Over the past few years, workers have been organizing unions at a breakneck pace. Whether that organizing pace is sustainable depends upon a number of factors, the most important of which is whether—and how quickly—it translates into concrete improvements in these workers’ lives. If federal labor law worked, all this organizing would lead seamlessly into collective bargaining with an employer. In the give and take of that process, workers would use the voice at work they’ve won to improve wages and working conditions. There are other means and models for unions to press for change at work, but collective bargaining is the gold standard—the preferred method under official U.S. policy.
But, at many newly organized workplaces, American workers are being denied their right to bargain collectively. The relevant law, the National Labor Relations Act (NLRA), requires employers to bargain in good faith with their employees’ certified bargaining representative. Anti-union employers, however, frequently ignore this requirement and simply use whatever tactics they can to delay the process for bargaining a first contract as the next phase of their union-busting campaign. They too often drag out the process to an absurd degree, as Starbucks has been doing. Or they might refuse to bargain at all, as Amazon has done. These moves are strategic. If these companies can make bargaining appear futile, then their workers may eventually give up and even vote out their union, an option that becomes available after one year without a first contract. Employers get away with this run-out-the-clock strategy all the time. That’s because the law has been unable to effectively enforce the duty to bargain in good faith. It’s a problem that has confounded workers and unions for decades.
Anti-union employers. . . . simply use whatever tactics they can to delay the process for bargaining a first contract as the next phase of their union-busting campaign.
But a simple, straightforward solution has been sitting under everyone’s noses all along. Several decades ago, the federal agency in charge of this issue, the National Labor Relations Board (NLRB), unfortunately tied its own hands from solving the problem. Now it simply needs to untie them.
The Problem: Failing to Make Workers Whole after Employers Break the Law
What typically happens today when an employer refuses to bargain in good faith shows just how broken the NLRB process is for protecting worker rights during bargaining. If an employer is dragging their feet to avoid bargaining a contract, workers can file an unfair labor practice charge. A trial is then held, and appeals are heard. It can take years of litigation, at which point—after years of not bargaining or the most superficial, bad-faith bargaining from employers—the remedy handed down by the NLRB is borderline pointless.
Understanding how the NLRB process became so ineffectual in preventing employers from delaying bargaining requires going back over half a century to 1970, in a case called Ex-Cell-O Corporation, the National Labor Relations Board limited the standard remedy for an employer refusing to bargain in good faith to the following: the employer must post a notice in the workplace promising that it will bargain in good faith and is issued an order to do so. That’s it. Since Ex-Cell-O, in each case where an employer has refused to bargain, the employer is simply ordered—after breaking the law for years—to start obeying the law it was already obligated to obey. In especially egregious cases, the NLRB might award the very rare “special remedy” of reimbursing the union for its bargaining costs, for when it wasted time negotiating with a bad faith employer. Under Ex-Cell-O, however, the most injured party—the workers denied their opportunity to bargain and win something better—are not compensated.
When union-busting companies take advantage of the NLRB’s toothless remedies, as was fashioned in Ex-Cell-O, the central policies of the NLRA—protecting the right to organize and promoting collective bargaining to improve the lives of workers’ and minimize industrial strife—are undermined. And this situation has been going on for over half a century when it comes to bargaining a first contract.
Ex-Cell-O Undermines the Right to Organize
One of the NLRA’s central policies is protecting workers’ right to organize. Workers organize so that they can improve their wages and working conditions and have the dignity of a voice on the job—and that voice is given its formal power at the bargaining table. By refusing to bargain, an employer can buy itself years of delay in ever allowing that voice to be effective. For an anti-union employer, unconcerned with its public image, the law, as it has been enforced, invites this lawbreaking approach. Under Ex-Cell-O, by dragging out the bargaining, the best outcome for the anti-union employer is that its workers give up and vote out their union. The worst outcome is that the employer is ordered to do the thing it was supposed to do in the first place: start bargaining.
Workers organize so that they can improve their wages and working conditions and have the dignity of a voice on the job. . . . By refusing to bargain, an employer can buy itself years of delay in ever allowing that voice to be effective.
In workplaces with high employee turnover—often a result of the very working conditions that the workers formed a union to improve—the employer’s refusal to bargain and the long road of litigation that ensues mean that by the time the employer is finally ordered to bargain, the composition of the bargaining unit that voted in favor of unionizing has changed drastically. That is, the bargaining unit’s pro-union majority may have been eliminated by attrition and turnover.
Consider Amazon. The average Amazon warehouse worker lasts eight months on the job. Twenty-one months have passed since Amazon’s Staten Island warehouse workers voted for a union, and the company has not agreed to a single collective bargaining session.
Or consider Starbucks. The average tenure for the plurality of Starbucks baristas is one to two years. Yet it’s been two years since the first stores organized a union, and not a single contract has been reached at any of the more than 370 Starbucks stores that have voted to unionize. The company continues to stall meaningful bargaining, insisting on making the process as inefficient as possible.
