On May 31, an NLRB panel ruled 2-1 to change its longstanding precedent with respect to the hiring of permanent replacements for economic strikers. The old rule, based in part on the U.S. Supreme Court's 1938 holding in NLRB v. Mackay Radio, was that an employer subject to a strike by employees over economic issues and other terms and conditions of employment could permanently replace (not fire or terminate) the strikers. Until now, the NLRB has interpreted Mackay Radio as meaning that the employer’s right to permanently replace strikers is virtually absolute, unless there was an “independent unlawful reason” for replacing the strikers.

The NLRB cannot overrule the Supreme Court, so Mackay Radio remains in place, but the Board is now more narrowly circumscribing employers’ right to replace economic strikers.  Under the Board panel’s recent decision in American Baptist Homes of the West, permanent replacement of an economic striker will be deemed unlawful by the Board if the decision to replace is driven by any motive unlawful under the NLRA (for example, a desire to retaliate against an employee for exercise of Section 7 rights). The Board found that American Baptist Homes permanently replaced economic strikers not solely to be able to continue to operate during the strike, but also to “teach them a lesson” and deter future strikes.

For more than 50 years, the NLRB rule had been that the motives for a decision to the hire permanent replacements for economic strikers were irrelevant except when there was evidence that the employer acted for “an independent unlawful reason” that was unrelated to the strike or the collective bargaining situation causing the strike. Under the new Board rule, an employer hiring permanent replacements apparently will be found to violate the NLRA if it acts for the intent or purpose of (1) discriminating against an employee because of protected concerted activity or (2) discouraging future protected concerted activity, even if the intent or purpose is related to the strike or bargaining situation. Based on the Board’s new rule, employers who are thinking about permanently replacing economic strikers should be prepared to demonstrate that continued operation of the business during an economic strike is the only reason for the permanent replacements. This may be very difficult to establish, especially to the satisfaction of the current NLRB General Counsel, Board region staff, or the current Board majority, which can be expected to scrutinize why the employer could not have used temporary replacements to continue operating during the strike. As Board Member Philip Miscimarra aptly pointed out in his dissent, “... under the [Board majority rule] ... if the employer hires permanent replacements, it appears that any evidence of anti-strike animus will render unlawful the employer’s actions, resulting in potentially debilitating back pay liability.”