NLRB Questions Employers’ Right to Permanently Replace Economic Strikers

The current members of the National Labor Relations Board (NLRB) seem to be constantly over-ruling well-settled NLRB precedent to expand organized labor’s rights, usually to the detriment of employers’ management rights.  Many years ago the U.S. Supreme Court said an employer possesses the right to permanently replace economic strikers to continue business operations during an economic strike.  Mackay Radio, 304 U.S. 333 (1938).  This doctrine states that a union has the right to use the economic weapon to engage in a strike, and employer has the right to use an economic weapon to permanently replace economic strikers.  While this principle has been well-established law for almost 80 years, the current NLRB has now made some exceptions to this long-standing principle. 

In American Baptist Homes, 364 NLRB No. 13 (May 31, 2016), the current NLRB finds that the employer was motivated by an "independent unlawful purpose" in permanently replacing economic strikers, thus finding the employer’s permanent replacement of strikers to be unlawful.  Much of the controversy came from a telephone conversation in which the union attorney placed a telephone call to the employer’s attorney, in which the employer allegedly indicated that the employer was permanently replacing the strikers and the union attorney asked why the employer was permanently replacing them.  Although the employer’s attorney denied the response, the NLRB ruled on credibility grounds that the employer representative responded that the employer "wanted to teach the strikers and the union a lesson.  They wanted to avoid any future strikes, and this was a lesson that they were going to be taught."

Having found this conversation to have occurred, the Board denies interfering with the sort of economic weapons that parties can use in seeking to gain acceptance of their bargaining position, and instead finds that the employer’s admitted purpose was to punish strikers for exercising the fundamental statutory right to strike.  Thus, the NLRB distinguishes between an employer’s attempt to force the union to agree to its contract terms, as compared to an attempt to discriminate against employees for the express purpose of punishing them for striking. 

There is a second reason for the NLRB ruling.  The Board found that the employer’s management official assumed that the permanent replacements would be willing to work in the event of another strike and the employer wanted to avoid the cost of hiring temporary employees again in the future.  The Board found that the employer’s attorney’s statement to the union that the employer hired permanent replacements because it "wanted to avoid any future strikes, and this was a lesson they were going to be taught" establishes an additional independent unlawful motive, specifically a desire to interfere with employees’ future protected activity.  The Board indicates in a footnote that the employer is not required to express a reason for permanently replacing economic strikers, but that if the employer does so (or if the evidence otherwise indicates a reason), the Board can and should determine whether that reason is an independent unlawful purpose. 

The lone Republican on the current NLRB dissents, indicating that the decision will eliminate or limit an employer’s ability to utilize permanent replacements.  The dissenting member states that under the majority’s decision, if the employer has permanent replacements, it appears that any evidence of strike animus will render unlawful the employer’s actions, resulting in potentially debilitating back pay liability.  The dissenting member says this is a structural change in the competing interests of employees, unions and employers that is contrary to what Congress intended, what the Supreme Court has recognized, and what the statute says the Board is duty-bound to enforce.

Editor’s Note: Many believe that the current NLRB is intent on changing the scope of labor law to the detriment of employers, and to the benefit of unions.  The current case is another example.  Employers will need to be extremely careful in what they say about the reasons for the permanent replacement of strikers.  Unions may try to "set up" management to make inappropriate statements and the like, generating additional risks for employers in permanently replacing economic strikers.  The danger is particularly acute in this day in which unions often engage in short-term or "intermittent" strikes to bolster their bargaining positions.