When employers avoid meaningful negotiations for years, many of the workers who originally voted to unionize so that they could collectively bargain are no longer around to even see the promised collective bargaining take place. Such an outcome doesn’t vindicate the right to organize but rather renders its exercise futile for countless workers.
Ex-Cell-O Invites Industrial Strife
Another central policy of the NLRA is promoting collective bargaining to minimize industrial strife. But under Ex-Cell-O, the ineffectiveness of the NLRB’s remedy for an employer refusing to bargain invites industrial strife. Workers need not take the employer’s lawbreaking sitting down. They have a right to engage in concerted activity, such as picketing or going on strike. While the legal machinery inches forward to finally impose an order on the employer to obey the law, workers can try to speed up the employer’s compliance by mobilizing. Workers can wage public campaigns, workplace actions, consumer boycotts, and strikes to press the employer to start bargaining in good faith. The employer’s refusal to bargain and the NLRB’s ineffective remedies not only encourage but practically demand industrial strife as a response from employees. Indeed, when it passed the NLRA, Congress itself noted this causal link, finding that employers’ refusals to accept collective bargaining had been causing the strife that the NLRA intended to resolve.
The upside of this concerted activity by workers is that it can build a militant labor movement. The downside is that it can be resource-draining and time-consuming, all for purposes of simply convincing an employer to obey the law. And even if the workers are successful, they are not compensated even one penny for all the losses they incurred before an employer’s compliance with the law is achieved.
The Losses Incurred by Workers
Workers unarguably endure losses when companies fail to bargain in good faith. Workers typically unionize in the first place because they have bills to pay but they aren’t earning a living wage, or because they have children who count on them but they don’t have predictable schedules, or because they have serious medical issues but no affordable health plan. Each week that passes while the employer refuses to bargain over these issues is another week of lost opportunity to address these issues at the bargaining table. The self-help that workers are forced to engage in due to NLRB toothlessness—for instance, going on strike for several days—often translates into further loss. When workers walk off the job to press their employer to obey the law, they lose wages. When they spend their time at a picket or rally or flyering the public, they lose time that could have been spent earning money or enjoying their family—all because of the employer’s illegal refusal to sit down and bargain in good faith.
A Legislative Solution: Not in This Congress
For some time, worker advocates have pressed for legislative reform to solve labor law’s glaring weaknesses. A bill in Congress, the Protecting the Right to Organize (PRO) Act, would amend the NLRA to provide for first contract mediation and arbitration. Under this legislation, if no first contract is reached within ninety days of the start of negotiations, either party can trigger mediation, and then if no settlement is reached within thirty days, either party can trigger binding arbitration. The theory is that, faced with the unpredictable outcome of an arbitrator’s decision on a contract, the parties—including the recalcitrant employer—will be sufficiently incentivized to reach an agreement on their own. Either way, an agreement will be reached within months, not years. Alas, corporations have the backing they need in Congress to block this legislation.
But legislative reform is not the only route to addressing this problem.
A Quicker Solution: Making Workers Whole
In a recent decision, in the case of Thryv, Inc., the NLRB breathed some life into an important remedial provision, Section 10(c). Under that section, when the NLRB finds that there has been an unfair labor practice, it is empowered “to take such affirmative action including reinstatement of employees with or without backpay, as will effectuate the policies of this Act.” The NLRB explained in Thryv that it has an “affirmative duty to rectify the harms caused by [an employer’s] unfair labor practice by attempting to restore the employee to the situation they would have been in but for that unlawful conduct.” It’s called “make-whole relief,” and the Thryv decision made clear that it includes “compensation for direct or foreseeable pecuniary harms in all cases.”
Now, Thryv did not involve a first-contract situation like that at Starbucks or Amazon. But the Thryv decision’s call to make employees whole in all cases as the NLRA intended currently sits alongside the 1970 Ex-Cell-O decision referenced earlier as the entire problem for first-contract cases: in those cases where the employer has outright refused to bargain a contract in good faith, the NLRB will only issue an order for the employer to bargain and not make the employees whole. The dissonance between Thryv and Ex-Cell-O is deafening. Ex-Cell-O should be overturned. Workers must be made whole in all cases, including when the employer has refused to bargain a contract in good faith.
Workers must be made whole in all cases, including when the employer has refused to bargain a contract in good faith.
So how can this be done? In other areas of law, when someone does something wrong and hurts another party, causing them to lose an opportunity, the law calculates compensatory relief. Why does the law suddenly become listless, powerless, and remedyless when it comes to workers’ injuries?
Imagine that Starbucks is planning a grand opening for a new store on March 5. On March 4, a nearby competitor has no scruples and busts the water main that supplies the new Starbucks store. It takes two days to fix the problem. On March 5, Starbucks cannot open because it has no water. It had advertised this grand opening far and wide. It loses a day’s worth of business opportunities, tallied up as some amount of lost sales and lost goodwill from would-be customers. Starbucks files suit to recover its losses due to the competitor’s sabotage. No one knows exactly how much Starbucks lost in sales. But the court does not throw up its hands. It is clear that Starbucks lost the opportunity to make any sales that day. So the court hears evidence about what the estimated sale losses were from both sides and decides accordingly. Now, imagine a world in which the competitor busts the water main and keeps it broken for months and years—on purpose. When Starbucks sues, all it gets is an order for the competitor to stop breaking the main and turn on the water again. That’s Ex-Cell-O.
