Last week, Lafe Solomon, the Acting General Counsel for the National Labor Relations Board (NLRB), issued a memorandum expanding the NLRB's use of default language in settlement agreements. Based on Memorandum GC 11-04, the NLRB's Regional Directors are now required to include default language in all informal settlement agreements and all compliance settlement agreements that amounts to an admission by the charged party (i.e., usually the employer) of the allegations in the underlying complaint when the charged party is non-compliant with any term of the settlement agreement.
Specifically, the Memo calls for mandatory language providing for the following:
- If the charged party fails to comply with any term of the settlement agreement and does not cure the breach within 14 days of receiving notice of such non-compliance from the Regional Director, the Regional Director will issue/reissue the complaint/compliance specification previously issued in that case.
- The charged party understands and agrees that the allegations of the newly issued or reissued complaint/compliance specification will be deemed admitted and its answer to the original complaint/compliance specification will be considered withdrawn.
- The only issue that may be raised before the NLRB is whether the charged party failed to comply with the terms of the settlement agreement.
- The NLRB may, without a trial or any other proceeding, make findings of fact and conclusions of law on the allegations in the newly issued or reissued complaint/compliance specification and issue an order providing a full remedy for any violations.
Solomon cited the potential for "savings of resources and avoidance of delays in the event of a breach of the settlement agreement" as the basis for his directive. However, employers commonly settle NLRB claims, even if those claims are unfounded, in order to save the legal and operational expense associated with defending themselves in costly NLRB proceedings. Under the NLRB's new approach, the mandatory language effectively forecloses employers' opportunity to defend themselves in the event it is alleged that they breached an NLRB settlement agreement after entering into it, even if the alleged breach has no underlying factual or legal merit. The result of NLRB's new position is to cause employers to either: (1) settle a case knowing that any allegation of breach will cause the NLRB to make a determination on the merits of the allegations without a hearing or (2) litigate the allegations without a settlement, thus potentially causing the employer to spend significant time and money on its defense. Consequently, employers should consult legal counsel before entering into NLRB settlement agreements.