NLRB Says: Settle or Else…

Authored by Robert S. Seigel

Jul 14, 2016

In a seemingly innocuous memo dated July 1, 2016, the National Labor Relations Board (NLRB) significantly increased pressure on federal contractor employers to settle unfair labor practice charges filed against them before a complaint is even issued. This new NLRB initiative is particularly troubling because it forces employers accused of committing unfair labor practices to decide within a period of days whether to settle the allegations or face the possibility of debarment from bidding on federal contracts.

On its face, the initiative is simple enough. Beginning on July 1, 2016 the NLRB will now collect, and transmit to a central database, information identifying the employer as a respondent charged with having committed violations of the National Labor Relations Act (NLRA). This data will then become available to “labor compliance advisors” for federal agencies that are responsible for determining whether the alleged violations are “serious,” “repeated,” “willful,” or “pervasive.” Depending on the categorization of the alleged violation, the consequences for the employer can be severe. The labor compliance advisors have authority to recommend that their employing agency decline to exercise an option on a federal contract with the subject employer, terminate an existing contract, or suspend and debar the employer or its representatives from bidding on future contracts.

This initiative is particularly alarming because the NLRB’s report to the database does not await disposition of the unfair labor practice allegations by an administrative law judge or by the NLRB itself. Instead, the NLRB prepares the report unless the employer agrees to settle the allegations before a complaint is issued by the NLRB regional director. Since the NLRB’s current practice is to allow a charged employer only a few days to decide whether or not to settle a case before a complaint is issued, as a practical matter, a charged employer that is a federal contractor is forced to decide in a very short time frame whether to settle allegations for which it may have a viable defense, or risk the possibility of serious sanctions, potentially including debarment from federal contracting.

The conundrum for the employer is compounded by the NLRB’s practice of submitting to an administrative law judge for decision, cases the merits of which depend on resolution of witness credibility. Thus, the ultimate disposition of allegations that depend on the veracity of the testimony of witnesses called by the NLRB general counsel, become irrelevant. This is because, in exercising its right to contest the witness’ veracity, the charged employer places itself squarely in the sights of a labor compliance officer who may or may not await final disposition of the allegations before imposing a penalty on the unwary employer. President Obama’s Executive Order that prompted the NLRB’s initiative suggests that such draconian consequences can be tempered by the contracting agencies’ ability to exercise discretion in determining the import of the unfair labor practice allegations on its bid decisions. However, this is small comfort to an employer who is faced with the Hobson’s choice of either settling allegations with the NLRB that they believe to be ill-founded, or risking severe consequences to their federal contracting business.

When confronted with potentially devastating consequences of this initiative, an employer must have the benefit of experienced labor counsel. The attorneys at Lowenbaum Law are prepared to offer you the best guidance available in navigating this perilous path.

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