NLRB Restricts Employers’ Ability to Reach Consent Settlement Agreements

In United States Postal Service, 364 NLRB No. 116 (August 27, 2016), the National Labor Relations Board (NLRB) overturned long-standing precedent by ruling that an administrative law judge (ALJ) may accept a proposed unilateral settlement only if its terms provide for a “full remedy.” This decision will affect employers’ future efforts to remove or limit default language when agreeing to settle alleged violations of the National Labor Relations Act (NLRA).

The ALJ’s Decision

The underlying complaint alleged that the employer had violated Section 8(a)(1) of the NLRA by threatening employees with more vigorous enforcement of workplace rules if they chose to be represented by a union steward or sought support and/or assistance from a union. Prior to the hearing, the employer requested that the ALJ approve a “unilateral settlement agreement,” to which both the General Counsel of the NLRB and the union objected. The General Counsel argued that because the employer was a recidivist offender, the employer’s proposed limitation of default (language that would have allowed the General Counsel to seek a default judgment and reinstate the claims if the employer failed to comply with the agreement) to one location or to a six-month period was insufficient to remedy the violations alleged in the complaint. The union also objected to the posting of a notice of violation in only one location, arguing that this was insufficient because the employer’s supervisors floated throughout many of the employer’s locations. Notwithstanding these objections, the ALJ determined that the employer’s proposed settlement was reasonable because it provided “almost the same remedy” as the one available to the charging party if the General Counsel were to have prevailed at the hearing.

Board Rejects the Consent Decree

Under prior precedent established in Electronic Workers IUE Local 201 (General Electric Co.), 188 NLRB 855 (1971), the Board had been willing to approve a settlement that provided a “full remedy” for all of the violations alleged in a complaint, without the agreement of the General Counsel or the charging party. In 1991, the Board introduced a different standard in Copper State Rubber, 301 NLRB 138 (1991) and Food Lion, Inc., 304 NLRB 602 (1991), indicating that it would accept a proffered adjustment that covered all of the allegations of a complaint and “effectuate[d] the remedial purposes of the [National Labor Relations] Act,” but would no longer require a “full remedy” in order to issue a consent decree.

In Postal Service, the Board again shifted position, rejecting 25 years of precedent established by Copper State and Food Lion, and returned to its former General Electric standard. In so doing, the Board noted that there were no policy justifications for accepting less than a full remedy. The Board further explained that a “proposed order protects the public interest and effectuates the purposes and policies of the Act only if it provides a full remedy for all of the violations alleged in the complaint.” (Emphasis added.) In evaluating whether a remedy is complete, the Board indicated that it would determine “whether the proposed order includes all the relief that the aggrieved party would receive under the Board’s established remedial practices were the case successfully litigated”—ignoring that such a remedy may provide little incentive for an employer to actually settle. The Board then found that because the settlement agreement limited enforcement to a six-month period, it did not provide a “full remedy” because Board orders “do not place such limitations on the effective duration of their terms.” The Board then remanded the case to the ALJ for further review.

Another Strong Dissent

Member Philip Miscimarra again dissented from the majority, noting that the Board’s position was “self-contradictory.” As Member Miscimarra pointed out, “if the Board would find that the terms of a settlement agreement are ‘reasonable’ . . . this means the Board would find it unreasonable not to give effect to the settlement agreement.” Therefore, any opposition raised by the General Counsel or other parties to a reasonable settlement agreement would be unreasonable. Member Miscimarra went on to explain that, “by holding that the Board will no longer accept settlement agreements that the Board would find ‘reasonable,’ my colleagues are imposing an irrational constraint on themselves.” (Emphasis in original.) This is because the Act seeks to encourage dispute resolution and promote industrial peace, which are advanced by the Board’s acceptance of all reasonable settlements, and not only those that provide for full remedies.

Member Miscimarra further disagreed with the majority’s rejection of the consent decree in the case, finding the six-month sunset clause did not limit employees’ rights and should have been accepted as a reasonable settlement.

Key Employer Takeaways

In the past, many employers faced with intransigent NLRB Regional Offices have sought assistance from ALJs to reach what they believe to be reasonable settlements. Unilateral settlement agreements, including those that contained limited or no default language, were regularly approved by ALJs on the basis that they were reasonable. Under the new standard, ALJs will no longer be able to accept settlements with any limitations—even where, as Member Miscimarra pointed out, a Board order would not result in default language. Instead, employers may be required to proceed to hearing and defend a claim on the merits, knowing that a Board order would not result in any worse remedy than a proposed settlement and that there may be a chance of success.