National Labor Relations Board v. Community Health Services, Inc. ( 2016 )

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS January 20, 2016
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
NATIONAL LABOR RELATIONS
BOARD,
Petitioner,
v.
COMMUNITY HEALTH SERVICES, No. 14-9614
INC., d/b/a Mimbres Memorial Hospital
and Nursing Home,
Respondent.
------------------------------
UNITED STEEL, PAPER AND
FORESTRY, RUBBER,
MANUFACTURING, ENERGY, ALLIED
INDUSTRIAL AND SERVICE
WORKERS INTERNATIONAL UNION,
Intervenor.
_________________________________
Appeal from the National Labor Relations Board
(NLRB No. 28-CA-016762)
_________________________________
Kaitlin Kaseta, Charleston, South Carolina (Bryan T. Carmody, Carmody & Carmody
LLP, Glastonbury, Connecticut, on the briefs), for Respondent.
Milakshmi V. Rajapakse, Attorney (Robert J. Englehart, Supervisory Attorney,
Richard F. Griffin, Jr., General Counsel, Jennifer Abruzzo, Deputy General Counsel,
John H. Ferguson, Associate General Counsel, and Linda Dreeben, Deputy Associate
General Counsel, with her on the briefs), National Labor Relations Board, Washington,
D.C., for Petitioner.
_________________________________
Before TYMKOVICH, Chief Judge, GORSUCH, and McHUGH, Circuit Judges.
_________________________________
McHUGH, Circuit Judge.
_________________________________
I. INTRODUCTION
This challenge to the National Labor Relations Board’s (the Board) petition for
enforcement questions whether the Board may disregard interim earnings when
calculating backpay awards for employees whose labor injury falls short of unlawful
termination. Respondent Mimbres Memorial Hospital and Nursing Home (the
Hospital) argues the Board failed to provide adequate support for its decision to
disregard interim earnings and therefore requests that we reverse the Board’s backpay
calculation. We defer to the Board’s policy-based rationale in support of its remedial
decision and affirm and enforce its order.
II. BACKGROUND
A. The Unfair Labor Practice Allegations and Proceedings
The complicated procedural history of this case stems from the Hospital’s
1999 decision to reduce the hours of its full-time, respiratory-department employees.
Cmty. Health Servs., Inc., 342 N.L.R.B. 398, 400–02 (2004). As a result of this
reduction in hours, the United Steelworkers of America, District 12, Subdistrict 2,
AFL-CIO, a union representing respiratory-department employees under an exclusive
collective bargaining agreement, filed charges against the Hospital on behalf of the
impacted employees. Based on these allegations, the Board’s General Counsel filed a
complaint with the Board, asserting the Hospital had violated § 8(a)(1), (5) of the
2
National Labor Relations Act (the Act or NLRA), 29 U.S.C. § 158. The Board
ultimately agreed and ordered the Hospital to “make whole any employee for any
loss of earnings and other benefits suffered as a result of its unlawful actions.” Cmty.
Health Servs., Inc., 342 N.L.R.B. at 404. On petition for review in this court, we
enforced the Board’s order in whole. NLRB v. Cmty. Health Servs., Inc., 483 F.3d
683 (10th Cir. 2007).
B. The Compliance Proceedings
The case proceeded to the compliance phase, where an administrative law
judge (ALJ) determined the Hospital owed thirteen current and former employees
approximately $105,000 in backpay. Cmty. Health Servs., Inc., No. 28-CA-16762,
2010 WL 3285384 (N.L.R.B. Div. of Judges July 28, 2010). In arriving at this
amount, the ALJ rejected the Hospital’s argument that any income an employee had
earned from secondary employment during the backpay period—i.e., interim
earnings—should be deducted from that employee’s backpay calculation. Id.In reaching that conclusion, the ALJ applied a backpay formula the Board first
pronounced in Ogle Protection Services, Inc., 183 N.L.R.B. 682 (1970). In Ogle, the
Board determined that interim earnings should not be deducted from backpay awards
when the underlying violation is something other than wrongful termination of
employment. 138 N.L.R.B. at 683. The Board in Ogle apparently presumed that
employees who remain employed by the wrongdoing employer will not make interim
earnings. Id. Here, the ALJ determined that application of the Ogle formula was
appropriate because to hold otherwise “would have the effect of imposing a duty on
3
employee victims of an unfair labor practice to moonlight in order to minimize the
impact of the unlawful conduct for the benefit of the wrongdoer.” Cmty. Health
Servs., 2010 WL 3285384.
