NLRB Can Award Backpay With No Interim Income Setoff for Hours Reduction ULPs: Tenth Circuit | Practical Law

NLRB Can Award Backpay With No Interim Income Setoff for Hours Reduction ULPs: Tenth Circuit | Practical Law

In NLRB v. Community Health Services, Inc., a split panel of the US Court of Appeals for the Tenth Circuit enforced a National Labor Relations Board (NLRB) order that did not reduce backpay awards to employees whose hours were unlawfully reduced by the amount of those employees' interim earnings, awarding backpay without deductions for the interim earnings of employees whose hours were unlawfully reduced.

NLRB Can Award Backpay With No Interim Income Setoff for Hours Reduction ULPs: Tenth Circuit

by Practical Law Labor & Employment
Published on 27 Jan 2016 • USA (National/Federal)
In NLRB v. Community Health Services, Inc., a split panel of the US Court of Appeals for the Tenth Circuit enforced a National Labor Relations Board (NLRB) order that did not reduce backpay awards to employees whose hours were unlawfully reduced by the amount of those employees' interim earnings, awarding backpay without deductions for the interim earnings of employees whose hours were unlawfully reduced.
On January 20, 2016, in NLRB v. Community Health Services, Inc., a split panel of the US Court of Appeals for the Tenth Circuit enforced an NLRB supplemental order that did not reduce backpay awards to employees whose hours were unlawfully reduced by the amount of those employees' interim earnings. The Tenth Circuit, applying the requisite highly deferential standard, held that the NLRB adequately explained the bases for its new policy of not deducting interim earnings from backpay awards in hours reductions unfair labor practice (ULP) cases. ( (10th Cir. Jan. 20, 2016).)

Background

The panel (Board) heading the NLRB's judicial functions:
The NLRB's General Counsel filed an application in the Tenth Circuit for enforcement of the Board's decision, which the Hospital opposed.

Outcome

A split panel of the Tenth Circuit enforced the Board's supplemental order awarding backpay without interim earnings deductions to employees whose labor injury falls short of unlawful termination, such as in hours reduction cases.
The Tenth Circuit panel majority noted that:
  • The Board has broad discretion under the NLRA to fashion remedies for ULPs. Courts must defer to the Board's remedial decisions unless they are arbitrary and unreasonable (Fibreboard Corp. v. NLRB, 379 U.S. 203, 216 (1964))..
  • The Board has long held that employees who are not unlawfully terminated but suffer other labor injuries have no duty to seek secondary employment pending a decision on their ULP claim (see 88 Transit Lines, Inc., 314 N.L.R.B. 324, 325 (1994)).
  • In Ogle Protection Service, Inc., (one of the Board's seminal backpay decisions), the Board did not clearly address whether backpay awards should be reduced by interim earnings in cases where there is no cessation of employment and therefore no duty to mitigate (183 N.L.R.B. 682 (1970)).
  • Ogle's progeny inconsistently deduct interim earnings from backpay awards in hours reduction cases, where the employees had no duty to mitigate their damages.
  • Although an employer-respondent could have raised fair notice concerns based on the Board's inconsistent guidance and practices concerning backpay awards in non-termination cases, the Hospital has waived any fair notice argument by not raising it in the proceedings before the Board, or in its appellate briefing.
The panel majority held that the Board adequately explained the need for consistency in calculating backpay awards for employees who have suffered ULPs short of termination and setting a new policy of not deducting interim earnings from those employees' backpay awards. In particular, the panel majority found that the Board reasonably relied on the following rationales for the new policy:
  • Encouraging Production and Employment. Where the labor violation does not involve employment termination, employees who have no duty to mitigate will be encouraged to seek supplemental employment if they can retain the benefit of that effort.
  • Rewarding "Extra Effort." Under established Board policy, employees who perform more work than required are entitled to retain the benefit of such "extra effort" (N.L.R.B. Casehandling Manual, pt. 3, § 10554.3 (2014)).
  • Accounting for Additional Hardships. The Board observed that an employee who seeks work from a secondary employer generally suffers additional hardships, "such as resolving scheduling conflicts between the two jobs and traveling to a second workplace." By allowing the employee to retain the benefit of undertaking these hardships, the Board's policy "acknowledge[s] these practical considerations and encourage[s] employees to address their financial situations contemporaneously."
  • Preventing Dilatory Conduct. The Board reasoned that deducting interim earnings from a backpay calculation would create an incentive for wrongdoing employers to delay rescinding their unlawful conduct, "knowing that the longer an employee worked a second job, the greater could be the reduction in backpay owed." The Board explained that declining to deduct interim earnings in this context has the same deterrent effect as the quarterly computation has in the context of an unlawful termination.
  • Allocating Windfalls. Where one of the parties will obtain a windfall, it is more appropriate for it to be the employee whose extra effort resulted in the interim earnings, rather than the uncooperative employer. Therefore, in selecting between two imperfect remedies, the Board expressed its preference for the one that requires the employer to pay the full amount of backpay, while permitting the employees to retain the benefit of their extra effort.