NLRB ANNOUNCES NEW EVIDENTIARY STANDARDS FOR ESTABLISHING DURATION OF BACKPAY PERIOD IN “SALTING” CASES

In Oil Capitol Sheet Metal, Inc., the National Labor Relations Board, in a 3-2 decision with Members Liebman and Walsh dissenting, announced new evidentiary standards for determining the duration of the backpay period when the discriminatee is a “salt.” Where the evidence establishes that the discriminatee is a “salt,” the Board will no longer apply a presumption of indefinite employment.

The Board has developed a rebuttable presumption that the backpay period for an applicant that the employer refused to hire in violation of the Act should continue indefinitely from the date of the discrimination until a valid offer of instatement has been made. The issue determined in Oil Capitol Sheet Metal, Inc., 349 NLRB No. 118, is whether the same presumption should apply where the discriminatee is a union organizer or “salt.”

Prior to this decision, the remedy for an unlawful discharge or refusal to hire included the employer’s payment of backpay to the employee for the period from the unlawful act until the employer made a valid offer of reinstatement (or instatement, in the case of an unlawful refusal to hire). The Board applied a presumption that, if hired, the “salt” would have stayed on the job for an indefinite period. If the job was a construction job, the Board applied a further presumption that the employer would have transferred the employee to other jobsites when the job from which he was discharged (or for which he should have been hired) came to an end.

The Board majority declined to continue to apply those presumptions. The Board reasoned that they are inconsistent with the reality of salting. The reality is that salts, when hired, stay on the job until they succeed in their organizational effort or reach the point where such efforts are unsuccessful. In either situation the union typically then sends the salt to seek to organize the employees of another nonunion employer.

The Board recognized that this will not always be the case. There may be instances where the union will permit a member to work for the targeted employer for an indefinite period.

However, the Board majority view is that the union is in the better position to explain its intentions, and thus the burden to establish the fact should be on the union. The burden should not be on the employer to prove the contrary.

In its opinion, the majority stated:

"The traditional presumption that the backpay period should run from the date of discrimination until the respondent extends a valid offer of reinstatement loses force both as a matter of fact and as a matter of policy in the context of a salting campaign. Indeed, as discussed below, rote application of the presumption has resulted in backpay awards that bear no rational relationship to the period of time a salt would have remained employed with a targeted nonunion employer. In this context, the presumption has no validity and creates undue tension with well-established precepts that a backpay remedy must be sufficiently tailored to expunge only actual, not speculative, consequences of an unfair labor practice, and that the Board’s authority to command affirmative action is remedial, not punitive."

In reaching its conclusions, the majority relied in part on the Fourth Circuit’s decision in Aneco v. NLRB, 285 F.3d 326, where the court deemed “indefensible” the Board’s assumption that the hired salt would have worked for the respondent employer for 5 years.

The majority acknowledged that the parties to the case before it had not sought a reversal of Board law. However, the Board said that it was its responsibility to ensure that its remedies are compensatory and not punitive.

The majority also held that instatement to the job would not be ordered where the “salt” would have left the job prior to the Board’s decision.

In dissent, Members Liebman and Walsh criticized the majority for overturning Board precedent endorsed by two appellate courts and rejected by none, without any party having raised the issue, without the benefit of briefing, and without any sound legal or empirical basis. The dissent would have continued to treat salts as the Board treats all other employees who are subjected to employment discrimination. The dissent stated that, in backpay cases, it is fundamental that the Board resolves factual uncertainties against the wrongdoer, the employer. This approach is not unique to the Board. Rather, as the Supreme Court stated in Bigelow v. RKO Radio Pictures, 327 U.S. 251, 265 (1946), the “most elementary conceptions of justice and public policy require that the wrongdoer shall bear the risk of the uncertainty which his own wrong has created.” In the view of the dissenting members, the majority’s new approach not only violates that well-established principle of resolving remedial uncertainties against the wrongdoer, but it treats salts “as a uniquely disfavored class of discriminatees, notwithstanding the Supreme Court’s ruling that salts are protected employees under the National Labor Relations Act. NLRB v. Town & Country Electric, Inc., 516 U.S. 85 (1995).”

