Following an economic strike, strikers retain their status as employees and are entitled to reinstatement to their former positions at the conclusion of the strike unless the employer can establish legitimate and substantial reasons for the failure to reinstate the strikers. Such "legitimate and substantial reasons" can include the hiring of permanent replacement workers.

However, it is the employer's burden to prove strikers were permanently replaced. This proof must be specific and must demonstrate a mutual understanding between the employer and the replacements that their jobs are "permanent." Furthermore, because the use of permanent replacement workers often results in the loss of the striking employees' jobs, disputes about the legality of the permanent replacements are frequent and contentious.

In 1997 the National Labor Relations Board, toward the end of the Clinton presidency, issued a decision known as Target Rock, 324 NLRB 373 (1997), that effectively heightened the risks to employers who wished to use permanent replacements. In Target Rock the employer had its replacement employees sign a boilerplate at-will statement that "I understand that the employer follows an employment-at-will policy in that I or the employer may terminate my employment at any time, or for any reason consistent with applicable state or federal law." The Board held that this statement "obviously does not support the Respondent's position that the striker replacements were permanent" and ordered the reinstatement of the allegedly permanently replaced striking employees with back pay.

This decision was troubling to employers because it suggested that an employer who hired "permanent" replacements could not hire such employees on an at-will basis, and that if an employer wished to replace strikers with permanent replacements, it must enter into some type of "permanent" contractual arrangement with them.

Board Reverses Course

Fortunately, the Board has recently changed its view. In Jones Plastics & Engineering Co., 351 NLRB No. 11 (2007), the Board reversed Target Rock insofar as it held "that at-will employment is inconsistent with or detracts from an otherwise valid showing of permanent replacement status." The Board found that because the employer had its replacement employees sign statements at the beginning of their employment that they were "permanent replacements" for employees "presently on strike," that, along with the lack of any other evidence that the replacements were temporary, was sufficient to establish permanent replacement status notwithstanding an at-will disclaimer in the same statement.

What This Means for Employers

This decision makes it easier to hire permanent replacements who are also designated at-will employees. An employer should have employees it hires with the intention of permanently replacing strikers sign a statement where this intention is expressly acknowledged. However, if permanent replacements are hired, care must still be taken to ensure that no other communications with them contradict or cast doubt upon their status as permanent replacements for purposes of the National Labor Relations Act. Even in Jones Plastics, the Board made clear that it would examine job advertisements and all other communications with replacement workers to determine their status as permanent or temporary.