The five members of the National Labor Relations Board (NLRB) usually delegate their authority to adjudicate matters under the National Labor Relations Act (NLRA) to a panel of three members. Typically, the NLRB acts at its full five-member strength only on cases involving significant new issues or changes in policy, and such full-Board decisions are not common. In an unusual move, the NLRB has recently handed down a spate of decisions rendered by the full five-member Board, all of which reflect a sharp three-to-two split among the members. Summaries of the recent full-Board NLRB decisions of most interest to employers are set forth below.

NLRB Eases Employer’s Burden Relating to Refusal to Hire Union “Salts”

In general, the NLRA prohibits employers from refusing to hire applicants because of their union affiliation or activity. For years, the NLRB presumed that any individual who applied for a job was entitled to the NLRA’s protections against such discrimination, even when the individual was a union “salt.” “Salts” are union agents who apply for or accept a job with a non-union company in an attempt to organize a union at the company. The term also applies to union agents who submit employment applications with no intention of accepting employment with the company. In this situation, the union files an unfair labor practice charge when the company does not hire the salts -- a tactic designed to harass the employer or gain a strategic advantage in an organizing campaign. Under the NLRB’s traditional presumption that union salts were entitled to the protections of the NLRA, an employer could avoid an unfair labor practice finding based on the failure to hire a qualified salt by proving that the salt had no genuine interest in employment, a difficult burden to satisfy. Recently, however, the NLRB, recognizing that the processes of the NLRA should not be used abusively, has reconsidered its approach to the protection of union salts under the NLRA.

In Toering Electric Co., decided September 29, 2007, the NLRB continued to hold that an applicant for employment entitled to NLRA protection is someone “genuinely interested” in seeking to establish an employment relationship with the employer. However, the NLRB reversed the ultimate burden of proof requirement and held that the General Counsel, the prosecutor in an unfair labor practice proceeding, has the ultimate burden of proving that an applicant is genuinely interested in obtaining employment. This ruling marks a significant change from the NLRB’s previous position regarding salts, which had placed the burden of proof concerning this issue on the employer.

Under the new approach, an employer charged with discriminatorily denying employment to an applicant may defend against the charge by raising a reasonable question as to the applicant’s actual interest in working for the employer. The employer may do this by introducing, for example, evidence that the applicant refused employment with the employer in the past, incorporated belligerent or offensive comments on the application form, or engaged in other conduct inconsistent with a genuine interest in employment. If the employer puts forth evidence of the applicant’s lack of genuine interest, the General Counsel must prove by a preponderance of the evidence that the individual was genuinely interested in establishing an employment relationship with the employer. If the General Counsel fails to carry that burden, the rejection of the applicant will be lawful.

The NLRB’s decision in Toering Electric Co. makes it easier for employers to avoid liability when charged with discriminatorily failing to hire union salts. Employers should remember, however, that the burden of proving a salt’s genuine interest in employment will fall on the General Counsel only after the employer has raised a reasonable question about the sincerity of the salt’s application. Significantly, the NLRB’s examples of the type of evidence that would raise such a question do not include the mere fact that the salt is on the payroll of the union, although the NLRB did not expressly foreclose the use of such evidence. As a practical matter, it may be difficult for an employer to impose the new burden of proof on the General Counsel. Thus, until the NLRB provides more guidance on the type of evidence that will impose the ultimate burden of proving a genuine interest in employment on the General Counsel, employers should proceed with caution in dealing with applicants believed to be salts.

Reasonably Based Lawsuits Protected from Unfair Labor Practice Claims

When employees or unions are believed to have engaged in unlawful conduct affecting an employer, the employer may seek to remedy the situation by filing a lawsuit based on the allegedly improper conduct. Sometimes, such lawsuits are allegedly motivated by a desire to retaliate against employees for engaging in activity protected by the NLRA. Adverse actions by an employer that are motivated by a desire to punish or retaliate against employees for engaging in protected activity (such as organizing a union, picketing, or making concerted demands regarding working conditions) generally constitute unfair labor practices under the NLRA. However, in Bill Johnson’s Restaurants, Inc. v. NLRB, the Supreme Court held in 1983 that the NLRB could not enjoin reasonably based, ongoing litigation as an unfair labor practice because such action would interfere with the First Amendment right to petition the government for redress of grievances. Nevertheless, the Court suggested that the NLRB could find a completed lawsuit to be an unfair labor practice when the lawsuit was filed with retaliatory intent and the judgment was adverse to the party bringing the lawsuit. For years, the NLRB followed this approach and maintained the distinction between ongoing and completed litigation, finding that employers who brought reasonably based but unsuccessful lawsuits against unions or employees for a retaliatory reason had committed an unfair labor practice.