The Hospital filed exceptions and supporting briefs to the Board, challenging
the ALJ’s decision. But in its Compliance Order, the Board affirmed the ALJ’s
rulings, findings, and conclusions. Cmty. Health Servs., Inc., 356 N.L.R.B. No. 103,
slip op. at *18 (Feb. 28, 2011).
The Hospital next petitioned the United States Court of Appeals for the
District of Columbia1 for review of the Board’s Compliance Order. Deming Hosp.
Corp. v. NLRB, 665 F.3d 196 (D.C. Cir. 2011). The D.C. Circuit rejected the Board’s
interpretation of Ogle and the Board’s concern that deducting interim earnings would
impose a duty to moonlight on the victims of wrongful hour reductions. Id. at 200.
The circuit court further explained that the Compliance Order conflated two distinct
concepts: an employee’s duty to mitigate (which is nonexistent when there is no
cessation of employment) and the “rules governing when backpay should be reduced
by interim earnings.” Id.The D.C. Circuit also noted that, since Ogle, the Board had been inconsistent
in its approach to calculating backpay in the absence of a cessation of employment.
Id. at 201. In light of this unclear precedent, the court ruled the Board had not
1
Under 29 U.S.C. § 160(f), a party “aggrieved by a final order of the Board”
may obtain review of the order “in any United States court of appeals in the circuit
wherein the unfair labor practice in question was alleged to have been engaged in or
wherein such person resides or transacts business, or in the United States Court of
Appeals for the District of Columbia.”
4
adequately explained its rationale for refusing to consider interim earnings here. It
therefore remanded the Compliance Order “for a more thorough analysis of the
issue.” Id.On remand, the Board issued a Supplemental Order reaffirming its original
ruling. Cmty. Health Servs., Inc., 361 N.L.R.B. No. 25, slip op. (Aug. 25, 2014). The
Board identified the sole issue on remand as “whether the Board should deduct an
employee’s interim earnings from other employment when calculating backpay in
cases where the employee suffers no cessation of employment with the wrongdoing
respondent-employer and has no duty to mitigate by seeking interim employment”
and concluded that “the deduction of interim earnings in this situation would not best
effectuate statutory policy.” Id. at *1. In reaffirming its prior conclusion, the Board
provided five new policy justifications for its choice of remedy. Specifically, the
Board explained that declining to deduct interim earnings where there is no cessation
of employment (1) encourages employment and production, (2) is more consistent
with the Board’s policy of not deducting interim earnings obtained from work
performed above and beyond an employee’s duty to mitigate, (3) better accounts for
the hardships that arise when taking on secondary employment, (4) discourages
employers from engaging in dilatory conduct such as delaying compliance with an
order to rescind unfair labor practices, and (5) prevents a windfall to the wrongdoing
employer. Id. at *7–*9. Although the Board acknowledged the existence of some
inconsistent precedent on this issue, it argued that the cases in which it
“inadvertently” deducted interim earnings from backpay calculations “represent a
5
tiny fraction of the hundreds of cases” in which the Board declined to deduct the
interim earnings of employees whose injuries fall short of unlawful termination. Id. at
*7. Based on these considerations, the Board reaffirmed its prior backpay order,
concluding that “important statutory policies strongly support a practice of declining
to deduct interim earnings when applying the Ogle Protection Service backpay
formula for cases involving economic loss but no cessation of employment.” Id. at
*9.