Dissenting NLRB members in Thryv expressed worry that making workers whole in every case “opens the door to awards of speculative damages that go beyond the Board’s remedial authority.” But there’s a difference between being uncertain about the cause of a loss and being uncertain about how to measure that loss. The former is the kind of speculative damage that the law shrinks from, the latter is not. In a refusal-to-bargain case, workers have often been denied, for a year or more, the opportunity to bargain for something better. That loss of opportunity is not speculative. It is real, concrete, and purposeful—the intended result of the employer’s violation of the law. The measure of the direct injury that the workers suffered is uncertain, but it is no more imprecise than the loss Starbucks incurred in the example imagined above. While everyone knows Starbucks lost the opportunity to make sales, no one knows exactly whether customer John Doe would have entered the Starbucks store, would have decided to buy something, would have chosen this-sized latte or that-sized frappuccino, or whether the barista would have successfully upsold that customer with a bite to eat. In the Starbucks hypothetical, figuring out the compensatory relief involves figuring out not only whether one contract of sale would have been completed at the grand opening but whether hundreds of contracts under varying terms would have been completed. But the calculation does not involve alchemy. It involves data, comparisons, and reasonable inferences.
Dissenting NLRB members in Thryv also warned against “tort remedies,” insofar as the decision called for remedying not just direct but foreseeable pecuniary harms. That concern is not present in making employees whole for the lost opportunity to bargain. Setting aside all of the consequential damages that might flow from an employer’s refusal to bargain, such as a worker foregoing medical treatment because he never had the chance to bargain for a better health care plan, the lost opportunity to bargain itself is more than a foreseeable harm—it is a direct harm.
But how do we measure that harm?
Putting a price tag on this lost opportunity involves making some assumptions. For a long time, the NLRB has been making assumptions when it comes to reducing workers’ back pay. Why not here?
When an employer unlawfully fires a worker for trying to organize a union, the “make-whole” remedy for the worker is reinstatement plus back pay, minus any wages the worker earned at a new job while awaiting her reinstatement. The NLRB has imposed upon these fired workers a duty to mitigate their employer’s back pay losses—specifically, a duty to reasonably search for, accept, and retain appropriate work after the firing that would produce those interim earnings that reduce an employer’s back pay bill. Under the NLRB’s rules, during a period when the fired worker is not reasonably searching for work, the worker is entitled to zero back pay from the employer that fired her. And why is that? What underlying assumption is this duty-to-mitigate rule making? Obviously, it is the assumption that, if the worker had reasonably searched for work, she would have found a job paying at least as much as the one from which she was fired. The NLRB doesn’t know whether the search would have produced such a result, but making such an assumption is the NLRB’s way of ensuring no employee is ever made more-than-whole and a way of enforcing the employee’s duty to mitigate. In other words, the NLRB makes an assumption in unlawful termination cases about the outcome of an employee’s required but unfulfilled efforts that works out to the benefit of lawbreaking employers. The NLRB should be equally entitled to make an assumption in refusal-to-bargain cases about the outcome of employers’ required but unfulfilled efforts that works out to the benefit of wronged employees.
To be clear, just as the NLRB has long made an assumption about the extent of loss in failure-to-mitigate cases, under Ex-Cell-O, the NLRB has already been making an assumption about the extent of loss in failure-to-bargain cases: even if workers had been afforded their opportunity to bargain, they still would not have made any improvements to their compensation; in essence, the NLRB is making an assumption that the process of collective bargaining delivers no value to workers. In this fashion, the NLRB, while tasked with promoting the process of collective bargaining, effectively declared in Ex-Cell-O that the entire process is futile in the face of lawbreaking. It’s no wonder why anti-union employers behave as they do, ignoring, defying, or playing games with their duty to bargain.
The NLRB could easily reverse this assumption. Indeed, effectuating the NLRA calls for its reversal, to assume that good-faith bargaining would not be futile. In refusal-to-bargain cases, the NLRB could hear evidence from all sides about how to calculate the loss. That evidence might include the average raises that workers achieved at the bargaining tables of similarly situated employers, or average raises received across the relevant industry. Make-whole relief could extend to other areas, such as health care premiums or 401(k) contributions that would have been addressed but for the employer’s unfair labor practice. Or the NLRB could consider adopting a default remedy that approximates the value of the lost opportunity, like it did in a case called Transmarine Navigation Corp., involving effects bargaining for a plant closure. That very approach has been unanimously upheld by the courts. In each instance, such awards are a measure of harm. They are compensation for a very definite injury that is the direct result of unlawful conduct.
Moreover, if workers were forced to strike or engage in other expensive or time-consuming campaigns for the purpose of pressuring the employer to obey the law and bargain, why shouldn’t the losses associated with those actions—all caused and made necessary by the employer’s lawbreaking—be compensated? After all, had the employer been obeying the law and bargaining in good faith, the employees would not have struck.
