One of the most widely observed weaknesses in federal labor law is the absence of effective remedies. Scholars have been writing about this problem for decades, and a Human Rights Watch report issued in 2000 described a “culture of near-impunity” resulting from weak remedies. Yet, in a decision issued last week in Ridgewood Health Care Center, the Trump appointees on the NLRB made it even easier for law-breaking employers to avoid meaningful consequences for their actions.
Ridgewood Health Care Center involved a common issue in labor law – what happens when one business entity takes over an operation from another entity. Under long-settled law, if a majority of the successor employer’s workforce also worked for the predecessor, then the successor employer must recognize and bargain with the union that represented the predecessor’s employees. In this case, RHCC owned a nursing home, but for many years it had leased the facility to a different entity called Preferred. In 2013, RHCC terminated the lease and decided to operate the nursing home itself. The workers at the nursing home had been represented by the United Steelworkers Union. When RHCC first met with workers, its President and Owner said they would hire “99.9 percent” of current employees. But later, she threatened that if the Union ended up representing the workers, she might close the facility. During job interviews, RHCC interrogated workers about their Union membership, and even the Trump Board Members agreed that RHCC refused to hire at least four workers in order to avoid an obligation to bargain with the Union.
In 1972, the Supreme Court held in NLRB v. Burns International Security Services, Inc. that a successor employer can ordinarily impose new terms and conditions before bargaining with the incumbent union. But, in dicta that has led to much litigation, the Court observed “there will be instances in which it is perfectly clear that the new employer plans to retain all of the employees in the unit and in which it will be appropriate to have him initially consult with the employees’ bargaining representative before he fixes terms.” In 1975, the NLRB had occasion to interpret that dicta in a case that had been remanded by the Court in light of Burns. In Spitzer Akron, Inc., the Board held that the phrase “plans to retain all the employees in the unit” clearly covers “not only the situation where the successor’s plan includes every employee in the unit, but also situations where it includes a lesser number but still enough to make it evident that the union’s majority status will continue.” Then, in 1979, in Love’s Barbecue Restaurant No. 62, the NLRB held that when a would-be successor illegally discriminates against the predecessor’s employees, “any uncertainty as to what [it] would have done absent its unlawful purpose must be resolved against [it] since it cannot be permitted to benefit from its unlawful conduct.” And thus, a successor found guilty of illegal discrimination is not entitled to set initial terms of employment without first bargaining with the incumbent union, and it must retroactively restore the predecessor’s terms. All seven circuit courts that have considered the issue have upheld this Love’s Barbecue remedy.
The NLRB has previously explained that the Love’s Barbecue remedy is necessary to prevent a law-breaking employer “from enjoying a financial position that is quite possibly more advantageous than the one it would occupy had it behaved lawfully.” Without the Love’s Barbecue remedy, a nefarious employer could illegally refuse to hire enough of its predecessor’s employees to avoid an initial duty to bargain, it could slash the wages and benefits paid by its predecessor, and enjoy the benefits of those reduced wages and benefits for years until it is finally ordered to bargain with a much-weakened union. In Ridgewood Health Care Center, the Trump NLRB drastically cut back on the circumstances where it will impose the Love’s Barbecue remedy. Contrary to forty years of consistent case law, the Trump Board Members announced that they read the Burns “perfectly clear” dicta to apply only where the successor intends to hire all or substantially all of the predecessor’s employees. Never mind that, as the Board has previously pointed out, this interpretation would support the absurd view that there is no obligation to bargain over initial terms where a new employer planned to employ a smaller workforce consisting solely of workers employed by the predecessor. Based on this misreading of Burns, the Board held that the Love’s Barbecue remedy will no longer be available when the employer illegally discriminated against the predecessor’s employees to avoid a bargaining obligation unless the NLRB’s General Counsel also proves that if not for the illegal discrimination, the successor would have hired all or substantially all of the predecessor’s employees. The Trump appointees explained that they needed to take this step to undermine one of the few meaningful remedies available under the NLRA because the Love’s Barbecue remedy “runs counter to the principle that initial terms must generally be set by economic power realities.” Apparently, to the Trump Labor Board, those realities include an employer’s ability to run roughshod over labor law protections. If an employer breaks the law to keep wages down, the Trump appointees seem to think the workers should not seek compensation because the alternative may be “job loss and financial ruin for all employees.” They should read the section of the NLRA where Congress explained that protections for collective bargaining are necessary to avoid depressing wage rates. As so often is the case with the Trump Administration, the Ridgewood majority does not even try to ground its fears about job loss on any evidence. To the contrary, as Board Member McFerran pointed out in dissent, the employer “made no showing of economic need to unilaterally change initial terms and conditions of employment.”
The Ridgewood decision is part of a larger pattern. The Trump appointees reached out to decide an issue that the employer did not raise, and it did so without even soliciting briefing from the parties, let alone the wider public. One of Trump’s appointees, Marvin Kaplan, had never practiced labor law before his appointment. Instead, he had spent most of his short career as a Republican partisan on Capitol Hill. When he testified before the Senate at his confirmation hearing, he insisted that he would “approach each case impartially, respect longstanding precedent, stay true to the tenets of statutory construction, endeavor to bridge the divisions at the National Labor Relations Board, [and] seek public input when appropriate.” I’d be curious to hear how he squares that testimony with his actions in Ridgewood.