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NLRB Acting General Counsel announces new guidelines for assisting illegally discharged employees to obtain full back-pay

NLRB Acting General Counsel Lafe Solomon announced new guidelines to help employees who were illegally discharged to get full compensation in backpay awards. Solomon issued two memos on Friday, one outlining new methods for calculating backpay, and another in which he urged reconsideration of two 2007 Board decisions that require illegally discharged employees to start looking for a new job within two weeks of being fired. Those decisions, wrote Solomon, have shifted the burden from the employer to the General Counsel to prove that the terminated employees have diligently pursued work throughout the backpay period. Solomon then ordered the NLRB’s 31 regional offices to identify cases that could be used to ask the Board to reconsider the Board’s decisions in Grosvenor Resort, 350 NLRB No 1197 (2007) and St. George Warehouse, 351 NLRB No 961 (2007).

In Jackson Hospital Corp dba Kentucky River Med Ctr, 356 NLRB No 8 (2010), the Board crafted a new procedure for assessing interest on make-whole orders, under which interest on make-whole awards is to be compounded on a daily basis, using the established methods for computing backpay and for determining the applicable rate of interest. Solomon instructed the regional offices that, from now on, interest will begin to accrue on backpay when that backpay is due and owing. Compensation earned through other jobs following the illegal termination will continue to be collected and applied in backpay calculations on a quarterly basis in a number of ways. Gross backpay will be calculated on a pay-period basis in each quarter, while interim earnings will initially be calculated on a quarterly basis. Quarterly interim earnings will be allocated to pay periods that contain gross backpay on a proportional basis determined by the proportional distribution of pay-period gross backpay in the quarter. Additionally, pay-period net backpay will be calculated by subtracting the proportional interim earnings from the pay- period gross backpay and daily compounded interest will begin accruing on each pay- period net backpay amount on the day following the end of the pay period, and will continue to accrue until the date the backpay is paid.

Furthermore, noting that “it does not advance the purposes of the Act to require discriminatees to search for work and often incur expenses in their search and yet not reimburse them for those expenses” due to an unsuccessful search, Solomon has directed the offices that those expenses will be calculated separately from backpay and will be charged to violators, even if the employee received earnings from another job during that period. Reimbursement will not be limited to the amount of gross backpay that a wrongfully terminated employee may be entitled to, as those expenses will be added to net backpay in the payroll period when incurred and daily compounded interest will be charged on these amounts also.

Under Solomon’s new directive, the General Counsel’s office will ask ALJs and the NLRB to require employers who wrongfully discharge employees to submit the appropriate documentation to the Social Security Administration so that when backpay is paid, it will be allocated to the appropriate periods. The office will also, from now on, seek orders requiring employers to reimburse employees in amounts that are equal to the difference in taxes owed upon receipt of a lump-sum reimbursement payment and taxes that would have been owed had the employer not unlawfully terminated the employees.

Source: CCH Editorial Staff.