The Weakness of Arguments Against Making Workers Whole
Those who oppose calculating loss for refusals to bargain point to Section 8(d) of the NLRA as the reason the NLRB cannot go down this road. Section 8(d) explains the obligation of both the union and the employer to bargain in good faith and further states that “such obligation does not compel either party to agree to a proposal or require the making of a concession.” In other words, the NLRB cannot impose a contract on the parties. A U.S. Supreme Court decision, H. K. Porter Co. v. NLRB, underscored this prohibition on imposing contract terms.
Section 8(d) and H. K. Porter are not relevant, however. Awarding make-whole relief is not imposing a contract. It is backward-looking—not prospective—relief. There is a difference. After an award of compensation for the lost opportunity to bargain, there will still be no contract. The workers will have been compensated for the losses incurred from the employer’s violation, but their wages going forward will, for the moment, remain unchanged. The day after the award, the parties will go to the bargaining table, with the same terms and conditions of employment from which they started, to negotiate an actual contract—hopefully this time in good faith.
If the employer again refuses to bargain in good faith, a new unfair labor practice charge can be filed, and the NLRB can again award make-whole relief to the workers covering the new period of violation—and still not impose prospective changes to the workers’ terms of employment. In each instance, no contract is imposed, workers’ estimated losses resulting from past unlawful conduct are calculated and awarded, and the ball remains, as before, in the employer’s court. The employer can choose to bargain in good faith or break the law. When it chooses the former, the law is working, and workers are given the opportunity to which they are entitled: to bargain for something better for themselves. When the employer chooses the latter, it breaks the law, and its employees get duly compensated for their losses.
Some might argue that an employer should not be required to make employees whole when it is “testing certification”; that is, when the employer commits a violation in order to challenge the NLRB’s certification of a bargaining representative, and thus overturn the union’s election victory. Congress gave the NLRB the final say on representation matters precisely because endless appeals of those matters would delay bargaining. Yet employers have worked out that they can have courts second-guess the NLRB by provoking the NLRB with a refusal to bargain that ends up appealed to a federal court of appeals, where the employer will attempt to argue that it shouldn’t be obligated to bargain in the first place. Unfortunately, the courts have long entertained these collateral attacks on the NLRB’s representation decisions. Employers may argue that they should not have to compensate workers for their lost opportunity to bargain while the employer is—purportedly in good faith—challenging the NLRB’s certification for the many years it takes to reach a final decision. But if the employer loses that appeal, brought in good faith or not, why should workers carry the burden of the employer’s mistake? The party that makes the mistake should bear the risk.
Moreover, the outcome here is not punitive by any means. The outcome is that the individuals who suffered losses as a result of unlawful conduct are made whole, even if imprecisely whole, but whole nonetheless, and not a penny more. Some employer advocates have claimed that make-whole relief in refusal-to-bargain cases amounts to a financial penalty. Imagine how their workers feel when they incur these losses for months and years as a direct result of the employer’s misconduct. Under Ex-Cell-O, the workers have been bearing 100 percent of what these employer advocates call a financial penalty.
Overturning Ex-Cell-O
The NLRB has an opportunity to correct its fifty-four-year-old mistake and overturn Ex-Cell-O, a misguided decision by the Nixon-era NLRB that swallowed many of the opponents’ arguments hook, line, and sinker, leaving workers without any compensation for over half a century of employer misconduct. At the time, even the U.S. Court of Appeals for the District of Columbia Circuit lamented that the Nixon NLRB’s approach was an insufficient exercise of its powers. But even better, the very majority that decided Ex-Cell-O deemed its remedy inadequate, admitting: “A mere affirmative order that an employer bargain upon request does not eradicate the effects of an unlawful delay of 2 or more years in the fulfillment of a statutory bargaining obligation.” In the past couple of years, NLRB general counsel Jennifer Abruzzo has sent multiple refusal-to-bargain cases to the NLRB arguing for make-whole remedies. Abruzzo has even suggested a methodology for calculating this relief. In each case, the NLRB has severed the question of compensating the employees, to be dealt with later in one fell swoop presumably, while it at least issues the typical bargaining orders to employers. In other words, there’s no reason to delay the ineffective and insufficient remedy while we consider an effective and sufficient one.
The sooner the NLRB moves on these matters and overturns Ex-Cell-O, the sooner workers will have a more meaningful right to organize and collectively bargain. Obviously, compensating workers for the losses they suffer raises the cost of refusing to bargain in good faith—but only by shifting the cost, not by creating it. For decades, workers have borne the cost of employer refusals to bargain. By overturning Ex-Cell-O, the NLRB will have rightfully placed that cost on the correct party: the bad actor. Suddenly, refusals to bargain might not look so appealing as a unionbusting strategy. Compliance might be in order. It would be a long-overdue flipping of the script. Instead of the law being used to show workers the futility of exercising their rights, it would teach employers the futility of breaking the law. By making employees whole for the lost opportunity to bargain, the rights and policies promised by the National Labor Relations Act would be a little closer to being fully delivered.
