Build Back Better Reconciliation Bill Includes Heavy New Penalties for Employer Violations of NLRA

Jackson Lewis P.C.
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The media has been covering the budget bill – the Build Back Better Act – which contains controversial provisions on many subjects. Among them are provisions that include new employer penalties under the National Labor Relations Act (NLRA).

The political roadblock on the bill is a probable Senate filibuster which would prevent passage. The Biden Administration is attempting to utilize a Senate rule enabling this legislation to be passed as a “budget reconciliation bill,” sidestepping a filibuster and passing with a simple majority – which the Democrats could accomplish on a straight party line vote. However, to use this vehicle, a reconciliation bill must relate only to budget issues.

Versions of this bill have been pending for months. The current iteration is 1,684 pages long (reduced from September’s 2,465 pages). Often overlooked by the press are the bill’s amendments to the NLRA. The bill proposes severe new penalties for employer unfair labor practices (ULPs).

Today, ULPs by either unions or employers are remedied by requiring backpay and reinstatement to prior employment and employment terms. The Build Back Better Act would add new “civil penalties” (fines) in addition to the traditional remedies. But these fines would apply only to employer violations, not unions.

Under the bill, any ULP violation by an employer would additionally be subject to a penalty “not to exceed” $50,000 for each violation.

However, for employers found to have committed certain violations, and any which results in the discharge or “serious economic harm” to an employee, the penalty can be doubled to $100,000 if the employer had been found to have committed a similar violation within five years.

In addition, the bill would add civil fine personal liability for any company officer or director who “directed or committed the violation,” established the policy that led to the violation, or had actual or constructive knowledge of the events and the authority to prevent it but did not act to prevent it. Personal liability has never been part of the NLRA.

It is not surprising that employer groups strenuously oppose these provisions. It appears that they have made some headway, considering the provisions that have been deleted from the original bill. In addition to the civil penalties above, the original bill would have banned employer acts long held lawful under the NLRA, including:

(1)      Permanent replacement of economic strikers

(2)      Employer lockouts

(3)      Advising employees (mistakenly) that they are “supervisors” or “independent contractors” and thus not covered by the NLRA

(4)      Mandating employee attendance at “captive audience” employer campaign meetings

(5)      Entering or requiring employees to enter agreements not to engage in collective actions (such as class action litigation)

Further, the bill would have applied the same severe civil penalties to these would-be violations.

However, the Build Back Better Act is still subject to scrutiny as to whether it meets the standards for a budget reconciliation bill – meaning it must be limited to budgetary matters. The Senate Parliamentarian decides (in an advisory capacity) whether specific terms of a reconciliation bill meet that standard. In September, the Parliamentarian rejected certain immigration provisions of the original bill on that basis.  Senate Republicans reportedly will challenge the remaining NLRA civil penalty amendments as beyond the scope of a reconciliation bill.

News reports suggest there will be more political wrangling to come, in addition to any possible adverse report by the Parliamentarian. Will the remaining civil penalties survive to be voted on? We will keep a continuing eye on developments.

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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