NLRB Adopts New Policy Awarding Employees Search-For-Work and Interim Employment Expenses Regardless of Interim Earnings
In King Soopers, Inc., the National Labor Relations Board (NLRB) adopted a new policy of awarding search-for-work and interim employment expenses regardless of discriminatees' interim earnings and separately from taxable net back pay.
On August 24, 2016, in a 3-1 decision in King Soopers, Inc., the panel (Board) heading the NLRB's judicial functions held that to satisfy the Board's statutory obligation to provide meaningful, make-whole relief for losses incurred by discriminatees as a result of an employer's unlawful conduct, it has retroactively adopted a new policy of awarding search-for-work and interim employment expenses regardless of discriminatees' interim earnings and separately from taxable net back pay, with interest (364 N.L.R.B. No. 93 (Aug. 24, 2016)).
Wendy Geaslin worked as a barista at a Starbucks kiosk in a King Soopers in Denver, Colorado. Geaslin was covered by a meat contract between King Soopers and the union under the parties' Letter of Agreement #26, Coffee Shops. King Soopers twice suspended and ultimately terminated Geaslin on May 21, 2014 for allegedly refusing to bag groceries and misconduct during a meeting with her managers and union representative to discuss the incident.
Geaslin filed a charge, and General Counsel for the NLRB issued a complaint on October 31, 2014, which was amended twice at the hearing. The complaint and amended complaint alleged that King Soopers violated:
Section 8(a)(1) of the NLRA when it interrogated Geaslin in March.
Section 8(a)(3) and (1) of the NLRA when it:
suspended Geaslin on May 9 and 14; and
terminated Geaslin on May 21.
The General Counsel also requested that Geaslin be reimbursed for "all search-for-work and work-related expenses regardless of whether the discriminatee received interim earnings in excess of these expenses, or at all, during any given quarter, or during the overall back pay period."
An Administrative Law Judge (ALJ) found that King Soopers engaged in unfair labor practices (ULP) by interrogating, twice suspending, and terminating Geaslin. The ALJ further found that King Soopers must offer Geaslin reinstatement and make her whole for any loss of earnings and other benefits. However, the ALJ refused to authorize the remedy sought by the General Counsel, stating that approval for this remedy lies with the Board. Instead, the ALJ ordered that back pay be calculated in accordance with F. W. Woolworth Co. (90 N.L.R.B. 289 (1950)).
King Soopers and the General Counsel both filed exceptions to the ALJ's decision. The General Counsel's exceptions were limited to the ALJ's finding that a make-whole remedy for a violation of Section 8(a)(3) and (1) does not include search-for-work and work-related expenses regardless of whether those amounts exceed interim earnings. In its brief in support of these exceptions, the General Counsel asked the Board to:
Change its longstanding practice of treating a discriminatee's reasonable search-for-work and interim employment expenses as an offset that reduces the amount of interim earnings subtracted from gross back pay (see English Mica Co., 101 N.L.R.B. 1061, 1062 (1952); F. W. Woolworth Co., 90 N.L.R.B. at 293 fn. 8 (1950); Crossett Lumber Co., 8 N.L.R.B. 440, 497-98 (1938)).
Award these expenses regardless of whether the discriminatee received interim earnings.
On the merits of the case, a majority of the Board (Chairman Pearce, and Members Hirozawa and McFerran) affirmed the ALJ's conclusions that Geaslin engaged in protected concerted activity (questioning whether she should be bagging groceries because the work belonged to a different bargaining unit or union) and that King Soopers violated:
Section 8(a)(1) by unlawfully interrogating Geaslin about her protected concerted activity.
Section 8(a)(3) and (1) by twice suspending and discharging Geaslin for engaging in protected concerted activity.
The Board next turned to the primary issue in this case, whether the Board should modify the current make-whole remedy to require respondents to fully compensate discriminatees for search-for-work expenses and expenses incurred in connection with interim employment. The Board held that:
Remedial changes are clearly warranted to satisfy the Board's statutory obligation to provide meaningful, make-whole relief for losses incurred by discriminatees as a result of a respondent's unlawful conduct.
It will retroactively adopt a new policy of awarding, with interest, search-for-work and interim employment expenses:
regardless of discriminatees' interim earnings; and
separately from taxable net back pay.
The Board assessed whether the current remedial framework properly awards make-whole relief or fails to make whole the aggrieved victims of unlawful conduct. The Board noted that:
Where the Board has found that its remedial structure fails to fulfill its make-whole objective, "[it] has revised and updated its remedial policies . . . to ensure that victims of unlawful conduct are actually made whole" (Don Chavas, LLC d/b/a Tortillas Don Chavas, 361 N.L.R.B. No. 10, slip op. at 2-3 (2014)).