Tags: unions, collective bargaining, labor unions
Remedying Employers’ Unlawful Refusal to Bargain
Over the past few years, workers have been organizing unions at a breakneck pace. Whether that organizing pace is sustainable depends upon a number of factors, the most important of which is whether—and how quickly—it translates into concrete improvements in these workers’ lives. If federal labor law worked, all this organizing would lead seamlessly into collective bargaining with an employer. In the give and take of that process, workers would use the voice at work they’ve won to improve wages and working conditions. There are other means and models for unions to press for change at work, but collective bargaining is the gold standard—the preferred method under official U.S. policy.
But, at many newly organized workplaces, American workers are being denied their right to bargain collectively. The relevant law, the National Labor Relations Act (NLRA), requires employers to bargain in good faith with their employees’ certified bargaining representative. Anti-union employers, however, frequently ignore this requirement and simply use whatever tactics they can to delay the process for bargaining a first contract as the next phase of their union-busting campaign. They too often drag out the process to an absurd degree, as Starbucks has been doing. Or they might refuse to bargain at all, as Amazon has done. These moves are strategic. If these companies can make bargaining appear futile, then their workers may eventually give up and even vote out their union, an option that becomes available after one year without a first contract. Employers get away with this run-out-the-clock strategy all the time. That’s because the law has been unable to effectively enforce the duty to bargain in good faith. It’s a problem that has confounded workers and unions for decades.
But a simple, straightforward solution has been sitting under everyone’s noses all along. Several decades ago, the federal agency in charge of this issue, the National Labor Relations Board (NLRB), unfortunately tied its own hands from solving the problem. Now it simply needs to untie them.
The Problem: Failing to Make Workers Whole after Employers Break the Law
What typically happens today when an employer refuses to bargain in good faith shows just how broken the NLRB process is for protecting worker rights during bargaining. If an employer is dragging their feet to avoid bargaining a contract, workers can file an unfair labor practice charge. A trial is then held, and appeals are heard. It can take years of litigation, at which point—after years of not bargaining or the most superficial, bad-faith bargaining from employers—the remedy handed down by the NLRB is borderline pointless.
Understanding how the NLRB process became so ineffectual in preventing employers from delaying bargaining requires going back over half a century to 1970, in a case called Ex-Cell-O Corporation, the National Labor Relations Board limited the standard remedy for an employer refusing to bargain in good faith to the following: the employer must post a notice in the workplace promising that it will bargain in good faith and is issued an order to do so. That’s it. Since Ex-Cell-O, in each case where an employer has refused to bargain, the employer is simply ordered—after breaking the law for years—to start obeying the law it was already obligated to obey. In especially egregious cases, the NLRB might award the very rare “special remedy” of reimbursing the union for its bargaining costs, for when it wasted time negotiating with a bad faith employer. Under Ex-Cell-O, however, the most injured party—the workers denied their opportunity to bargain and win something better—are not compensated.
When union-busting companies take advantage of the NLRB’s toothless remedies, as was fashioned in Ex-Cell-O, the central policies of the NLRA—protecting the right to organize and promoting collective bargaining to improve the lives of workers’ and minimize industrial strife—are undermined. And this situation has been going on for over half a century when it comes to bargaining a first contract.
Ex-Cell-O Undermines the Right to Organize
One of the NLRA’s central policies is protecting workers’ right to organize. Workers organize so that they can improve their wages and working conditions and have the dignity of a voice on the job—and that voice is given its formal power at the bargaining table. By refusing to bargain, an employer can buy itself years of delay in ever allowing that voice to be effective. For an anti-union employer, unconcerned with its public image, the law, as it has been enforced, invites this lawbreaking approach. Under Ex-Cell-O, by dragging out the bargaining, the best outcome for the anti-union employer is that its workers give up and vote out their union. The worst outcome is that the employer is ordered to do the thing it was supposed to do in the first place: start bargaining.
In workplaces with high employee turnover—often a result of the very working conditions that the workers formed a union to improve—the employer’s refusal to bargain and the long road of litigation that ensues mean that by the time the employer is finally ordered to bargain, the composition of the bargaining unit that voted in favor of unionizing has changed drastically. That is, the bargaining unit’s pro-union majority may have been eliminated by attrition and turnover.
Consider Amazon. The average Amazon warehouse worker lasts eight months on the job. Twenty-one months have passed since Amazon’s Staten Island warehouse workers voted for a union, and the company has not agreed to a single collective bargaining session.
Or consider Starbucks. The average tenure for the plurality of Starbucks baristas is one to two years. Yet it’s been two years since the first stores organized a union, and not a single contract has been reached at any of the more than 370 Starbucks stores that have voted to unionize. The company continues to stall meaningful bargaining, insisting on making the process as inefficient as possible.
When employers avoid meaningful negotiations for years, many of the workers who originally voted to unionize so that they could collectively bargain are no longer around to even see the promised collective bargaining take place. Such an outcome doesn’t vindicate the right to organize but rather renders its exercise futile for countless workers.
