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NLRB Revises Policy to Allow Board Settlements to Include Front Pay

January 25, 2013

By Rebecca Lacher

A recent memorandum published by the Acting General Counsel of the National Labor Relations Board, “Inclusion of Front Pay in Board Settlements” has revised the NLRB’s long-standing policy in Board settlements discouraging the use of front pay as a remedy in lieu of reinstatement in two significant ways:

  1. Board settlements may now include front pay, which, if agreed to by the real parties, was previously required to be set forth in a “side letter.”
  2. Waiver of reinstatement rights must be in writing unless otherwise authorized by the Board’s Operations-Management division.

Noting that most settlement agreements involving front pay “are entirely non-Board” – i.e., private – the NLRB’s acting general counsel justified the policy change by explaining, “Agency policy should favor Board settlements, not discourage them.” The memorandum reiterated, however, that Board “policy favors reinstatement” as it is “generally the best means to remedy the harm to employee statutory rights caused by unlawful discharge or layoff.”

Current policy requires that an individual “should not be pressured in any way to waive reinstatement, since reinstatement is one of the most effective remedies available under the Act. Of course, for a variety of reasons, individuals may elect to waive reinstatement in response to a settlement offer from a charged party.” Compliance Casehandling Manual (CHM) § 10592.7.

To allay confusion created by the Board’s obligation to “communicate” or “relay” a settlement offer while simultaneously admonishing Regions not to “encourage” or “advocate” a waiver of reinstatement, the NLRB has revised CHM § 10592.8, which previously had forbidden front pay in lieu of reinstatement in Board settlements. The revisions “incorporate a different approach . . . that seeks to ensure that the parties and the discriminatee are fully informed of the Agency’s position.”

Thus, the manual no longer states that the Region “should not encourage a discriminatee to waive reinstatement,” but instead advises the Region to “make sure the discriminatee is aware of the Region’s position that the discriminatee is entitled to reinstatement and that absent settlement the Region intends to pursue formal proceedings to obtain an order requiring reinstatement (as well as 100 percent of backpay plus interest).”

In addition, rather than stating that the Region “may relay” a front pay offer from a respondent, the revised policy states that the Region “should relay” the settlement proposal, whether from a respondent or if proposed by a discriminatee. The revisions also specify that the Region may raise the issue of front pay where it is “confident that reinstatement will not be achieved absent litigation,” but should clarify “that the Region is not seeking front pay in formal proceedings.”

Lastly, the policy previously allowing oral waiver has been changed to require “a signed waiver of reinstatement” unless the particular circumstances warrant an exception and the Board’s Division of Operations-Management authorizes the exception. CHM § 10130.4.

For more information regarding this or other labor and employment issues, please contact Rebecca Lacher, a member of Schnader’s Labor and Employment Practices Group. 

The materials posted on Schnader.com and SchnaderWorks.com are prepared for informational purposes only and should not be considered as providing legal advice or creating an attorney-client relationship. Please see our disclaimer page for a full explanation.

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