11/27/2024: GC Memo Emphasizes Importance of Vindicating Public Rights in Settlement Agreements
Charging parties and respondents cannot agree to just anything.
Ensuring Settlement Agreements Adequately Address the Public Rights at Issue in the Underlying Unfair Labor Practice Allegations, GC 25-02, (GC Memo)
In Metro Health Inc., the Board ended the practice of allowing administrative law judges (ALJs) to settle cases based on terms that a respondent agreed to but that the charging party and the General Counsel did not agree to. With this “consent order” route to settling now foreclosed, it is likely that more cases will be settled via agreements entered into between charging parties and respondents.
Charging parties and respondents are allowed to settle cases in this way provided that their settlement agreements comply with the standards established in Independent Stave and OM 07-27. If they do not comply with these standards, then the Board will continue to prosecute the case.
The purpose of this memo is to emphasize that, in order for these kinds of agreements to be acceptable to the Board, they must adequately address the “public rights” that the National Labor Relations Act (NLRA) and the Board exists to protect. This means that the agreements cannot merely remedy the harms suffered by the charging party, but must also remedy the harms suffered by other workers.
Most importantly, the agreements in question should ensure that other workers are notified and assured that the respondent will not engage in similar conduct going forward. Thus, a settlement that merely pays off an illegally fired worker without reinstating them or providing adequate assurance to other workers that the employer will not also illegally fire them is unlikely to be approved.
Virginia Mason Franciscan Health d/b/a St. Elizabeth Hospital, JD(SF)-33-24, 19-CA-267892 (ALJ Decision)
The National Labor Relations Board Administrative Law Judge issued a decision addressing unfair labor practice charges filed by SEIU Healthcare 1199NW against Virginia Mason Franciscan Health. The charges concerned the employer's handling of a bonus program called the Broad Based Award (BBA) in 2020 and 2021.
The case arose after Virginia Mason merged with Dignity Health in 2019 to form CommonSpirit Health. CommonSpirit maintained Dignity Health's practice of paying an annual BBA bonus to employees. Virginia Mason attempted to include newly acquired union-represented employees in this bonus program.
In 2020, Virginia Mason unilaterally implemented the BBA for union employees without completing bargaining. In 2021, when the union refused to accept the employer's terms for the bonus program, the employer withheld the BBA from union employees.
The ALJ analyzed three main legal questions. First, whether the BBA constituted a mandatory subject of bargaining or was merely a gift exempt from bargaining obligations. Second, whether contract language in management rights and zipper clauses permitted unilateral action. Third, whether withholding the 2021 BBA constituted inherently destructive conduct violating Section 8(a)(3) of the National Labor Relations Act.
On the first question, the ALJ found the BBA was a mandatory subject of bargaining because it was tied to hours worked and performance ratings, making it a form of compensation rather than a gift. The ALJ distinguished this from cases like North American Pipe Corp., where a one-time stock award given without regard to employment factors qualified as a gift.
On the second question, the ALJ applied the Board's contract coverage standard from MV Transportation. The management rights and zipper clauses failed this analysis because they contained only generic language about rules and policies, without specifically addressing bonuses or showing the parties intended to cover bonus programs during negotiations.
On the third question, the ALJ rejected the argument that withholding the 2021 BBA was inherently destructive conduct under Great Dane Trailers. The ALJ reasoned that the BBA was not an existing benefit for these employees, and withholding it supported a discrete bargaining position rather than demonstrating broader hostility to collective bargaining.
The ALJ concluded Virginia Mason violated Section 8(a)(5) of the Act by implementing the 2020 BBA and withholding the 2021 BBA without completing bargaining. However, the ALJ dismissed the Section 8(a)(3) allegation regarding the 2021 withholding. The remedy included a bargaining order and notice posting requirement.
Significant Cases Cited
NLRB v. Great Dane Trailers, 388 U.S. 26 (1967): Established that certain conduct so destructive of employee rights carries its own indicia of unlawful intent.
MV Transportation, 368 NLRB No. 66 (2019): Created two-step "contract coverage" standard for analyzing management rights defenses.
North American Pipe Corp., 347 NLRB 836 (2006): Found one-time stock award given without regard to employment factors was a gift not subject to bargaining.
International Paper Co., 319 NLRB 1253 (1995): Set forth four factors for analyzing whether conduct is inherently destructive of employee rights.