Settlements of unfair labor practice charges appear to be returning to more traditional standards under new guidance from Acting General Counsel of the National Labor Relations Board William B. Cowen. Unfair labor practice charges have long been resolved mostly through agreed-to settlements with an NLRB regional director during or at the conclusion of an investigation. Under the last general counsel, new requirements for settlements were announced that made it significantly more difficult to resolve unfair labor practice charges via settlement. The new guidance, GC Memo 25-06, “Seeking Remedial Relief in Settlement Agreements, is a return to standards that should facilitate settlement rather than hamper agreed-to resolutions.
Focus on facilitating efficient, prompt and fair settlements
The acting general counsel’s memo initially discusses the need for “efficiency” in the NLRB’s approach toward settlement of charges, noting that “’if we attempt to accomplish everything, we risk accomplishing nothing.’” To that point, Cowen had already rescinded four memos from the prior general counsel on remedial relief – GC 21-06, GC 21-07, GC 22-06, and GC 24-04. In those memos, Regions had been directed to obtain full remedial relief in settlements of charges, and limits on certain clauses and requirements for certain forms of relief were added. The acting general counsel’s memo comments that “our remedial enthusiasm’ should not “distract us from achieving a prompt and fair resolution of disputed matters.”
GC 25-06 notes that the settlement rate of unfair labor practice charges in 2024 was 96.3% of the charges that were determined by a Region to have merit. Embedded in this statistic was the fact that of the 21,300 unfair labor charges which were filed with the Board, only 39.5% were determined by a Region to have merit. Still, that is 8,415 charges that the Regions would either litigate by filing administrative complaints or resolve via settlement agreements. The memo cited the Board’s own guidance that “’diligent settlement efforts should be exerted in all … cases’ to both effectuate the Act and ‘permit the Agency to concentrate its limited resources on other cases by avoiding costly litigation expenses.’”
To that end, GC 25-06 addressed both monetary and non-monetary terms of settlement agreement for NLRB regional directors. On the monetary side, GC 25-06 directs that regional directors have the discretion to settle charges for less than 100% of the back pay that could be recovered if the region prevailed fully in a charge in litigation. Regional directors again have the discretion to settle back pay relief for 80% of what would be complete “make-whole” relief based on the evidence, the litigation risks, and the extent to a prompt resolution would promote labor peace. Additionally, a regional director can consider accepting less than 80% by seeking authorization from another division of the Board.
The acting general counsel also addressed the Board decision in Thyrv, Inc., 372 NLRB No. 22 (Dec. 13, 2022), in which the Board adopted the prior general counsel’s position that “all direct or foreseeable pecuniary harms” that resulted from an employer’s unfair labor practice could be awarded. This standard expanded the types of monetary relief that could be awarded by the Board to employees whose employment was terminated or who were disciplined in some way, and threatened to greatly increase the cost to an employer when found to have committed an unfair labor practice. GC 25-06 noted that the majority in Thryve did not enunciate a clear standard for awarding direct or foreseeable relief, while the dissent in the case did. The standard in the dissent would require make-whole relief only “where the causal link between the loss and the unfair labor practice is sufficiently clear.” Thus, GC 25-06 directed regional directors to utilize the dissent’s standard when considering what monetary relief beyond back wages to seek in settlement agreements.
On the non-monetary side, GC 25-06 returns to the Region the discretion to draft settlement agreements with clauses that are typically important to employers. One is including non-admissions clauses in which the employer does not admit to committing the alleged unfair labor practice. Another is excluding default clauses, which alleviated the Region of actually proving the original alleged unfair labor practice charge where an employer defaulted on a term of a settlement agreement, such as not making a required payment of backpay or not implementing a revised policy. Default clauses were particularly onerous to employers because the settlement agreement was essentially viewed as an admission by the employer of having committed the alleged unfair labor practice, under the prior general counsel’s guidance.
The changes in directions to regional directors in GC 25-06 offer the prospect that unfair labor practice charges will be less onerous to settle and on terms that are more realistic. GC 25-06 is more in line with past guidance from general counsels and the Board.
