The National Labor Relations Board (NLRB) recently held that waivers signed by a group of terminated employees in exchange for enhanced severance benefits barred unfair labor practice (ULP) charges filed by a union on behalf of the employees.
The National Labor Relations Board (NLRB) recently held that waivers signed by a group of terminated employees in exchange for enhanced severance benefits barred unfair labor practice (ULP) charges filed by a union on behalf of the employees. See BP Amoco Chemical-Chocolate Bayou, 351 NLRB No. 39 (Sept. 29, 2007). In its 2-1 decision, the Board majority applied the factors it considers in determining whether a private settlement of a ULP is valid.
The Board majority rejected the dissenting member’s opinion that these factors should not apply where no ULP charge has been filed at the time the release is executed, noting that whether charges have been filed may be relevant to the analysis but is not dispositive.
In this case, a group of employees was selected for termination as part of a reduction in force. At the time they were selected, the employees were not represented by the union and there was no active union organizing campaign. In exchange for enhanced severance benefits, the employees all signed termination agreements in which they agreed to release all claims arising out of their employment or termination. The employees were given forty-five days to consider whether to sign the agreements and had seven days after signing to revoke them. The employer encouraged all of the employees to consult with legal counsel before signing the agreements.
Subsequently, the union filed a ULP charge on behalf of the employees, claiming they were selected for termination because of their support for the union. The Administrative Law Judge recommended dismissal of the charges based on the waivers signed by the employees. The Board majority agreed with the ALJ.
In finding that the employees validly waived their right to file unfair labor practice charges arising from their terminations, the Board considered several factors, including:
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Whether the parties to the Board case have agreed to be bound, and the position taken by the General Counsel with regard to settlement;
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Whether the settlement is reasonable in light of the violations alleged, the risks inherent in litigation, and the stage of litigation;
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Whether there has been any fraud, coercion or duress by any party in reaching settlement; and
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Whether the employer has a history of violating the Act or has previously breached settlement agreements.
In this case, the Board found that the standards set forth above were met. The employees were all advised that they should consult legal counsel before signing the releases, and many did so. The Board held that the employees were aware of the content of the agreements, advised as to the meaning, and knew that they were releasing claims against the employer. Thus, the Board found that the employees intended to be bound by the agreement.
Next, the Board held that the agreements were reasonable in light of the violations alleged and the litigation risks presented. When the agreements were signed, no ULP charges had been filed and the prospect of litigation was not obvious. Additionally, the Board found that there was a significant risk that a charge alleging discriminatory selection would not be meritorious because:
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Little or no union activity was occurring at the time of the downsizing;
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The record did not show that all of the employees selected for termination had engaged in protected activity or that the employer was aware of this;
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The selection process was a careful and lengthy one supported by business justifications;
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Many of the employees presented by the General Counsel as witnesses at the hearing were not supportive of the position of the General Counsel or the union; and
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Many of the terminated employees had work histories that were “less than pristine.”
Thus, the Board found “the termination agreements and attendant enhanced benefits were a reasonable adjustment in light of the litigation risks.”
Further, the Board found no evidence that the agreements were fraudulent, that they were signed under duress or the threat of coercion, or that the employees attempted to revoke the agreements. The Board pointed out that the employer had encouraged the employees to consult attorneys, given them time to review and assess the agreements, and provided them with an opportunity to revoke the agreements after execution.
The Board also found that the employer did not have a history of violating the National Labor Relations Act (NLRA).
The Board majority distinguished this situation from prior cases in which the Board has refused to give effect to private settlement agreements. In one case, the employer’s history of serious violations of the Act, as well as the opposition of the charging party and General Counsel to the waiver, weighed against enforcing the waiver provisions. The Board found that such concerns were not present in this case. Additionally, the Board has refused to enforce waivers that include provisions prohibiting employees from providing evidence to the Board in cases involving other employees. However, the agreements in this case did not contain such provisions – they only precluded the claims of the employees who entered into the agreements.
In consideration of all of these factors, the Board held that the waivers barred the filing of ULPs on behalf of the employees by the union.
Employers’ Bottom Line:
The Board’s decision in BP Amoco is instructive because it illustrates the factors the Board will consider in determining whether a waiver or release is enforceable with regard to alleged violations of the NLRA. In response to this decision, Associate General Counsel Richard Siegel has issued a memorandum instructing NLRB regional office personnel to submit to the Division of Advice all otherwise meritorious cases involving waivers that were executed before a ULP charge was filed. We will continue to keep you updated on the status of this issue.
If you have any questions regarding this decision or labor or employment issues in general, please contact Jerry Coker, jcoker@fordharrison.com, 404-888-3820, or the Ford & Harrison attorney with whom you usually work.