Settlement of Workers' Compensation Claim Was Unlawful Direct Dealing; Employer Assurances Cured ULP: NLRB General Counsel's Office | Practical Law

Settlement of Workers' Compensation Claim Was Unlawful Direct Dealing; Employer Assurances Cured ULP: NLRB General Counsel's Office | Practical Law

The National Labor Relations Board (NLRB) General Counsel's Office recently released an advice memorandum in American Water Service Company, Inc., providing guidance on whether an employer engaged in unlawful direct dealing when it settled a former employee's workers' compensation claim without attempting to notify the employee's union of the pending settlement and, as a condition to the settlement, required the employee to sign a release agreement that impacted the union's pending grievance over her discharge.

Settlement of Workers' Compensation Claim Was Unlawful Direct Dealing; Employer Assurances Cured ULP: NLRB General Counsel's Office

by PLC Labor & Employment
Published on 15 May 2013 • USA (National/Federal)
The National Labor Relations Board (NLRB) General Counsel's Office recently released an advice memorandum in American Water Service Company, Inc., providing guidance on whether an employer engaged in unlawful direct dealing when it settled a former employee's workers' compensation claim without attempting to notify the employee's union of the pending settlement and, as a condition to the settlement, required the employee to sign a release agreement that impacted the union's pending grievance over her discharge.
On May 13, 2013, the NLRB's General Counsel's office, which heads the NLRB's prosecutorial functions, issued an advice memorandum in American Water Service Company, Inc. dated April 30, 2013, providing guidance on whether an employer engaged in unlawful direct dealing, when it:
  • Settled a former employee's workers' compensation claim without attempting to notify the employee's union of the pending settlement.
  • As a condition to the settlement, required the employee to sign a release agreement that impacted the union's pending grievance over her discharge.

Background

The employer, American Water Works Service Company, Inc., operates two customer service centers, including one in Pensacola, Florida. The union represents customer service representatives (CSRs) at both call centers. In May 2005, the employee began working as a CSR at the Pensacola facility, where her job responsibilities included answering customer's inquiries about the employer's services and billing.
The employee suffered a work-related injury to her left wrist in August 2008. The same year, she hired an attorney, who filed a workers' compensation claim on her behalf. An insurance company administered the employer's workers' compensation claims and retained an attorney to defend the employer against the employee's claim. Although the employee was not initially interested in settling her claim, around September 2010, her attorney informed the insurer's attorney that the employee was interested in settlement. At that time, the insurer's attorney recited the employer's required settlement terms, which the employer regards as necessary to all workers' compensation settlements, including:
  • A general release.
  • The claimant's resignation (if still employed).
  • A no re-hire provision.
The parties had no further communication regarding the matter until March 1, 2011, when the employee's attorney indicated to the insurer's attorney that the employee would only agree to the resignation provision if she received more money. The insurer's attorney rejected that demand. In March 2012, the employer discharged the employee for avoiding calls. The union filed a grievance challenging the discharge and seeking a make-whole remedy including reinstatement and backpay.
On April 2, 2012, the employee's attorney contacted the insurer's attorney and indicated that the employee was willing to settle her workers' compensation claim for an amount that was less than one-half the amount she requested in March 2011. Three days later, the insurer's attorney and the employee's attorney verbally agreed to settle the workers' compensation claim. The parties executed the settlement and its accompanying general release of claims agreement on April 13. At the time of the settlement:
  • The union was unaware of the workers' compensation claim or settlement.
  • The management official who ordinarily handled the union's grievances was unaware of the workers' compensation claim or settlement.
  • The employer agents handling the settlement did not know about the union's grievance.
The settlement agreement contained:
  • A general release of the employee's employment-related claims.
  • A broad confidentiality clause.
During the NLRB Region's investigation of the case, the employer assured the Region that it:
  • Would not enforce certain provisions of the agreement, such as the confidentiality clause, to either:
    • prevent the union from communicating with the employee regarding the facts and circumstances of her employment and discharge; or
    • preclude the employee from otherwise aiding the union in pursuing her grievance.
  • Was willing to allow the union to arbitrate the grievance if the union did not seek the employee's reinstatement or a monetary remedy in arbitration proceedings.
  • Was willing to effectively rescind the agreement and permit the union to seek reinstatement or monetary relief if the employee returned the settlement proceeds.

Advice Memorandum Analysis and Conclusions

In an advice memorandum, the NLRB Division of Advice:
  • Noted that the panel (Board) heading the judicial functions of the NLRB typically finds that an employer engages in unlawful directly dealing where it:
    • communicates directly with bargaining unit employees;
    • starts the communication to set or change wages, hours and terms and conditions of employment or to undercut the union's role in collective bargaining; and
    • excludes the union from the communication.
    (Permanente Medical Group, Inc.)
  • Found that:
    • the employer obviously communicated with the employee directly and excluded the union from the communication;
    • failed to notify the employee's union about the settlement discussions that would affect the employee's terms and conditions of employment and prevent the employee from pursuing the grievance filed on her behalf.
  • Rejected the employer's argument that the existence of the general waiver and release in this case mandates a conclusion that the purpose of the employer's discussion with the employee was not to establish or change her wages, hours or other terms and conditions of employment.
  • Concluded that it is unlikely that the employer's oversight in this instance will erode the union's position as the employees' exclusive representative because of the employer's good faith assurances, including that it would:
    • allow the union to arbitrate the grievance if it does not seek reinstatement or a monetary remedy in arbitration proceedings.
    • not enforce the confidentiality provision to the extent that it would otherwise prevent the employee from communicating with or aiding the union with its pending grievance over her discharge.
    • allow the employee to rescind the agreement and return the settlement proceeds to permit the union to seek reinstatement and monetary relief in arbitration.

Practical Implications

This advice memorandum is not binding precedent from the Board. However, it does provide guidance to employer intending to settle disputes with bargaining unit employees. Employers may engage in direct dealing in violation of the NLRA if they, or counsel acting on their behalf, attempt to settle individual claims (such as workers' compensation), using a waiver and release of claims, without giving notice to the union. Employers may be permitted to avoid liability for these violations if they are willing to make specific assurances permitting the employee to void the settlement and pursue remedies through the collectively bargained grievance procedure.