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Why settle? The new NLRB is not interested in compromise

September 27, 2021

Although they may find it repugnant to do so, many employers end up settling employment-related lawsuits. Afterall, litigation can be expensive and employers often settle when the cost of the settlement is less than the exposure that they would face if they lost at trial. The same reasoning used to apply to employers who were facing litigation in an unfair labor practice matter before the National Labor Relations Board (NLRB). However, a recent memorandum issued by the NLRB’s general counsel likely makes the prospects of settlement so unattractive that employers will have no choice but to fully litigate future NLRB cases.

On Sept. 15, 2021, the NLRB’s new general counsel, Jennifer Abruzzo, issued a memorandum to the NLRB’s regions instructing them to demand nothing less than full relief in all settlements. Specifically, the general counsel instructed the regions to accept nothing less than, “100 percent of the backpay and benefits owed” in reaching settlements.

What’s more, the general counsel also instructed the regions to seek the following relief in settlements:

  • Consequential damages that conceivably could flow from the employer’s alleged unfair labor practice e.g., medical expenses, moving expenses and any other economic damages that may have occurred because of the employer’s alleged unfair labor practice.
  • Reinstatement of terminated employees. Where reinstatement is not feasible, the regions are instructed to seek front pay.
  • Inclusion of “default language” in all settlements. This language would result in a default judgment being entered against any employer who did not abide by its settlement agreement with the NLRB.
  • The expansion of notices to employees of the allegations against the employer and of the employees’ rights under the National Labor Relations Act. This includes an instruction that regions should consider requiring such postings on employers’ public social media websites, where appropriate.
  • Settlement agreements that do not contain a non-admissions of liability clause.
  • Letters of apology. According to the general counsel, “such a letter may assist in de-escalating lingering tensions between the employee and the employer during the reinstatement process.”

The general counsel’s memorandum makes clear that the NLRB will be seeking full capitulation, rather than compromise, when settling unfair labor practice charges. The NLRB’s new stance on settlement may leave many employers asking the question: Why settle?

For more information on this topic, or to learn how Godfrey & Kahn can help, contact a member of our Labor, Employment & Immigration Law Practice Group.

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