The dissent also stated that the majority’s reasons for adopting its new evidentiary approach were “dubious at best,” and that it was unreasonable to presume that salts would leave employment at some fixed point in time, known by a union in advance. For those same reasons, the dissenters found that there was no justification for the majority’s departure from the presumption that a salt, like any other employee at a construction site, would have been transferred to one of the employer’s other projects upon completion of the project at the site where the discrimination occurred.

This case may just be the beginning of the Board’s foray into which party has the burden of proof in construction backpay cases. As stated in footnote 20, the Board did not comment on the application of Dean General Contractors to non-salting cases. However, this decision raises the specter that the Board will abandon the Dean General Contractors presumption in non-salting cases. The Dean General Contractors presumption provides that an employer’s backpay obligation can terminate upon the completion date of the construction project in question, if the employer shows that, under its established policies, an employee hired into a position like the one unlawfully denied the discriminatee would not have been transferred or reassigned to another job after the project at issue ended. Dean General Contractors, 285 NLRB 573 (1987).

Management Perspective

In the Board’s decision in Oil Capitol Sheet Metal, Inc., 349 NLRB No. 118 (May 331, 2007), the Board finally recognized that there is a distinction between a “salt” and a bona fide applicant for employment when it comes to determining back pay liability in refusal to hire cases. There can be no reasonable dispute that salts, by definition, seek and obtain employment to organize the workforce. Rather than continue to obligate the employer to prove the goals of the union and the union salt, the Board has properly shifted the burden to the group or persons that possess the actual knowledge. To continue the back pay obligation for a union salt ad infinitum based on the fictional theory that the salt would have continued to work for the employer and transferred to all future jobs after the organizing drive has run its course, unfairly penalizes employers and does not properly remedy violations of the Act. Moreover, it ignores the realities of the industry and the goals of salting. It is the union that dictates the duration of the organizing attempt and how long the salt would have worked for the employer. Therefore, it is only proper that the General Counsel prove the period of time the salt would have been employed for purposes of calculating back pay.

This decision only affects salting cases, not other types of unlawful refusal to hire or discharge cases. Employers will no longer have the burden of proving a negative often resulting in a financial injustice. The decision properly places the burden of proof on the party that has the proof.

Union Perspective

Now that the Board has shifted the burden of proof to the General Counsel to establish the duration of the backpay period, a union that contemplates using salts to organize an employer will have to consider what evidence the General Counsel will need to sustain its burden to show that, once hired, the salt would have remained employed for a stated period of time or an indefinite period of time. In order to provide the factual prerequisite, the union, in advance of salting the job, will have to formulate a strategic plan for salting the employer. The plan should be in writing to avoid an argument by the employer that it was merely fabricated to further the union’s interest of extending the backpay period. The written plan should identify the names of the salts, the project that they will be salting, whether the salts will move to another project of the same employer once the initial project concludes, if offered employment, and the anticipated duration of the salting. With these statements of the union’s goals identified in writing, the union will be able to furnish the General Counsel with the evidence that it needs to establish the duration of the backpay period.

Link to Decision and Order: Oil Capitol Sheet Metal, Inc. and Sheet Metal Workers Local 270, Affiliated with Sheet Metal Workers International Union, AFL–CIO.

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The contributors to this Hot Topic edition are from the Section's Committee on Development of the Law Under the NLRA.

When he is not practicing yoga, Howard Z. Rosen performs CLE two person skits with both Chris Hexter and Bernie Siebert. Time permitting, Howard, who is a Fellow of the College of Labor and Employment Lawyers, former Co-Chair of the DLL Committee, and current Co-Chair of the LEL Publications Committee practices law in Los Angeles where he represents unions and employees with the firm of Posner & Rosen LLP.

W.V. Bernie Siebert is partner in the Denver office of Sherman & Howard where he practices labor and employment law exclusively representing of management. He is currently Management Co-Chair of the Developing Labor Law Committee. He is listed in Best Lawyers in America, Chambers USA, Who's Who Legal for Labour and Employment, has been named one of Colorado's Super Lawyers and was inducted into The College of Labor and Employment Lawyers as a Fellow in 1996.