Fifth Circuit Strikes NLRB Remedial Power, Deepening Court Split
Fifth Circuit Strikes NLRB Remedial Power, Deepening Court Split
In the span of a few days, two federal courts of appeals found that the National Labor Relations Act does not authorize the NLRB to award damages for “foreseeable pecuniary harms” in unfair labor practices cases. The Fifth Circuit (which hears cases from Louisiana, Mississippi, and Texas) and the Sixth Circuit (Kentucky, Michigan, Ohio, and Tennessee) both rejected the NLRB’s novel theory of damages first announced in the 2022 NLRB case, Thryv, Inc.
In Thryv, Inc., and for the first time in its 90-year history, the NLRB asserted that an employer is required to compensate an employee for all “direct or foreseeable pecuniary harms” flowing from illegal terminations and suspensions. Although such consequential damages are common in civil lawsuits, their application in NLRB cases represented a significant departure from the traditional equitable relief of reinstatement and backpay that employers have come to expect.
The NLRB’s expansive view of “direct or foreseeable pecuniary harms” announced in Thryv included, for example, interest and late fees on credit cards, penalties for early withdrawals from retirement accounts, loan or mortgage payments, transportation or childcare costs, and other costs flowing from the suspension or termination. A subsequent memorandum from the NLRB’s then-General Counsel revealed just how vast the universe of potential harms could be, asserting that employers could also be responsible for an illegally terminated employee’s job search costs, utility disconnection or reconnection fees, and relocation or moving costs. Thryv threatened to explode the potential costs to an employer found responsible for unfair labor practices.
Recent court of appeals decisions provide welcome relief for employers. The Fifth Circuit and the Sixth Circuit joined the Third Circuit (Delaware, New Jersey, Pennsylvania, and the U.S. Virgin Islands) in rejecting Thryv damages. The Ninth Circuit (Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington), however, has upheld Thryv damages. These disparate decisions create a “circuit split,” which may require resolution by the United States Supreme Court.
It is worth noting, however, that the NLRB’s Acting General Counsel, William B. Cowen rescinded a number of his predecessor’s memoranda, including those addressing Thryv damages. The current administration may not be eager to defend Thryv if it were to be challenged to the Supreme Court. It is also possible that the NLRB (once the board has a quorum) will issue a decision overturning Thryv.
For now, an employer appealing an NLRB decision to the Third, Fifth, or Sixth Circuit is protected from the imposition of Thryv-type damages. Outside of those three circuits, except in the Ninth Circuit, employers have a growing arsenal of case law to rely upon in fighting the NLRB’s overreach. The NLRA permits a party appealing an NLRB order to “obtain a review of such order in any United States court of appeals in the circuit wherein the unfair labor practice in question was alleged to have been engaged in or wherein such person resides or transacts business, or in the United States Court of Appeals for the District of Columbia.”
If you have any questions about the matters discussed in this issue of Compliance Matters, please call your firm contact or visit us online at www.brgslaw.com .
Sincerely,