Next, General Counsel filed an application in this court for enforcement of the
Board’s decision, and the Hospital responded in opposition. We exercise jurisdiction
under 29 U.S.C. § 160(e), (f).
III. DISCUSSION
On this petition for enforcement, we are asked to determine whether the Board
provided sufficient support for its decision to exclude interim earnings from backpay
calculations when the employer has wrongfully reduced employee hours, but not
terminated employment. The Hospital contends the Board’s Supplemental Order is
inadequate, arguing the Board’s reliance on Ogle Protection Service, Inc., 183
N.L.R.B. 682 (1970), is flawed and its policy justifications are unfounded. General
Counsel contends the Board selected a reasonable remedy that is in line with the
policies underlying the NLRA.
The Board’s power to award backpay arises under §10(c) of the NLRA, which
permits the Board to “take such affirmative action including reinstatement of
employees with or without back pay, as will effectuate the policies of [the Act].”
6
29 U.S.C. § 160(c). Because a backpay award is “only an approximation,” the Board
“has considerable discretion in selecting a method reasonably designed to
approximate the amount of pay” due to a wronged employee. NLRB v. Velocity
Express, Inc., 434 F.3d 1198, 1202 (10th Cir. 2006) (internal quotation marks
omitted). On review of a backpay order, our task is narrow. See id. (“The NLRB’s
power to order backpay is a broad, discretionary one, ‘subject to limited judicial
review.’” (quoting Fibreboard Corp. v. N.L.R.B., 379 U.S. 203, 216 (1964))). We
will not disturb the Board’s remedial decision unless it is “arbitrary or unreasonable,”
or, in other words, “is a patent attempt to achieve ends other than those which can
fairly be said to effectuate the policies of the NLRA.” Id. (brackets and internal
quotation marks omitted).
It is through this deferential lens that we assess the Hospital’s opposition to the
Board’s Supplemental Order. We first review the Board’s interpretation of Ogle and
its progeny, and we then turn to the Hospital’s criticism of the Board’s policy
justifications.
A. The Supplemental Order Properly Interpreted Ogle
To properly assess the Board’s application of its decision in Ogle, we begin by
explaining the Board’s historical approach to two underlying concepts: the duty to
mitigate and the calculation of backpay awards.
1. Board Precedent Regarding the Duty to Mitigate and Backpay Calculations
First, we consider the duty to mitigate. Under longstanding Board and
Supreme Court precedent, employees who believe they have been unlawfully
7
terminated have a duty to seek out substitute employment while they await a Board
decision on that issue. Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 199–200 (1941)
(recognizing the Board’s power to “give appropriate weight to a clearly unjustifiable
refusal to take desirable new employment” when calculating backpay). Although the
Board and courts frequently refer to this obligation as a duty to mitigate, the term is
somewhat of a misnomer because the motivation for the obligation is more “the
healthy policy of promoting production and employment” than “the minimization of
damages.” Id.Where unlawfully terminated employees are under an obligation to seek work,
the policy holds that backpay calculations logically should include a deduction for
interim earnings. Without such a deduction, employees who are willing to bet on the
outcome of the claims against the former employer or whose short-term financial
needs are minimal would have little incentive to comply with their mitigation
obligation. Instead, they could wait for a favorable decision from the Board to make
them whole. The duty to seek interim employment gives these employees an
incentive to remain productive during the period the claims against the former
employer are unresolved.
Conversely, employees who are not unlawfully terminated but suffer other
labor injuries—e.g., reduction in hours or wage—have no duty to seek secondary
employment pending a decision on their unfair labor practices claim. See 88 Transit
Lines, Inc., 314 N.L.R.B. 324, 325 (1994) (explaining that employees who are not
discharged are not required “as part of any mitigation obligation, to obtain additional
8
replacement work from some other employer during the backpay period”). But some
employees who are unable to wait for the outcome of an NLRB action will make up
the lost hours with supplemental work despite the lack of any legal duty to do so. The
fact that employees who have no duty to seek secondary employment may
nevertheless do so raises the question of whether the Board should account for such
interim earnings when calculating a backpay award.