Ex-Cell-O Invites Industrial Strife
Another central policy of the NLRA is promoting collective bargaining to minimize industrial strife. But under Ex-Cell-O, the ineffectiveness of the NLRB’s remedy for an employer refusing to bargain invites industrial strife. Workers need not take the employer’s lawbreaking sitting down. They have a right to engage in concerted activity, such as picketing or going on strike. While the legal machinery inches forward to finally impose an order on the employer to obey the law, workers can try to speed up the employer’s compliance by mobilizing. Workers can wage public campaigns, workplace actions, consumer boycotts, and strikes to press the employer to start bargaining in good faith. The employer’s refusal to bargain and the NLRB’s ineffective remedies not only encourage but practically demand industrial strife as a response from employees. Indeed, when it passed the NLRA, Congress itself noted this causal link, finding that employers’ refusals to accept collective bargaining had been causing the strife that the NLRA intended to resolve.
The upside of this concerted activity by workers is that it can build a militant labor movement. The downside is that it can be resource-draining and time-consuming, all for purposes of simply convincing an employer to obey the law. And even if the workers are successful, they are not compensated even one penny for all the losses they incurred before an employer’s compliance with the law is achieved.
The Losses Incurred by Workers
Workers unarguably endure losses when companies fail to bargain in good faith. Workers typically unionize in the first place because they have bills to pay but they aren’t earning a living wage, or because they have children who count on them but they don’t have predictable schedules, or because they have serious medical issues but no affordable health plan. Each week that passes while the employer refuses to bargain over these issues is another week of lost opportunity to address these issues at the bargaining table. The self-help that workers are forced to engage in due to NLRB toothlessness—for instance, going on strike for several days—often translates into further loss. When workers walk off the job to press their employer to obey the law, they lose wages. When they spend their time at a picket or rally or flyering the public, they lose time that could have been spent earning money or enjoying their family—all because of the employer’s illegal refusal to sit down and bargain in good faith.
A Legislative Solution: Not in This Congress
For some time, worker advocates have pressed for legislative reform to solve labor law’s glaring weaknesses. A bill in Congress, the Protecting the Right to Organize (PRO) Act, would amend the NLRA to provide for first contract mediation and arbitration. Under this legislation, if no first contract is reached within ninety days of the start of negotiations, either party can trigger mediation, and then if no settlement is reached within thirty days, either party can trigger binding arbitration. The theory is that, faced with the unpredictable outcome of an arbitrator’s decision on a contract, the parties—including the recalcitrant employer—will be sufficiently incentivized to reach an agreement on their own. Either way, an agreement will be reached within months, not years. Alas, corporations have the backing they need in Congress to block this legislation.
But legislative reform is not the only route to addressing this problem.
A Quicker Solution: Making Workers Whole
In a recent decision, in the case of Thryv, Inc., the NLRB breathed some life into an important remedial provision, Section 10(c). Under that section, when the NLRB finds that there has been an unfair labor practice, it is empowered “to take such affirmative action including reinstatement of employees with or without backpay, as will effectuate the policies of this Act.” The NLRB explained in Thryv that it has an “affirmative duty to rectify the harms caused by [an employer’s] unfair labor practice by attempting to restore the employee to the situation they would have been in but for that unlawful conduct.” It’s called “make-whole relief,” and the Thryv decision made clear that it includes “compensation for direct or foreseeable pecuniary harms in all cases.”
Now, Thryv did not involve a first-contract situation like that at Starbucks or Amazon. But the Thryv decision’s call to make employees whole in all cases as the NLRA intended currently sits alongside the 1970 Ex-Cell-O decision referenced earlier as the entire problem for first-contract cases: in those cases where the employer has outright refused to bargain a contract in good faith, the NLRB will only issue an order for the employer to bargain and not make the employees whole. The dissonance between Thryv and Ex-Cell-O is deafening. Ex-Cell-O should be overturned. Workers must be made whole in all cases, including when the employer has refused to bargain a contract in good faith.
So how can this be done? In other areas of law, when someone does something wrong and hurts another party, causing them to lose an opportunity, the law calculates compensatory relief. Why does the law suddenly become listless, powerless, and remedyless when it comes to workers’ injuries?
Imagine that Starbucks is planning a grand opening for a new store on March 5. On March 4, a nearby competitor has no scruples and busts the water main that supplies the new Starbucks store. It takes two days to fix the problem. On March 5, Starbucks cannot open because it has no water. It had advertised this grand opening far and wide. It loses a day’s worth of business opportunities, tallied up as some amount of lost sales and lost goodwill from would-be customers. Starbucks files suit to recover its losses due to the competitor’s sabotage. No one knows exactly how much Starbucks lost in sales. But the court does not throw up its hands. It is clear that Starbucks lost the opportunity to make any sales that day. So the court hears evidence about what the estimated sale losses were from both sides and decides accordingly. Now, imagine a world in which the competitor busts the water main and keeps it broken for months and years—on purpose. When Starbucks sues, all it gets is an order for the competitor to stop breaking the main and turn on the water again. That’s Ex-Cell-O.
