revised memorandum, adding that in cases involving the payment of front pay, unless the settlement agreement sets forth the time period the front pay is intended to cover (such as in lieu of two years of future employment), it should be reported to the SSA as payment of wages in the year in which the payment was made.