Called Out on Strike but Still in the Game: The NLRB GC’s New Approach to Permanent Strike Replacements

Authored by Robert S. Seigel

Oct 10, 2016

The National Labor Relations Board’s General Counsel (GC) is urging the NLRB Board to reverse almost eighty years of precedent concerning an employer’s unfettered right to use permanent replacements for striking employees. If the NLRB adopts its GC’s view, an employer’s ability to hire permanent replacements for striking employees will be seriously diminished if not altogether precluded.

Since the U.S. Supreme Court’s seminal decision in NLRB v. Mackay Radio & Telegraph Company, 304 U.S. 333 (1938), employers have enjoyed the right under the National Labor Relations Act (NLRA) to hire “permanent replacements” for striking employees. These replacements may continue to be employed even after the strike ends or the replaced striker has made an “unconditional offer to return to work.” However, strikers who offer to return to work must be reinstated to active employment if a vacancy arises for which they are qualified. In a case called Hot Shoppes, Inc., 146 NLRB 802, 805 (1964), the NLRB ruled that an employer need not show any specific economic justification for hiring permanent replacements or otherwise demonstrate that hiring permanent replacements was necessary to enable the employer to operate during the strike.

In a brief filed in a case called United Site Services of California, 20-CA-139280, the NLRB’s GC has argued that Hot Shoppes was wrongly decided. Attempting to overturn this 60–year-old precedent, the NLRB General Counsel argues that hiring permanent replacements for economic strikers is “inherently destructive” of employee rights under the NLRA. Therefore, according to the GC, an employer should only be entitled to hire permanent replacements if it can demonstrate a “legitimate and substantial business reason” for hiring them. In his brief, the GC not only concedes that this standard is difficult to satisfy, he asserts that the standard should be difficult to satisfy.

The United Site Services case is currently pending before the Board. It is unlikely the case will be decided until the NLRB is restored from its present complement of three members to its full complement of five members. This undoubtedly will have to await the results of the next presidential election. If a Democrat continues to occupy the White House after the election, Democrat-appointees will continue to constitute a majority on the NLRB, and adoption of the GC’s argument should be anticipated.

The adverse consequences that would flow from the Board’s adoption of the GC’s argument cannot be overstated. An employer’s ability to hire permanent replacements is the fundamental economic weapon an employer can wield in response to an economic strike. We expect such a decision would substantially alter the balance of power in strike situations in favor of unions. Moreover, substituting temporary for permanent replacements is fraught with difficulty, one of the most prominent of which is finding qualified, motivated workers to serve as temporary replacement employees. As a corollary, we expect the decision will lead to the greater use of outside labor services to provide temporary replacement labor during strikes. This, in turn, will undoubtedly prompt litigation over the constitutionality of state “strikebreaker” laws purporting to limit the use of such labor services.

Because this is now a fluid and evolving area of the law, any employer facing an imminent strike, preparing for the possibility of a strike, or even preparing for collective bargaining negotiations, should contact the knowledgeable and experienced attorneys at Lowenbaum Law to discuss the possible impact of this case on your business.

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