Dissenting NLRB members in Thryv expressed worry that making workers whole in every case “opens the door to awards of speculative damages that go beyond the Board’s remedial authority.” But there’s a difference between being uncertain about the cause of a loss and being uncertain about how to measure that loss. The former is the kind of speculative damage that the law shrinks from, the latter is not. In a refusal-to-bargain case, workers have often been denied, for a year or more, the opportunity to bargain for something better. That loss of opportunity is not speculative. It is real, concrete, and purposeful—the intended result of the employer’s violation of the law. The measure of the direct injury that the workers suffered is uncertain, but it is no more imprecise than the loss Starbucks incurred in the example imagined above. While everyone knows Starbucks lost the opportunity to make sales, no one knows exactly whether customer John Doe would have entered the Starbucks store, would have decided to buy something, would have chosen this-sized latte or that-sized frappuccino, or whether the barista would have successfully upsold that customer with a bite to eat. In the Starbucks hypothetical, figuring out the compensatory relief involves figuring out not only whether one contract of sale would have been completed at the grand opening but whether hundreds of contracts under varying terms would have been completed. But the calculation does not involve alchemy. It involves data, comparisons, and reasonable inferences.
Dissenting NLRB members in Thryv also warned against “tort remedies,” insofar as the decision called for remedying not just direct but foreseeable pecuniary harms. That concern is not present in making employees whole for the lost opportunity to bargain. Setting aside all of the consequential damages that might flow from an employer’s refusal to bargain, such as a worker foregoing medical treatment because he never had the chance to bargain for a better health care plan, the lost opportunity to bargain itself is more than a foreseeable harm—it is a direct harm.
But how do we measure that harm?
Putting a price tag on this lost opportunity involves making some assumptions. For a long time, the NLRB has been making assumptions when it comes to reducing workers’ back pay. Why not here?
When an employer unlawfully fires a worker for trying to organize a union, the “make-whole” remedy for the worker is reinstatement plus back pay, minus any wages the worker earned at a new job while awaiting her reinstatement. The NLRB has imposed upon these fired workers a duty to mitigate their employer’s back pay losses—specifically, a duty to reasonably search for, accept, and retain appropriate work after the firing that would produce those interim earnings that reduce an employer’s back pay bill. Under the NLRB’s rules, during a period when the fired worker is not reasonably searching for work, the worker is entitled to zero back pay from the employer that fired her. And why is that? What underlying assumption is this duty-to-mitigate rule making? Obviously, it is the assumption that, if the worker had reasonably searched for work, she would have found a job paying at least as much as the one from which she was fired. The NLRB doesn’t know whether the search would have produced such a result, but making such an assumption is the NLRB’s way of ensuring no employee is ever made more-than-whole and a way of enforcing the employee’s duty to mitigate. In other words, the NLRB makes an assumption in unlawful termination cases about the outcome of an employee’s required but unfulfilled efforts that works out to the benefit of lawbreaking employers. The NLRB should be equally entitled to make an assumption in refusal-to-bargain cases about the outcome of employers’ required but unfulfilled efforts that works out to the benefit of wronged employees.
To be clear, just as the NLRB has long made an assumption about the extent of loss in failure-to-mitigate cases, under Ex-Cell-O, the NLRB has already been making an assumption about the extent of loss in failure-to-bargain cases: even if workers had been afforded their opportunity to bargain, they still would not have made any improvements to their compensation; in essence, the NLRB is making an assumption that the process of collective bargaining delivers no value to workers. In this fashion, the NLRB, while tasked with promoting the process of collective bargaining, effectively declared in Ex-Cell-O that the entire process is futile in the face of lawbreaking. It’s no wonder why anti-union employers behave as they do, ignoring, defying, or playing games with their duty to bargain.
The NLRB could easily reverse this assumption. Indeed, effectuating the NLRA calls for its reversal, to assume that good-faith bargaining would not be futile. In refusal-to-bargain cases, the NLRB could hear evidence from all sides about how to calculate the loss. That evidence might include the average raises that workers achieved at the bargaining tables of similarly situated employers, or average raises received across the relevant industry. Make-whole relief could extend to other areas, such as health care premiums or 401(k) contributions that would have been addressed but for the employer’s unfair labor practice. Or the NLRB could consider adopting a default remedy that approximates the value of the lost opportunity, like it did in a case called Transmarine Navigation Corp., involving effects bargaining for a plant closure. That very approach has been unanimously upheld by the courts. In each instance, such awards are a measure of harm. They are compensation for a very definite injury that is the direct result of unlawful conduct.
Moreover, if workers were forced to strike or engage in other expensive or time-consuming campaigns for the purpose of pressuring the employer to obey the law and bargain, why shouldn’t the losses associated with those actions—all caused and made necessary by the employer’s lawbreaking—be compensated? After all, had the employer been obeying the law and bargaining in good faith, the employees would not have struck.
