On September 27, 2007, the National Labor Relations Board ("NLRB" or "Board") issued a decision reversing prior precedent related to whether an employer that is confronted with an economic strike can hire "at will" permanent replacements to replace the striking employees. Reversing its decision in Target Rock Corp., the NLRB in Jones Plastic & Engineering Co. held that characterizing the permanent replacements of economic strikers as being "at-will employees" does not detract from the replacement workers' status as permanent replacements. Accordingly, the NLRB held in Jones Plastic that the employer lawfully declined to recall the strikers upon the strikers' unconditional offer to return to work because they had been permanently replaced.
An economic striker who unconditionally offers to return to work is entitled to be immediately recalled unless the employer can show a "legitimate and substantial business justification for refusing to recall the former striker." The NLRB has long held that the permanent replacement of an economic striker is one such example of a "legitimate and substantial business justification." Accordingly, economic strikers who have been permanently replaced need not be returned to work, but rather must be put on a preferential recall list.
In Target Rock, the Clinton-era NLRB ruled that the replacement workers in that case were not "permanent replacements" because, in part, they were notified during the hiring process that they were "at-will employees." Thus, upon the economic strikers' unconditional return to work, the employer in Target Rock was required to recall the strikers (and discharge the replacements). The NLRB's Target Rock decision put employers in a difficult position because most employers prefer to maintain the at-will employment status of their employees. However, after Target Rock, employers were confronted with the choice of: (1) having replacement workers be at-will employees, with the corresponding obligation to recall returning economic strikers to the jobs inhabited by the at-will replacements or (2) hiring permanent replacement workers in an economic strike under an employment relationship that is not at-will (thus making it more difficult to discharge these employees and creating the possibility of breach of contract claims when and if the employer were to discharge the replacement workers). In Jones Plastic, the NLRB spared employers from this conundrum and reversed its Target Rock holding.
In Jones Plastic, the union struck the company after the parties reached an impasse during collective bargaining negotiations. Shortly thereafter, the employer started hiring replacement workers, which the employer characterized as permanent replacements. However, during the hiring process for the replacement workers, the replacement workers signed forms wherein they acknowledged that, although they were permanent replacements for striking employees, their employment with the employer could be terminated at any time and for any reason, with or without cause.
At the conclusion of the strike, the striking employees provided the employer with unconditional offers to return to work. However, the employer refused to recall the strikers and took the legal position that they had been permanently replaced. The union then filed unfair labor practice charges with the NLRB, arguing that the employer's refusal to recall the strikers was unlawful.
Reversing Target Rock, the NLRB held that "[a]t-will employment ... does not speak to whether a mutual understanding exists about job retention vis-à-vis returning strikers. As such it does not detract from an employer's otherwise valid showing that it has hired permanent replacements." Accordingly, the NLRB held that the employer's at-will disclaimer did not negate its showing that the replacement workers were hired to be permanent replacements. Thus, the NLRB found that the employer did not violate the National Labor Relations Act when it placed the returning strikers on preferential recall lists instead of immediately recalling them.
In light of the NLRB's holding in Jones Plastic, an employer confronted with hiring permanent replacements for economic strikers is now free to communicate to the replacement workers that although they are permanently replacing economic strikers, they are at-will employees whose employment can be terminated by either the employee or the employer at any time, with or without cause.