On September 15, 2008, the Seventh Circuit Court of Appeals in United Steel, Paper and Forestry, Rubber, Mfg., Energy, Allied Indus. and Serv. Workers Int'l Union v. Nat'l Labor Relations Board upheld a decision by the National Labor Relations Board (NLRB) in favor of an employer who declined to recall economic strikers upon the strikers' unconditional offer to return to work because they had been permanently replaced. The Court determined that the NLRB permissibly held that the employer established a "mutual understanding" with striker replacements that their employment was permanent. In doing so, the Court reiterated an employer's ability to place conditions, such as probationary periods, testing requirement and at-will status, on a permanent replacement's employment without changing the replacement's "permanent status."
The union in Jones Plastic & Engineering Co., 351 N.L.R.B. No. 11 (2007), 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. During the hiring process, 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 for any reason, with or without cause (i.e., they were "at-will" employees). At the conclusion of the strike, the striking employees provided the employer with an unconditional offer 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 the employer's refusal to recall the strikers was unlawful. The NLRB found the employer's actions lawful because the strikers had been permanently replaced. Afterward, the union filed a petition for review.
Although the Court affirmed the NLRB's decision that the employer was not required to reinstate the strikers even though it characterized them as "at-will" employees, it recognized limitations on the employer's ability to categorize striker replacements as permanent replacements. Specifically, an employer must establish under the totality of the circumstances that a mutual understanding of permanence has been reached with the striker replacements. In addition, the employer may not selectively discharge some replacement workers to reinstate strikers who no longer support the union. Otherwise, striker replacements would lose their "permanent" status and the employer would be required to bring back all of the former strikers making an unconditional offer to return to work.