The Weakness of Arguments Against Making Workers Whole
Those who oppose calculating loss for refusals to bargain point to Section 8(d) of the NLRA as the reason the NLRB cannot go down this road. Section 8(d) explains the obligation of both the union and the employer to bargain in good faith and further states that “such obligation does not compel either party to agree to a proposal or require the making of a concession.” In other words, the NLRB cannot impose a contract on the parties. A U.S. Supreme Court decision, H. K. Porter Co. v. NLRB, underscored this prohibition on imposing contract terms.
Section 8(d) and H. K. Porter are not relevant, however. Awarding make-whole relief is not imposing a contract. It is backward-looking—not prospective—relief. There is a difference. After an award of compensation for the lost opportunity to bargain, there will still be no contract. The workers will have been compensated for the losses incurred from the employer’s violation, but their wages going forward will, for the moment, remain unchanged. The day after the award, the parties will go to the bargaining table, with the same terms and conditions of employment from which they started, to negotiate an actual contract—hopefully this time in good faith.
If the employer again refuses to bargain in good faith, a new unfair labor practice charge can be filed, and the NLRB can again award make-whole relief to the workers covering the new period of violation—and still not impose prospective changes to the workers’ terms of employment. In each instance, no contract is imposed, workers’ estimated losses resulting from past unlawful conduct are calculated and awarded, and the ball remains, as before, in the employer’s court. The employer can choose to bargain in good faith or break the law. When it chooses the former, the law is working, and workers are given the opportunity to which they are entitled: to bargain for something better for themselves. When the employer chooses the latter, it breaks the law, and its employees get duly compensated for their losses.
Some might argue that an employer should not be required to make employees whole when it is “testing certification”; that is, when the employer commits a violation in order to challenge the NLRB’s certification of a bargaining representative, and thus overturn the union’s election victory. Congress gave the NLRB the final say on representation matters precisely because endless appeals of those matters would delay bargaining. Yet employers have worked out that they can have courts second-guess the NLRB by provoking the NLRB with a refusal to bargain that ends up appealed to a federal court of appeals, where the employer will attempt to argue that it shouldn’t be obligated to bargain in the first place. Unfortunately, the courts have long entertained these collateral attacks on the NLRB’s representation decisions. Employers may argue that they should not have to compensate workers for their lost opportunity to bargain while the employer is—purportedly in good faith—challenging the NLRB’s certification for the many years it takes to reach a final decision. But if the employer loses that appeal, brought in good faith or not, why should workers carry the burden of the employer’s mistake? The party that makes the mistake should bear the risk.
Moreover, the outcome here is not punitive by any means. The outcome is that the individuals who suffered losses as a result of unlawful conduct are made whole, even if imprecisely whole, but whole nonetheless, and not a penny more. Some employer advocates have claimed that make-whole relief in refusal-to-bargain cases amounts to a financial penalty. Imagine how their workers feel when they incur these losses for months and years as a direct result of the employer’s misconduct. Under Ex-Cell-O, the workers have been bearing 100 percent of what these employer advocates call a financial penalty.
Overturning Ex-Cell-O
The NLRB has an opportunity to correct its fifty-four-year-old mistake and overturn Ex-Cell-O, a misguided decision by the Nixon-era NLRB that swallowed many of the opponents’ arguments hook, line, and sinker, leaving workers without any compensation for over half a century of employer misconduct. At the time, even the U.S. Court of Appeals for the District of Columbia Circuit lamented that the Nixon NLRB’s approach was an insufficient exercise of its powers. But even better, the very majority that decided Ex-Cell-O deemed its remedy inadequate, admitting: “A mere affirmative order that an employer bargain upon request does not eradicate the effects of an unlawful delay of 2 or more years in the fulfillment of a statutory bargaining obligation.” In the past couple of years, NLRB general counsel Jennifer Abruzzo has sent multiple refusal-to-bargain cases to the NLRB arguing for make-whole remedies. Abruzzo has even suggested a methodology for calculating this relief. In each case, the NLRB has severed the question of compensating the employees, to be dealt with later in one fell swoop presumably, while it at least issues the typical bargaining orders to employers. In other words, there’s no reason to delay the ineffective and insufficient remedy while we consider an effective and sufficient one.
The sooner the NLRB moves on these matters and overturns Ex-Cell-O, the sooner workers will have a more meaningful right to organize and collectively bargain. Obviously, compensating workers for the losses they suffer raises the cost of refusing to bargain in good faith—but only by shifting the cost, not by creating it. For decades, workers have borne the cost of employer refusals to bargain. By overturning Ex-Cell-O, the NLRB will have rightfully placed that cost on the correct party: the bad actor. Suddenly, refusals to bargain might not look so appealing as a unionbusting strategy. Compliance might be in order. It would be a long-overdue flipping of the script. Instead of the law being used to show workers the futility of exercising their rights, it would teach employers the futility of breaking the law. By making employees whole for the lost opportunity to bargain, the rights and policies promised by the National Labor Relations Act would be a little closer to being fully delivered.
Tags: unions, collective bargaining, labor unions