In BE & K Construction Co., however, the NLRB recently changed its position and held that a completed, reasonably based lawsuit that results in an outcome unfavorable to the employer cannot be found to be an unfair labor practice, even if a purpose of its having been brought was retaliation against employees because of their NLRA-protected conduct. The NLRB reasoned that the prospect of an unfair labor practice finding, should the lawsuit ultimately prove to be unsuccessful, would tend to discourage employers from exercising their First Amendment right to petition the government for redress of grievances. The NLRB emphasized that its ruling protects only those lawsuits that are “reasonably based” and stated that a lawsuit lacks a reasonable basis when no reasonable litigant could realistically expect success on the merits. In light of the NLRB’s ruling in BE & K Construction Co., employers need no longer be dissuaded from bringing a lawsuit that has a reasonable basis in law and fact because of the prospect that the lawsuit might itself be deemed to be an unfair labor practice.

NLRB Creates Window Period for Challenges to a Voluntarily Recognized Union

Under the NLRA, a union may become the bargaining representative of a unit of employees through either an election conducted by the NLRB or through the voluntary recognition process. In the voluntary recognition process, the union obtains proof, usually through authorization cards signed by employees, that a majority of employees desire representation by the union. An employer presented with such proof may then voluntarily recognize the union as its employees’ bargaining representative. Historically, when an employer voluntarily recognized a union, the NLRB prohibited the processing of a decertification petition (that is, a petition seeking to oust the recognized union) filed by the employees or an election petition filed by a rival union (to replace the recognized union) for a reasonable time period, generally six months or longer, after recognition. That prohibition is known as the “recognition bar doctrine.” In a significant departure from preexisting law, the NLRB recently modified the recognition bar doctrine to permit the filing of a decertification or election petition within a limited time period after voluntary recognition.

In Dana Corp., decided on September 29, 2007, the NLRB held that the recognition bar doctrine should be modified to permit employees to file or support a decertification or election petition within 45 days of receiving notice of the recognition. Under the new rule, employees must receive adequate notice of the employer’s voluntary recognition of a union. Employees then have 45 days from the date of the notice to file a decertification petition or support a rival union’s election petition. The petition must be supported by 30 percent or more of the unit employees; however, documentation of that support may be obtained either pre- or post-recognition. If no notice of recognition is given, the recognition bar does not apply at all, and employees may file or support a decertification or election petition at any time after recognition of the union.

To comply with the notice requirement, the employer or the recognized union must provide written notice of the voluntary recognition to the Regional Office of the NLRB. The NLRB will then provide an official notice of recognition that the employer must post in a conspicuous place for 45 days. If no election petition is filed within 45 days of posting the notice, employees cannot challenge the union for a reasonable time, generally six months or longer, following expiration of the 45-day period.

Employers need to be aware that the duty to bargain with the union attaches immediately after recognition. This means that the employer is obligated to bargain with the recognized union even during the 45-day period when the employees could challenge the union. Employers can execute contracts with a recognized union during the 45-day period; however, a post-recognition contract will not bar a subsequent petition filed during the 45-day period. Employers should also be aware that the modified recognition bar doctrine adopted in the Dana Corp. decision will only be applied prospectively. If an employer voluntarily recognized a union before September 29, 2007, the pre-Dana Corp. recognition bar doctrine will apply, and employees must wait for a reasonable time after recognition before filing a decertification petition or supporting a rival union’s election petition.

NLRB Clarifies Factors Indicating Permanent Striker Replacement Status

Federal labor law establishes an employer’s right to hire employees to replace economic strikers and, further, to retain the replacements after the strike instead of immediately reinstating the strikers if the employer can prove a mutual understanding with the replacement employees that they would not be discharged to make room for returning strikers. While an economic striker who unconditionally offers to return to work ordinarily is entitled to immediate reinstatement, an employer who shows a legitimate and substantial business justification for refusing to reinstate the former striker is excused from that obligation. The hiring of permanent replacements for striking employees as a means of continuing business operations during a strike is one such justification. The employer is not bound to displace those hired to fill the places of economic strikers if it made assurances to those replacements that their employment would be “permanent” (that is, not just until the end of the strike), but the burden is on the employer to show a mutual understanding with the replacements that they are permanent.

In 1997, the NLRB issued a decision in Target Rock Corp. that was widely interpreted to mean that if replacement workers were hired on an at-will basis, with the employer retaining the right to terminate them at any time and for any reason, the workers were not considered permanent striker replacements. Thus, an employer that hired replacement workers on an at-will basis could not meet the burden of showing a mutual understanding that the new employees would not be displaced by returning strikers, and the employer could not refuse to reinstate the former strikers to their former positions based on the presence of the replacement employees.

On September 27, 2007, however, the NLRB overturned the principle from Target Rock Corp. and ruled in Jones Plastic & Engineering Co. that the at-will employment status of striker replacements does not detract from an employer’s otherwise valid showing that it has hired permanent replacements. In Jones Plastic, the employer hired workers on an at-will basis to replace economic strikers. The job application included an employment-at-will provision, each new employee received a copy of the employee handbook containing an employment-at-will policy, and each worker signed a form stating the understanding that their employment was at-will.

Despite these employment-at-will provisions, the NLRB found that the employer had a mutual understanding with the replacement workers that they were “permanent” employees. Though the employment relationship was intended to be at-will, the employer explicitly stated to the replacement workers that they were permanent replacements for the striking employees. Further, the employer informed the striking employees that it had begun to hire permanent replacements and that they risked being permanently replaced if they did not return to work. The NLRB observed that the employer in Jones Plastic was following its normal employment practices by offering the replacement workers employment on an at-will basis and reasoned that this was not inconsistent with the assertion that the replacement workers were intended to permanently replace the strikers.

