By Cary Burke
On April 4, 2023, the National Labor Relations Board signaled that it might allow employees to recover damages stemming from employers refusing to follow bargaining orders pending appeal. In Hudson Institute of Process Research, 372 NLRB No. 73 (April 4, 2023), the Board ruled that the employer unlawfully failed to bargain with the union. Ominously, though, the Board noted that it was severing and reserving for consideration whether to order the employer to “make its employees whole for the lost opportunity to bargain.” In other words, and as we previously discussed here, the Board will take up whether to overrule Ex-Cell-O Corp., 185 NLRB 107 (1970).
For context, in Ex-Cell-O, the Board held that Supreme Court precedent prevented the imposition of financial penalties on employers that refuse to bargain pending appeal of a bargaining order. NLRB General Counsel Jennifer Abruzzo has made no secret that, in her view, this restriction incentivizes employers to refuse to bargain. And General Counsel Abruzzo has further made known that she would seek to have Ex-Cell-O overturned in an appropriate case.
It appears that the appropriate case has arrived. Whether the Board will take up this invitation – and, if so, to what extent – remains unclear. Just as importantly, how such damages would be calculated is also not well understood. It’s possible that wage rates and benefits packages of employees working for “comparable” employers that offer similar services or manufacture similar products might be the basis for such calculations. These “lost opportunity damages” might also be tied to prevailing wages, cost-of-living increases, or some other metric entirely.
Should the Board overrule Ex-Cell-O and allow for the imposition of such financial penalties, employers that refuse to bargain with a union pending an appeal could open themselves up to steep damages awards should the appeal prove unsuccessful. In short, the risk calculus will change in significant ways. For that reason, employers with questions are advised to speak with their labor counsel at Seyfarth Shaw.