Boilerplate Language In NLRB Settlement Agreement Leads To Default Judgment

by Proskauer - Labor Relations

[author: Mark Theodore]

During the last several months, the NLRB has made no secret that it wants to make changes to precedent and policy. We have seen public pronouncements about ambush elections, employee rights posters, micro bargaining units, and other issues. Just because the NLRB doesn't highlight a policy change doesn't mean the change cannot have widespread consequences. This is true about the relatively new boilerplate language being placed into informal settlement agreements by the NLRB.

Parties to unfair labor practices cases often settle charges instead of litigating; indeed the vast majority of cases where complaint is issued are settled. This is the case regardless of the actual merit of the allegations. Sometimes the desire to settle is a resource issue, sometimes it is a simple desire to bring some closure to the issue. Oftentimes, there is an incentive to settle because the terms are better than if a finding of a violation of the Act were to occur. When a case is settled the NLRB offers its standard informal settlement agreement, a two page document that contains some boilerplate about what is being settled. Several months ago the NLRB decided to add the following language to the boilerplate:

The Charged Party agrees that in case of non-compliance with any of the terms of this Settlement Agreement by the Charged Pary, and after 14 days notice from the Regional Director of the National Labor Relations Board of such non-compliance without remedy by the Charged Party, the Regional Director may reissue the complaint in this matter. The General Counsel may then file a motion for default judgment with the Board on the allegations of the complaint. The Charged Party understands and agrees that the allegations of the reissued complaint may be deemed to be true by the Board and its answer to such complaint shall be considered withdrawn. The Charged Party also waives the following:  (a) filing of answer; (b) hearing: (c) administrative law judge's decisions; (d) filing of exceptions and briefs; (e) oral argument before the Board; (f) the making of findings of fact and conclusions of law by the Board; and (g) all other proceedings to which a party may be entitled under the Act or the Board's Rules and Regulations. On receipt of said motion for default judgment, the Board shall issue an order requiring the Charged Party to show cause why said motion of the General Counsel should not be granted. The Board may then, without necessity of trial or any other proceeding, find all allegations of the complaint to be true and make findings of fact and conclusions of law consistent with those allegations adverse to the Charged Party, on all issues raised by the pleadings. The Board may then issue an order providing a full remedy for the violations found as is customary to remedy such violations. The parties further agree that the Board's order and U.S. Court of Appeals judgment may be entered ex parte. 

This language says the Charged Party waives all rights to contest the matters, and gives the Regional Director the power to determine whether the employer or union has complied with the agreement. It is an extremely broad waviver of rights that could result in the issuance of a finding that the law has been violated with no recourse.

One employer recently found this out the hard way in Long Mechanical, Inc., 358 NLRB No. 98 (August 9, 2012).pdf. In Long Mechanical, as part of a settlement agreement with the NLRB the employer agreed to reinstate some employees and provide certain information to the union on a periodic basis. After some time, the Regional Director determined the employer was not in compliance and warned it to comply or face potential default pursuant to the provision. Ultimately, a motion for default was filed. The Board granted the motion and adopted all allegations in the original complaint. The lack of information about the alleged non-compliance in the case makes it impossible to evaluate what happened. One cannot tell if the employer had in fact failed to comply. One cannot tell if the default judgment resulted in findings of unfair labor practice allegations that were dropped as part of the settlement agreement.

The use of this boilerplaite language should raise alarm bells in certain circumstances when settling matters with the agency. One can envision circumstances where it is worth asserting it is not worth settling unless the language is stricken from the agreement. The NLRB agents typically say they will not delete the language but they have done so (albeit begrudgingly) when a compelling argument exists. There are situations, frankly, where it is better to litigate the matter than have this language in a settlement agreement.

  • Questions of law exist. Sometimes reasonable people disagree as to the contours of the NLRA. Even with 77 years of precedent, there are cases where it is not always clear whether a violation exists and what kind of remedy should result. For example, it is not always clear when an employer may stop distribution of union literature on its premises. Board agents and even Administrative Law Judges sometimes cannot definitively articulate the limits of such distribution rules. In such a situation, especially if there is a possiblity the problem can recur, it is not worth having the boilerplate language in the agreement because it would be ceding a well-founded position to whatever the Regional Director believes.
  • Context. Is there a possiblity additional unfair labor practice charges may be forthcoming? If the incident or incidents giving rise to the charge are self-contained and isolated, then there probably is no issue. If, however, the employer is subject to ongoing dispute with a union, then the boilerplate can be hazardous. For example, if the employer is the target of an intense corporate campaign, where charges are often filed in droves despite the existence of merit, then the boilerplate language may only give the union motivation to assert a breach has occurred.
  • Remedy ambiguity. Sometimes it is not clear what the remedy should be. In most cases, the remedy is a simple cease and desist with a notice posting. One advantage of settlement is the ability to have input in the notice language. If there is some dispute over the remedy then the boilerplate language only gives the government the ability to ask for whatever remedy it wants.  

In sum, the boilerplate language in NLRB settlement agreements is something that should be carefully evaluated. There may be some situations where the employer could be giving up important rights with no opportunity to be heard on the matter.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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