The National Labor Relations Board, in a 2-1 decision by Chairman Mark Pearce and Member Kent Hirozawa, in American Baptist Homes of the West, 364 NLRB No. 13, has adopted a new standard for considering the legality of an employer’s hiring of permanent replacements in response to economic strikes. The decision, in the words of Member Philip Miscimarra’s dissent, is not only a “deformation of Board precedent,” but “a substantial rearrangement of the competing interests balanced by Congress when it chose to protect various economic weapons, including the hiring of permanent replacements.”

The Board Has Curtailed the Right to Hire Permanent Striker Replacements

In short, the Board in American Baptist Home of the West, severely casts doubt on the right of an employer to hire permanent replacements for striking workers. Under longstanding precedents, the Board would not look into the motivation when an employer decided to hire permanent replacements for strikers.

In this case, the General Counsel asked the Board to adopt a new standard and to hold that an employer may not hire permanent replacements where the Board finds that the employer has “an intent to encroach upon protected rights,” namely the right to strike.  The Board has now held, for the first time, that it will find an employer’s hiring of permanent replacements to be an unfair labor practice where it concludes “the hiring of permanent replacements was motivated by a purpose prohibited by the Act,” and that it will no longer require proof that of “the existence of an unlawful purpose extrinsic to the strike.”

The Board Holds that Attempts to Discourage Future Strikes Unlawfully Interferes With Employees’ Section 7 Rights

In the case at issue, the Board majority found that a prohibited purpose existed based on statements by an employer who had been subjected to a series of intermittent strikes that had caused it to incur significant expense in arranging for temporary replacements and wanted to “avoid any future strikes” and “teach the strikers and the Union a lesson.”

In so doing, the Board has undercut the right of employers, well recognized for almost 80 years, to hire permanent replacements as an “economic weapon” when faced with an economic strike, labor’s ultimate economic weapon. Relying on an obscure phrase in the Board’s 1961 decision in Hot Shoppes, Inc.,  a decision in which as Member Miscimarra points out, “the Board adopted a rule disallowing any scrutiny into an employer’s motive for hiring permanent replacements” in response to an economic strike (emphasis in original).

The Supreme Court Has Recognized Employers’ Right Since 1938

Since the Supreme Court’s 1938 decision in National Labor Relations Board v. McKay Radio & Telegraph Co., 304 U.S. 333, it has been undisputed that an employer faced with an economic strike by its employees, has had the right to hire permanent replacements to continue the operation of its business and to respond to the union’s use of labor’s ultimate economic weapon. Notably, the Board and the Courts have viewed labor’s right to strike and an employer’s right to hire replacements or lock out employees as countervailing forces, and that “employers and unions in collective bargaining “proceed from contrary and to an extent antagonistic viewpoints and concepts of self-interest . . “ and that the “presence of economic weapons in reserve, and their actual exercise on occasion by the parties, is part and parcel of the system that the Wagner and Taft-Hartley Acts have recognized.” NLRB v. Insurance Agents’ International Union, 361 U.S. 477, 478-479 (1960).

In other words, our system of labor management relations and collective bargaining has historically granted labor and management tools that they have had a legal right to threatened to wield or to actually use to help prevail in bargaining. This has been a fundamental element of the system of collective bargaining in the United States since the NLRA was enacted in 1935.

The Board Is Attempting to Change Bargaining By Cutting Employers’ Rights

The unfair labor practice charges that the Board considered in American Baptist Homes of the West arose out of contract negotiations between the operator of a continuing care facility in Oakland, CA, and Service Employees International Union, United Healthcare Workers-West (SEIU) in 2010 for a successor collective bargaining Agreement. In order to press its bargaining demands, the SEIU engaged in informational picketing of the employer’s facilities.  In order to ramp up the pressure, on July 9, 2010, the SEIU then gave the employer notice that it would strike on Monday August 2nd if there was not a new contract.  The SEIU also notified the employer that same day, in a second letter, that the strikers would return to work on Saturday August 7th.  In other words the union threated to conduct an “intermittent strike,” something that has become a common tool, particularly in health care.  The website Labor Notes  stated as follows concerning this tactic: “A short-term strike sends a powerful message to management, dramatizing workers’ anger and determination.”

Faced with the need to maintain operations and care for its patients, the employer engaged a staffing agency and incurred expenses of at least $350,000 to ensure that the necessary personnel would be available.  When the union struck, the employer made offers of permanent employment to 44 of the replacements for the 80 employees who went on strike.

The Board, in finding that the employer in Baptist Home of the West did not have the right in these circumstances to hire permanent replacements pointed to evidence that “the decision to hire permanent replacements was admittedly motivated by her desire to avoid a future strike at the facility,” and the Board’s finding that it would have cost the employer a “lesser amount  . . . over the 3-year life of the contract to fully implement the Union’s” economic proposals than it cost to retain the replacements.”

In essence, the Board concluded that what made the hiring of permanent understudies a ULP and unlawful in this case was that the employer was seeking to dissuade employees from striking in the future.  However, what the majority ignores is that every time an employer and a union bargain for a contract, at the end of the day each side tries to convince the other to compromise through the threat of wielding the rights the law gives them: the right to strike and the right to hire replacements and/or lock out employees.

What Does This Mean For Employers Going Forward?

There can be no question that the Board and the General Counsel are trying to affect the relative strength of employers and unions in bargaining.  For those who read this blog and follow the pronouncements of the Board’s General Counsel, this should come as no surprise.  As we reported in April , when the General Counsel issued his latest memo identifying issues on which the NLRB’s Regional Offices must consult with the Division of Advice, cases involving an allegation that an employer’s permanent replacement of economic strikers had an unlawful motive, were near the top of the list.

While the views of the Board and the General Counsel are reflected in American Baptist Homes of the West, as the dissent observes, the decision is clearly inconsistent with contrary to almost 80 years of judicial and Board interpretation of the Act.  Undoubtedly, the issue will make its way back into the courts as the Board seeks to enforce the decision and this and/or other employers and advocates seek judicial review.

While at the end of the day, the Courts are likely to restore the longstanding interpretation of the Act which has held that as the Board held in Mrs. Natt’s Bakery in 1942, “since an employer may” when faced with the prospect of an economic strike “replace striking workers with impunity, it is not unlawful for him to state such an intention.”

In the meantime, employers facing strike threats and considering when and whether to hire permanent replacements, will do no doubt face unions and workers that will feel an unwarranted sense of protection against the possibility of their employers wielding this rarely deployed tool.