NLRB Strikes Defense to Backpay Remedy for Workers that Employer Claimed were not Authorized to Work in US | Practical Law

NLRB Strikes Defense to Backpay Remedy for Workers that Employer Claimed were not Authorized to Work in US | Practical Law

In Flaum Appetizing Corp. the National Labor Relations Board (NLRB) determined that employers found to have discriminated against employees that engaged in concerted activity protected under the National Labor Relations Act (NLRA) must plead specifically and be prepared to offer evidence that a discriminatee is not authorized to work in the US, to challenge a back pay or reinstatement award under Hoffman Plastic Compounds, Inc. v. NLRB. In its decision dated December 30, 2011, the NLRB constructed procedural barriers for employers wishing to avail themselves of that Supreme Court precedent, which held that the NLRB is prohibited from awarding backpay to an undocumented worker who violates the Immigration Reform and Control Act (IRCA). The NLRB struck an employer's Hoffman-related affirmative defense in NLRB compliance proceedings and denied the employer an evidentiary hearing to confirm that discriminatees were not eligible for backpay based on their immigration status. Member Hayes dissented.

NLRB Strikes Defense to Backpay Remedy for Workers that Employer Claimed were not Authorized to Work in US

by PLC Labor & Employment
Published on 11 Jan 2012 • USA (National/Federal)
In Flaum Appetizing Corp. the National Labor Relations Board (NLRB) determined that employers found to have discriminated against employees that engaged in concerted activity protected under the National Labor Relations Act (NLRA) must plead specifically and be prepared to offer evidence that a discriminatee is not authorized to work in the US, to challenge a back pay or reinstatement award under Hoffman Plastic Compounds, Inc. v. NLRB. In its decision dated December 30, 2011, the NLRB constructed procedural barriers for employers wishing to avail themselves of that Supreme Court precedent, which held that the NLRB is prohibited from awarding backpay to an undocumented worker who violates the Immigration Reform and Control Act (IRCA). The NLRB struck an employer's Hoffman-related affirmative defense in NLRB compliance proceedings and denied the employer an evidentiary hearing to confirm that discriminatees were not eligible for backpay based on their immigration status. Member Hayes dissented.

Key Litigated Issues

On December 30, 2011, the NLRB issued a decision in Flaum Appetizing Corp., granting partial summary judgment against an employer on disputed backpay claims and striking the employer's affirmative defense that its former employees, as undocumented workers, were not entitled to backpay. The key issue of first impression decided in this case was whether an affirmative defense to an NLRB backpay or reinstatement remedy in an NLRB compliance specification based on Hoffman Plastic Compounds, Inc. and concerning a worker's immigration status either:
  • May be plead generally, as would defenses to a backpay remedy that would be supported by information and evidence within the knowledge and possession of the worker (such as allegations that the worker failed to mitigate lost earnings in the backpay period or that backpay should be set-off because of interim earnings).
  • Must be pled specifically, as would defenses to the calculation of gross backpay that would be supported by information and evidence within the knowledge and possession of the employer (such as hours, rates of pay and total earnings before the employer violated the NLRA and triggered backpay liability) and supported with:
    • a detailed statement of the employer's position on why the compliance specification's calculations are incorrect; and
    • documents with "supporting figures" for the employer's position about the proper backpay calculation.
The pleading requirements effectively determine an employer's burdens of proof, and the availability of discovery and evidentiary hearings on an affirmative defense. Specifically if the NLRB:
  • Permits general pleading, the employer has the opportunity to subpoena and introduce evidence from the worker at an evidentiary hearing to confirm the worker's undocumented status and ineligibility for reinstatement or backpay.
  • Requires specific pleading and a supporting statement and documentation from the employer, then, where an employer does not possess and provide the NLRB with evidence that tends to show that the workers are not authorized to work in the US, the NLRB:
    • can adopt the compliance specification without holding an evidentiary hearing or affording the employer an opportunity to subpoena information or testimony from the worker about worker's undocumented status and ineligibility for reinstatement or backpay; and
    • is more likely to grant motions by the NLRB's General Counsel for summary judgment on the specification and to strike the affirmative defense.

