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House Poised to Add Civil Penalties to National Labor Relations Act

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With supporters of the Protecting the Right to Organize (PRO) Act unable to advance the legislation under the regular rules of the Senate, they are now attempting to move pieces of the legislation by way of special rules relating to the federal budget.

Legislative language released on September 8, 2021 indicates that provisions in the PRO Act imposing civil penalties for unfair labor practices (ULPs), and the creation of new ULPs, will be included when the House takes up "budget reconciliation" in the near future.

By way of background, the PRO Act represents the most dramatic re-write of federal labor policy in a generation, containing more than 50 substantive changes to federal labor law ranging from overturning state right-to-work laws to reclassifying independent contractors as "employees" for purposes of union organizing laws. The U.S. House of Representatives previously passed the bill by a narrow margin earlier this year. To date, however, the measure remains stalled in the U.S. Senate, where 60 votes are required to pass the measure as a whole.

Enter "budget reconciliation," which refers to a measure relating to federal spending which can be passed with simple majorities of both the House and Senate. Congress is currently working to advance President Biden's $3.5 trillion spending plan (the so-called "soft infrastructure bill") by way of these expedited procedures.

PRO Act supporters in the House have included the legislation's civil penalties provisions into budget reconciliation in an attempt to get this portion of the legislation passed with only 51 votes in the Senate (which would require all 50 Democratic senators to vote for the bill, with Vice President Harris casting the 51st tie-breaking vote).

The creation of new civil penalties under the National Labor Relations Act (NLRA) would fundamentally change its nature from a "make whole" remedial statute into a punitive one. As introduced, the reconciliation bill would add fines of up to $50,000 per violation for ULPs under the NLRA. Where an employer commits a ULP by discriminating or retaliating against an employee for engaging in protected activity, or where an employee is discharged or suffers "serious economic harm," these fines would be doubled to $100,000 per violation if the employer has committed a similar ULP within the last five years.

The PRO Act provisions contained in budget reconciliation also effectively create new ULPs beyond those contained in the Act, prohibiting an employer from: (a) permanently replacing a striking worker; (b) discriminating against a worker who has unconditionally offered to return to work based on participation in a strike; (c) locking out employees; (d) misrepresenting to an employee that they are not covered under the NLRA (e.g., misclassifying a worker as an independent contractor rather than an employee, or misclassifying an employee as a "supervisor" under the NLRA); (e) requiring employees to attend captive-audience meetings during a union organizing campaign; and (f) entering into or enforcing any prohibition on joint, class, or collective action. This last provision would essentially ban the use of arbitration in employment cases for unionized and non-union employers alike.

Liability for violation of any of the above would extend to any director or officer who directed or committed the violation, had established a policy that led to such a violation, or had actual or constructive knowledge of and the authority to prevent the violation and failed to prevent the violation.

The House is expected to take up this legislation in the near future, although as of this writing it is unclear what final form the reconciliation bill will take. Even less clear is its fate in the Senate. Thus far, there does not appear to be unanimous Democratic support for President Biden's $3.5 trillion package generally, and, as noted above, the PRO Act itself does not yet have even 50 supporters.

With regard to civil penalties, the picture is even murkier. Under the arcane rules relating to budget reconciliation, provisions that change substantive policy but have merely incidental budgetary impact are not eligible for inclusion. Senate PRO Act opponents are expected to move to strike the civil penalties provisions from the budget bill, but ultimately the ruling of the Senate Parliamentarian will determine whether these provisions are permissible. While there is limited precedent for increasing existing statutory penalties by way of reconciliation (for example, monetary fines for OSHA violations or violations under the Fair Labor Standards Act (FLSA)), there is no precedent for imposing an entirely new and transformative penalty scheme by way of budget rules.

Posted In: Congressional Activity; Executive Branch; National Labor Relations Act (NLRA)

Want to know more? Read the full article by at Littler Mendelson

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