Discharging an employee for engaging in protected concerted activity most harms the discriminatee deprived of his job, causing a loss of income and employment benefits. Under the duty to mitigate, the discriminatee must then find and maintain interim employment, potentially causing additional, significant financial hardship. Therefore, it is vitally important that the Board ensure that the make-whole remedy fully compensates unlawfully discharged employees for the losses they incurred and "deter[s] further encroachments on the labor laws." (Goya Foods of Florida, 356 N.L.R.B. at 1463.)
The Board's current treatment of search-for-work and interim employment expenses fails to fully compensate discriminatees for losses incurred as victims of unlawful conduct.
In Crossett Lumber Co., the Board:
first recognized that discriminatees may incur significant expenses in searching for and maintaining interim employment (for example, increased transportation costs, room and board while seeking employment or working away from home, and the cost of moving if required); and
found it appropriate to compensate discriminatees for these additional expenses, but treated them as an offset to interim earnings, rather than as a separate element of the back pay award.
The Board's traditional approach of treating search-for-work and interim employment expenses as an offset to interim earnings:
has resulted in less than make-whole relief for the most seriously aggrieved victims of unlawful conduct, contrary to the central remedial principle underlying the NLRA (Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 194 (1941); NLRB v. J.H. Rutter-Rex Mfg., 396 U.S. 258, 262–63 (1969));
has failed to compensate discriminatees unable to find interim employment or who find jobs that pay wages lower than the amount of their expenses; and
may, by imposing a duty on discriminatees to mitigate by engaging in reasonable efforts to seek and hold interim employment and by failing to provide back pay for any periods during which the discriminatee fails to mitigate, discourage discriminatees' job search efforts (Midwestern Personnel Services, 346 N.L.R.B. 624, 625 (2006), enfd. 508 F.3d 418 (7th Cir. 2007)).
No other expense incurred by discriminates as a direct result of an employer's unlawful conduct (for example medical expenses or retirement fund contributions) is treated as an offset to interim earnings.
To fully compensate discriminatees for their losses, the Board is changing its policy to treat search-for-work and interim employment expenses in a manner consistent with its treatment of other losses suffered by discriminatees (Goya Foods of Florida, 356 N.L.R.B. at 1463).
Awarding search-for-work and interim employment expenses separately from taxable net back pay, with interest, avoids potential tax complications caused by the Board's traditional approach, resulting in a clearer accounting for the discriminatee, the IRS, and the Social Security Administration.
Making the change in its policy to award employees search-for-work and interim employment expenses regardless of interim earnings:
only affects how the Board calculates search-for-work and interim employment expenses, not whether these expenses are a permissible remedy (the Board has been permitted to award search-for-work and interim employment expenses for 80 years); and
is consistent with the Board's broad, discretionary authority under Section 10(c) to revise its remedial policies to ensure that discriminatees are made whole (Don Chavas, LLC, 361 N.LR.B. No. 10 at 2–3; Pressroom Cleaners, 361 N.L.R.B. No. 57 at 2).
The decision provides the following example to demonstrate what the Board described as the shortcomings of the prior approach:
"Juana Perez worked at a remote location earning $1,000 per month prior to her unlawful discharge. During the month following her discharge, Perez spent $500 travelling to different locations looking for work. Perez could only find interim employment in another state that paid $750 per month. Perez moved to the new state to be closer to her new job and was also required to obtain training for her new position, costing her $5000 and $500, respectively. Under the Board's traditional approach, Perez would receive compensation for only $1500 of her $6000 total expenses, far less than make-whole relief."
The Board explained these calculations:
"During the first quarter after her unlawful discharge, Perez's gross backpay would be $3000 ($1000 x 3 months), her interim earnings would be $1500 ($750 x 2 months), and her search-for-work and interim employment expenses would be $6000 ($500 travel expenses + $5000 moving expenses + $500 training expenses). Under the Board's traditional approach, Perez could only receive compensation for $1500 of her expenses because such payment cannot exceed the amount of her interim earnings."
Member Miscimarra concurred in part and dissented in part. Miscimarra dissented from the changes adopted regarding the remedial treatment of search-for-work and interim employment expenses, basing his dissent on the following arguments:
The Board's traditional approach:
makes claimants whole in most cases and does not result in greater than make-whole relief in other cases, therefore exceeding the Board's statutory authority (which is limited to relief that is remedial); and
is consistent with other statutes that deal with these expenses as a component of back pay.
The new standard does not adequately safeguard against the risk that awarding search-for-work and interim employment expenses, separate from interim earnings, may tend to produce more protracted Board litigation, particularly when such expenses are disproportionately high in comparison to the claimants' lost earnings or interim earnings. This may in turn delay the time that any Board-ordered remedies are available to claimants.
In this decision, the Board adopts a new policy awarding employees search-for-work and interim employment expenses regardless of interim earnings. Employees are now compensated for these expenses even when their interim earnings are nonexistent or less than those expenses.