Background

In 2002, the Supreme Court issued an opinion in Hoffman Plastic Compounds, Inc. v. NLRB, holding that the NLRB was prohibited from awarding backpay to an undocumented worker who violated the Immigration Reform and Control Act (IRCA). In August 2011, the NLRB decided in Mezonos Maven Bakery, Inc. that under Hoffman it lacked authority to award backpay to undocumented workers if either the workers or their employer violated the IRCA (see Legal Update, NLRB Rules That it Cannot Award Backpay to Undocumented Workers).
In the present case, the NLRB ordered Flaum Appetizing Corporation, to reinstate and make whole 17 employees whom it had discharged for engaging in protected Section 7 activity. Subsequently, an NLRB regional director filed a compliance specification alleging that the employer owed backpay to 15 of the former employees. In response, the employer:
  • Provided an answer containing a general denial of the allegations.
  • Raised affirmative defenses alleging that the former employees were not entitled to backpay because they:
    • are undocumented aliens and therefore, under Hoffman, are not entitled to any backpay;
    • committed fraud under IRCA and had "unclean hands"; and
    • failed to mitigate their backpay damages.
Counsel for the NLRB's General Counsel demanded that Flaum supply an amended answer with specific pleading, a supporting statement and documentation about its Hoffman, fraud and "unclean hands" defenses. Counsel for the NLRB's General Counsel also filed motion to require Flaum to provide a bill of particulars providing:
  • The names of the former employees and identifying which affirmative defenses apply to each of them.
  • A brief statement of the facts constituting the offense each former employee allegedly committed and when.
Flaum sought to subpoena each of the former employees for documentation that would help establish its Hoffman, fraud and unclean hands defenses, including all:
  • Passports.
  • Permanent resident cards.
  • Photographs issued by federal, state and local governments.
  • Driver licenses.
  • Social Security cards.
  • Naturalization certificates.
  • Documents confirming country of citizenship.
Flaum also answered the bill of particulars with the information it possessed, alleging that:
  • When each former employee began working, none were entitled to work in the US.
  • Each former employee committed fraud and had "unclean hands" by providing facially valid but fraudulent documentation and photo identification.
  • Flaum first learned about the questionable immigration status of the former employees when at an NLRB hearing a number of the former employees testified that they provided false documentation when Flaum hired them.
The counsel for the NLRB's General Counsel demanded further information alleging that Flaum did not:
  • Provide dates on which the former employees allegedly committed the wrongdoings attributed to them.
  • Describe the nature of the documentation and photo identification submitted by each of the former employees and how it was fraudulent.
  • Name the former employees who admitted at NLRB hearings that they provided false documents or quote their individual testimony.
When Flaum failed to furnish additional information, the counsel for the NLRB's General Counsel moved that the five-member panel (Board) heading the NLRB's judicial functions:
  • Strike Flaum's Hoffman, fraud and "unclean hands" defenses.
  • Grant summary judgment as to the gross amount of backpay for each former employee.

Outcome

A three-member panel of the Board reviewed the counsel for the NLRB's General Counsel's motions. The panel unanimously:
  • Granted summary judgment as to the uncontested gross back pay calculation.
  • Struck Flaum's fraud and "unclean hands" defenses.
  • Denied the motion to strike the Hoffman defense as to four of the former employees who admitted during NLRB hearings that they were not authorized to work in the US and provided false documentation to Flaum.
A Board majority (Member Hayes dissenting) struck Flaum's Hoffman defense reasoning that:
  • The Board cannot permit a party to raise an affirmative defense, obtain an evidentiary hearing on the defense and subpoena evidence to support the defense, without evidence to support the defense.
  • Since Flaum articulated no factual support, or reason to believe that it could obtain factual support, for its Hoffman defense the Board must strike the defense.
The Board majority also concluded that permitting the Hoffman affirmative defense in the absence of any basis for it would violate the policies underlying both:
  • The IRCA. Although the IRCA requires employers to verify the employment of their employees before hiring, the law provides that reverification of work authorization may be an unfair immigration-related employment practice under certain circumstances.
  • The NLRA. The NLRA is intended to neutralize discrimination, yet permitting an affirmative defense without factual foundation could lead to the filing of similar defenses in every compliance case, leading to the intimidation of employees, as well as to delays, abuse of the Board's processes and a waste of administrative resources.
Member Hayes dissented, finding that the employer's defense was sufficiently pled to warrant a hearing in which a judge could determine the appropriate scope of inquiry into the employee's resident status.

Practical Implications

The Board majority's decision:
  • Presumes that employers, rather than the workers whose immigration status is questioned, have the requisite information and documentation to prove the actual immigration status.
  • Imposes the burden on the employer to show that workers are not authorized to work in the US rather requiring workers to show that they can lawfully work in the US.
The decision indicates that an employer seeking to avail itself of a Hoffman affirmative defense to a backpay remedy must be prepared to:
  • Plead specific facts and offer supporting documentation when answering a compliance specification, as would have been required for defenses tied to information that the employer typically possessed.
  • Use only documents and information that it possesses or that is publicly available to support the defense because the Board will not likely grant an evidentiary hearing or opportunities to use trial subpoenas to obtain relevant evidence from the workers about their work authorization statuses.
  • Submit bills of particulars and further documentation to the NLRB in response to demanding requests.

Board and Court Documents