Make-Whole Remedy Includes “Direct and Foreseeable” Financial Losses in Addition to Back Pay

By David E. Mastagni and Taylor Davies-Mahaffey

On December 13, the National Labor Relations Board expanded the available remedies for unfair labor practices (ULP) based on discrimination or retaliation. The International Brotherhood of Electrical Workers, Local 1269, filed a ULP against Thryv, Inc., over the imposition of layoffs without providing requested information and satisfying its bargaining obligations. In Thryv, Inc., Case 20-CA-250250, the Board held that as part of the make-whole remedy, employers must provide make-whole relief for “direct or foreseeable” monetary harms resulting from the ULP, such as reasonable search for work and interim employment expenses. These damages must be provided in addition to and deducted from back pay, interest must be provided and the employer must bear any adverse tax consequences from a lump sum award and report those earnings over the calendar years the wages would have been earned.

Thryv began the process of laying off all of its new business advisors in the Northern California region in July 2019, when it transferred two new business advisors to a different division so that they could be kept on after the layoffs. On August 21, 2019, Thryv emailed the union stating it would lay off six new business advisors effective September 20. The following day, the parties agreed to meet and confer on September 11 and 12. However, on September 5 Thryv informed the union it would inform the employees of their termination the following day, which it did.

During the meet-and-confer process, the union made multiple information requests regarding the affected employees’ accounts. The administrative law judge, and the Board, determined the information to be presumptively necessary, and that Thryv committed an unfair labor practice by refusing to disclose it, in violation of the National Labor Relations Act. Moreover, because the union needed the information to effectively bargain, it did not waive its rights by not presenting counter-proposals. The Board further found Thryv also violated the Act by unilaterally laying off six employees while presenting its proposal to the union as a fait accompli and while in the process of negotiating a new collective bargaining agreement.

Importantly, the Board clarified its practice of ordering relief that ensures affected employees are made whole for the consequences of an employer’s unlawful conduct. It concluded that all orders for make-whole relief going forward will expressly order the employer to compensate affected employees for all direct or foreseeable pecuniary harms suffered as a result of the unfair labor practice. It clarified that all harms must be specifically calculated and requires the general counsel to present evidence demonstrating the amount of harm, the direct or foreseeable nature of the harm and why the harm is due to the unfair labor practice. Moreover, the employer will then have the opportunity to present evidence challenging the amount of money claimed or the direct or foreseeable nature of the harm, or argue that it would have occurred regardless of the unfair labor practice.

The Board supported its expansion of its standard make-whole remedy by citing its broad discretionary authority to “take such affirmative action including reinstatement of employees with or without back pay, as will effectuate the policies of this Act” (29 U.S.C. § 160[c]). It noted that the Board in the past has awarded relief for pecuniary harms resulting from an unfair labor practice. The Board concluded that standardizing its make-whole remedy to expressly include the direct or foreseeable pecuniary harms suffered by affected employees was necessary to better effectuate the make-whole purposes of the Act.

Although NLRB decisions are not binding on California public employees, PERB and the California courts give great weight to NLRB decisions as persuasive authority, as California’s labor statutes are modeled after the NLRA. This expanded definition of the remedy for employees wrongfully separated from employment also has application to disciplinary appeals where reinstated employees not only lost wages, but also suffered out-of-pocket medical expenses, travel expenses, tax account refiling costs, interest on credit card debt, etc. This ruling provides important analysis of the scope of make-whole labor remedies.