he Lawletter Vol 41 No 9
For almost 80 years, the National Labor Relations Board ("NLRB" or "Board") has awarded "search-for-work" and "interim employment" expenses as part of its broad discretionary authority under section 10(c) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 160(c), to provide a make-whole remedy for those injured by unfair labor practices in violation of section 8 of the NLRA, 29 U.S.C. § 158. See Crossett Lumber Co., 8 N.L.R.B. 440, 497-98, enforced, 102 F.2d 1003 (8th Cir. 1938). Such expenses include, for example, increased transportation costs necessitated by seeking or commuting to interim employment, room and board while seeking employment and/or working away from home, and the cost of moving if necessary to assume interim employment. During those almost-80 years, the NLRB has awarded these expenses to those individuals who have suffered discrimination under section 8 of the NLRA in the form of an offset to interim earnings, rather than as a separate element of a back-pay award. The result of treating the award as an offset to interim earnings was that (1) individuals who were unable to find interim employment did not receive any compensation for their search-for-work expenses, and (2) individuals who found jobs that paid wages lower than the amount of their expenses did not receive full compensation for the search-for-work and interim employment expenses.
At the request of the Board, General Counsel, and the complainant—coffee barista—in King Soopers, Inc. & Wendy Geaslin, 364 N.L.R.B. No. 93, 2016 WL 4474606 (Aug. 24, 2016), the NLRB examined its prior approach to awarding search-for-work and interim employment expenses and concluded that its traditional approach provided less than make-whole relief for the most seriously aggrieved victims of unlawful conduct, which is contrary to the central remedial principle underlying the NLRA. The Board provided the following example illustrating the shortcomings of the Board's traditional approach:
Juana Perez worked at a remote location earning $1,000 per month prior to her unlawful discharge. During the month following her discharge, Perez spent $500 travelling to different locations looking for work. Perez could only find interim employment in another state that paid $750 per month. Perez moved to the new state to be closer to her new job and was also required to obtain training for her new position, costing her $5000 and $500, respectively. Under the Board's traditional approach, Perez would receive compensation for only $1500 of her $6000 total expenses, far less than make-whole relief. Thus, the Board's traditional approach fails to fully reimburse losses incurred by those discriminatees who have already been the most economically injured by unlawful actions.
King Soopers, 2016 WL 4474606, at *7 (internal footnote omitted).
The Board pointed out that it had never articulated a policy reason for its treatment of search-for-work and interim employment expenses as an offset. Moreover, such treatment is inconsistent with the manner in which additional expenses, such as medical expenses and retirement fund contributions, are awarded, since the Board awards compensation for medical expenses and retirement fund contributions regardless of the injured individuals' interim earnings and separately from taxable net back-pay. Id. at *8.
After reviewing the history of the rule and finding that the practice was inconsistent with the remedial purpose of the NLRA, the NLRB adopted a new policy of awarding search-for-work and interim employment expenses regardless of an individual's interim earnings and separately from taxable net back-pay, with interest. The new policy was applied retroactively to King Soopers, and in "all pending cases in whatever stage." Id. at *11.
In reaching its decision, the majority considered and rejected the contention of the one dissenting member that this new policy treats search-for-work and interim employment expenses as compensatory damages, which are not permitted under the NLRA, pointing out that the Board had awarded these expenses for almost 80 years and a change in the manner in which they are calculated does not change their nature as permissible aspects of a back-pay award. The majority also rejected the notion that the new policy will result in a windfall for individuals whose interim earnings equal or exceed the sum of their lost earnings and their search-for-work and interim employment expenses, pointing out that search-for-work and interim employment expenses represent a different injury than lost pay and, in any event, even if a few were to experience a windfall, that would provide an insufficient reason to keep the past policy. The Board also rejected the dissenting member's contention that the new policy will result in prolonged litigation stating that Board proceedings rarely involve search-for-work and interim employment expenses. Furthermore, they disagreed with the proposition that the policy would discourage individuals who had lost their employment from looking for legitimate and realistic employment opportunities and with the notion that the policy would lead to the award of speculative expenses or otherwise open the door to abuse.
It is hard to predict what the overall impact of this rule change will be. As the NLRB pointed out, search-for-work and interim employment expenses are not generally the subject of Board litigation and they do not drive settlement negotiations. Nonetheless, because the new policy modifies a practice followed for 80 years, undoubtedly there will be some resistance to the change.