In American Baptist Homes of the West, 364 NLRB No. 13 (May 31, 2016), the National Labor Relations Board (NLRB) ruled that an employer violated the National Labor Relations Act (NLRA) when its decision to permanently replace striking workers was based on a desire to (1) teach the striking workers and union a lesson and (2) avoid future strikes.

 

Under the NLRA, employers have a right to permanently replace workers who are on an economic strike. This right exists irrespective of motive and in the absence of evidence of an independent unlawful purpose. See Hot Shoppes, Inc., 146 NLRB 802 (1965).  The NLRB's decision in American Baptist Homes severely limits the right of employers to hire permanent replacements in response to strike called by a union and thereby effectively weakens the ability of employers to defend themselves against such work stoppages.

 

Brief Summary of Facts

 

This case arose out of a dispute between American Baptist Homes (the employer) and the Service Employees International Union (SEIU).  The parties disagreed over the terms of a new collective bargaining agreement and the SEIU informed the employer that it would engage in a strike "unless and until a mutually agreeable resolution has been reached."  The union also stated that all the striking workers would return to work after five days.

 

In response to the strike threat, the employer engaged a staffing agency and made offers of temporary employment to about 60-70 individuals.  While the strike was ongoing, the employer offered a permanent position to approximately 44 of those individuals.  According to testimony that was submitted during a hearing on the matter, the employer's attorney purportedly admitted that the employer "wanted to teach the strikers and the Union a lesson.  They wanted to avoid any future strikes, and this was the lesson that they were going to be taught."

 

After nearly a week of being on strike, the striking employees reported back to work.  At that time, the employer informed some of the employees that they had been permanently replaced and would be placed on a preferential rehire list.

 

Majority Decision

 

In a 2-1 decision, the NLRB ruled that American Baptist Homes' decision to permanently replace the striking employees was motivated by an "independent unlawful purpose" and therefore violated the NLRA.  In its reasoning, the NLRB stated that the phrase "independent unlawful purpose" includes "an employer's intent to discriminate or to encourage or discourage union membership."  The Board further reasoned that an employer violates the NLRA when it retaliates against employees for engaging in union or other protected activity, and that the right to strike is fundamental.  Finally, the Board maintained that the phrase "independent unlawful purpose" does not require that the unlawful purpose be unrelated or extrinsic to the parties' bargaining relationship or the underlying strike.

 

Accordingly, the NLRB concluded that the employer's desire to teach the strikers and union a lesson and avoid future strikes constituted an independent unlawful purpose, despite the fact that the employer's motivation was in direct response to a strike that was initiated by the union.

 

As a remedy for the employees, the Board ordered the employer to reinstate all the workers who lost their jobs and provide them with backpay for lost wages.

 

Dissenting Opinion

 

In a strongly worded dissent, Member Miscimarra noted that the right of an employer to hire permanent replacements is an economic weapon that employers have been able to utilize for nearly 80 years.  He also noted that the Board's decision in Hot Shoppes, Inc. provides that an employer's "motive" in hiring replacement workers is immaterial, absent evidence of an independent unlawful purpose.  He further explained that in order to be "independent," the motivation must be an antiunion motive extrinsic or unrelated to the union's strike activity.  In his opinion, the desire to prevent future strikes was neither extrinsic nor unrelated to the union's strike.  To the contrary, it was actually directly related to the union's decision to strike.

 

Member Miscimarra also argued that the majority's decision will effectively preclude many employers from using permanent replacements as an economic weapon in response to a strike.  Indeed, he noted that it will be "virtually impossible to distinguish self-preservation from antistrike motives in hiring permanent replacements."  He also cautioned that any stray comment by an employer that reflects negatively towards strike participants could jeopardize the employer's ability to hire permanent replacements during a work stoppage.

 

Takeaways

 

As discussed in the dissenting opinion, any decision to permanently replace striking workers is likely to be heavily scrutinized by the NLRB.  In addition, unions might also begin to rely on the American Baptist Homes decision to feel more confident about calling for a strike in future labor disputes.

 

Therefore, employers who wish to utilize permanent replacements in response to an economic strike should be very careful about ensuring that their motivation would be deemed lawful by the Board.  Specifically, employers should not inform unions that the company is hiring permanent replacements to punish striking employees, prevent future strikes, or discourage support for the union's decisions.  Rather, employers should base a decision to hire permanent replacements on reasons such as ensuring a smooth continuation of the business operations.

 

Employers are also advised to consult with a labor attorney or knowledgeable labor relations consultant before making the decision to hire permanent replacements for striking workers.