Earlier this week, the National Labor Relations Board (“NLRB”) issued two important decisions that California employers should be aware of:

NLRB Adds Consequential Damages to Its Weapons Cache

On December 13, the NLRB greatly increased the scope of its power and reach, by determining that the law allows the Board to attach an award of “consequential damages” to any findings against an employer. This case was decided along party lines, with a 3-2 majority in favor of the union and finding that expanded remedies were proper. In Thryv, Inc. 372 NLRB 22 (2022), the Board expressly held that:

• the employer had improperly terminated the employment of six employees in violation of the National Labor Relations Act;
• the traditional make whole remedy of back pay and reinstatement was insufficient; and
• the NLRB had the authority to order the employer to go beyond these damages and require the employer to compensate affected employees “for all direct or foreseeable pecuniary harms” that these employees suffered as a result of the termination/unfair labor practice (“ULP”).

Historically, the Board restricted its remedies to back pay and reinstatement when it came to ULP charges related to improper hiring/demotion/termination. In Thryv, the Board found that section 10(c) of the National Labor Relations Act [29 U.S.C. § 160(c)] gave the Board broader discretion to issue awards that included compensation for all foreseeable harms that affected employees suffered as a result of the actions the employer engaged in that caused the ULP. The Thryv decision identified a number of examples of the type of expansive remedies that the Board can award, such as (a) expenses incurred by terminated employees in looking for new jobs, (b) compound interest, (c) late fees on credit cards caused by the inability to pay due to loss of wages, (d) penalties incurred by employees who had to undertake early retirement withdrawals to cover living expenses, and (e) costs to recover or replace repossessed property. These are only examples. Under Thryv, the Board is free to award any type of consequential damages that it determines are necessary to make employees completely whole for damages/injuries incurred as a result of an employer's unfair labor practice.

The consequences of an NLRB decision upholding a ULP charge just got materially more concerning for employers. As a result of this decision, employers should look for unions to increase the number of ULP charges that they file, and look for them to be more aggressive about using ULP charges as leverage against employers. In addition, this author would expect that because ULP charges can be filed by individual employees, we can also expect sophisticated employee-side attorneys to begin to use ULP charges as an additional weapon against employers.

On the opposite side, employers should be more diligent about making sure their decisions do not violate the National Labor Relations Act and should ensure that hiring, discipline/demotion and termination decisions are closely scrutinized to avoid discrimination based on union status or union activity, and the appearance of any such bias.

Creation of Micro Bargaining Units

When unions organize workplaces, it can be difficult to organize an entire facility, or an entire shift. It takes a lot of resources and is very risky for unions to organize a large facility/company, because if the union cannot get the required support, they have made a big investment to come up empty.

Therefore, unions often desire the option to organize smaller units of a workforce initially, to get their foot in the door of an employer’s workplace – and then work outward from there. A couple of Board decisions under the Trump NLRB made this strategy difficult. The 2017 PCC Structurals decision and 2019 decision in Boeing Co., required that in order to properly organize only a smaller unit of workers, the burden was on the union to show that workers in that small unit have “sufficiently distinct” interests from the other employees in the workplace. This was a very difficult standard to meet because most of the time the interests of all employees in a facility or on a given shift are similar. Thus, these decisions made it more difficult for unions to organize workers.

On December 14, in a 3-2 decision in American Steel Construction, 372 NLRB 23 (2022), the Board struck down the 2017 decision of the Trump Board in PCC Structurals and the related 2019 Trump Board decision in Boeing Co. In American Steel Construction, the 3-person majority held that micro-units were presumed to be proper and would only be disallowed or forced to expand where the proposed micro-unit has an “overwhelming” similarity and common interest with the excluded employees. In reaching this decision the majority essentially resurrected the Obama Board decision in Specialty Healthcare & Rehab. Center of Mobile, 357 NLRB 934 (2011).

The American Steel Construction decision will make it easier for unions to organize workers because the case allows unions much broader discretion in determining who will and will not be in the bargaining unit, so the union has a lot more power to independently dictate who will and will not be in the unit. This will allow unions the ability to shape the unit in a way that gives them the best chance of success in the union campaign. Non-union or partially unionized California employers should now pay even closer attention to potential union activity in their workplace as a result of this decision, and consider training their management and supervisors to help recognize union activity when it occurs and how to properly respond to it.