The Jones Plastic decision allows employers more flexibility in retaining replacement workers following a strike. Before Jones Plastic, an employer that hired replacement workers on at at-will basis had a difficult burden to meet in showing a mutual understanding that the replacements were intended to permanently replace the strikers. In fact, the Target Rock decision suggested that permanent replacements could never be hired on a purely at-will basis, since the nature of at-will employment is nonpermanent. Now, employers may lawfully retain permanent replacement workers who are hired on an at-will basis.

NLRB Shifts Backpay Evidentiary Burden

Under the NLRA, a finding that an employer unlawfully discharged an employee (for union activities or other conduct protected by the NLRA) raises a presumption that some backpay is owed. However, unlawfully discharged employees have a duty to mitigate their backpay remedy by seeking other suitable employment, and an employer may defend against an award of backpay by proving that the former employee failed to make reasonable efforts to find other equivalent employment. In this regard, the NLRB has traditionally placed the burden on the employer to prove not only that equivalent jobs were available in the relevant geographic area, but that the unlawfully terminated employees unreasonably failed to apply for those jobs.

In St. George Warehouse, decided on September 30, 2007, the NLRB rejected this traditional approach. Observing that it is the employee and the General Counsel who are “in the best position to know of the [employee’s job] search or his reasons for not searching,” the NLRB held that once the employer, in challenging a proposed backpay award, proves that there were substantially equivalent jobs for the terminated employee in the relevant geographic area during the backpay period, the burden shifts to the General Counsel to introduce evidence of the terminated employee’s job search. The General Counsel will ordinarily be able to satisfy this burden by having the terminated employee testify about his or her efforts to find another job. If the General Counsel fails to introduce evidence of the terminated employee’s job search or introduces evidence showing only a limited and perfunctory job search after the employer demonstrates that equivalent jobs were available in the area, the employer will be much more likely to prevail on its claim that the employee failed to mitigate his or her backpay damages. Although the employer retains the ultimate burden of proving that the terminated employee failed to make a reasonable search for other employment, the St. George Warehouse case relieves the employer of the burden of proving something of which the employer is likely to have no direct evidence -- the nature and extent of the discharged employee’s job search. Thus, the St. George Warehouse decision makes it significantly easier for employers to carry their burden of proof on the failure-to-mitigate issue.

NLRB Rules That Employees Disciplined for Misconduct Caught on Unlawfully Installed Cameras Are Not Entitled to Make-Whole Remedies

Section 8(a)(5) of the NLRA imposes a duty on employers to bargain with the union representing its employees over terms and conditions of employment. When an employer unilaterally changes terms and conditions of employment without first offering to bargain over the changes, the NLRB may find a violation of Section 8(a)(5). The remedy ordinarily is to restore the status quo ante, and employees who have been discharged or disciplined as a direct result of the change are generally entitled to have the discipline rescinded and to be reinstated and made whole through the award of backpay. However, Section 10(c) of the Act prohibits such “make-whole” remedies when employees are disciplined “for cause.” The recent NLRB decision in Anheuser-Busch, Inc. addresses the conflict between these two concepts and concludes that an employee who has been discharged or disciplined for misconduct discovered through means unilaterally implemented by the employer in violation of Section 8(a)(5) is not entitled to reinstatement and backpay.

In Anheuser-Busch, the employer, suspecting that employees were illegally using drugs in an informal break room, installed and operated hidden surveillance cameras for a period of six weeks. Although the NLRB had previously ruled that installation and use of hidden cameras to detect and punish employee misconduct constitutes a change in the terms and conditions of employment, the employer did not notify the employees’ union about the use of the cameras until after discontinuing the surveillance. The cameras produced evidence of 16 employees engaging in misconduct, five of whom were eventually discharged and 11 of whom were suspended.

Although the NLRB found that the use of the surveillance cameras violated Section 8(a)(5), it held that the employees who were discharged and disciplined based on evidence acquired through the use of the cameras were not entitled to the make-whole relief of reinstatement and backpay. Relying on the Section 10(c) prohibition against make-whole remedies for employees who are disciplined “for cause,” the NLRB reasoned that discipline “for cause” refers to discipline that is not imposed for a reason prohibited by the NLRA. In Anheuser-Busch, the employees were disciplined and discharged for unauthorized breaks and using drugs on company property -- reasons not prohibited by the NLRA. The NLRB further observed that Section 10(c) does not place any limitations on the source of the employer’s knowledge of the employees’ misconduct. Noting the policy considerations against allowing employees who have engaged in misconduct to receive a windfall award of backpay and reinstatement and the adequacy of other remedies (such as a cease-and-desist order) for the Section 8(a)(5) violation, the NLRB held that Section 10(c) bars make-whole relief for employees disciplined or discharged for misconduct, even though that misconduct was discovered through means that were implemented in violation of the employer’s duty to bargain under Section 8(a)(5).