NLRB Expands Penalties To Include Consequential Damages

If an employer is found to have violated the National Labor Relations Act, the remedies (penalties) the National Labor Relations Board (NLRB or Board) can order may now include consequential damages.

The Board ruled this week in the case of Thryv, Inc. that an employer who unlawfully laid off six employees must, in addition to backpay, pay the employees for all “direct or foreseeable pecuniary harms” suffered as a result of the unfair labor practice. These types of damages may include such things as interest and late fees on credit cards, penalties from making early withdrawals from retirement accounts in order to cover living expenses, transportation or childcare costs, or out-of-pocket medical expenses.

While reluctant to call the remedies “consequential damages,” the Board explained that these types of remedies are necessary to return employees to the position they would have been in had the unlawful conduct not taken place. The Board determined that it is not enough to award back pay to employees who were discriminated against; instead, the Board must ensure that an employee receives compensation for other financial harms suffered as a result of the employer’s conduct.

The Board refused to limit these remedies to cases involving egregious misconduct and instead ruled that they should be considered as part of the Board’s standard make-whole remedies in any case. As such, in all cases in which the Board’s standard remedy would include an order for make-whole relief, it will now expressly order the losing party to compensate the other party for all direct or foreseeable pecuniary harms suffered as a result of the unfair labor practice. The Board also decided to apply this ruling retroactively to all pending cases.

As we have previously mentioned, the General Counsel to the NLRB appointed by President Biden has made clear her intention to aggressively pursue employers, change NLRB law, and expand NLRB remedies. Employers who have pending NLRB charges should add the potential for consequential damages to their liability assessments. If you have questions about this case or need assistance with a pending NLRB matter, please contact a KZA attorney.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.