The Board’s two seminal backpay decisions—F.W. Woolworth, Co., 90
N.L.R.B. 289 (1950), and Ogle Protection Service, Inc., 183 N.L.R.B. 682 (1970)—
do not squarely address this issue. In Woolworth, the Board sought a method of
curtailing employers’ incentive to delay reinstating wrongfully terminated
employees.2 Because the wrongfully terminated employee has a duty to seek interim
employment, the longer the employer waited to reinstate the injured employee, “the
greater would be the reduction in back-pay liability,” and the greater the likelihood
the employee would find higher paying employment and reject an offer of
reinstatement. Woolworth, 90 N.L.R.B. at 292. Woolworth remedied this problem by
instituting a quarterly backpay formula, through which the Board subtracts the
employees’ interim earnings in each quarter from what the employees would have
2
Before the Board decided F.W. Woolworth, Co., 90 N.L.R.B. 289 (1950), it
calculated backpay “by subtracting what an employee actually earned during the
entire backpay period from what she would have earned during that period had the
unlawful action not occurred.” Deming Hosp. Corp. v. NLRB, 665 F.3d 196, 199
(D.C. Cir. 2011); see also Pennsylvania Greyhound Lines, Inc., 1 NLRB 1, 51 (1935)
(calculating a backpay award by determining what the employee would have earned
from the noncompliant employer during the backpay period, “less the amount which
each [employee] earned subsequent to discharge”).
9
earned from the wrongdoing employer during that same quarter, had they not been
terminated. Id. at 292–93. Under this formula, interim earnings made in prior quarters
have no impact on the backpay calculation for subsequent quarters, and vice versa.
For example, if an employee suffered lost pay before securing interim employment,
the employer could not avoid paying that amount based on the employee’s success in
finding a higher paying job in a subsequent quarter.
Ogle, on the other hand, involved employees who had not been unlawfully
terminated, and thus had no duty to mitigate, but who were otherwise injured when
their employer repudiated the terms of a collective bargaining agreement. 183
N.L.R.B. at 683. In Ogle, the Board concluded that Woolworth’s “quarterly
computation is unnecessary and unwarranted” in cases that do not “involve cessation
of employment status or interim earnings that would in the course of time reduce
backpay.” Id. The Board therefore held that the Woolworth formula is not applicable
where there is no cessation of employment, apparently failing to anticipate that
employees who are not terminated may nonetheless be motivated to seek secondary
employment if, for example, the employer’s unfair labor practices result in reduced
wages or hours. As a result, the Board did not clearly address in Ogle whether
backpay awards should be reduced by interim earnings in cases where there is no
cessation of employment and therefore no duty to mitigate.3
3
In creating the exception to the Woolworth formula, the Board in Ogle
explained that a quarterly computation is unnecessary for “a violation of the Act
which does not involve cessation of employment status or interim earnings that
would in the course of time reduce backpay.” Ogle Prot. Serv., Inc., 183 N.L.R.B.
102. The Board’s Assessment of Ogle in the Supplemental Order
With this backdrop in mind, we turn to the Board’s discussion of Ogle in its
Supplemental Order. The Board acknowledged that “the literal language of Ogle
Protection Service does not compel the conclusion that interim earnings, where
proven, should not be deducted in cases where there is no job loss.” Cmty. Health
Servs., Inc., 361 N.L.R.B. No. 25, slip op. at *7 (Aug. 25, 2014). The Board also
recognized that in at least six of its prior decisions, it allowed for the deduction of
interim earnings where there was no cessation of employment. Id. at *6 (citing to
Atlantis Health Care Group (P.R.) Inc., 356 N.L.R.B. No. 26, slip op. at *1 (Nov. 15,
2010); Willamette Industries, 341 N.L.R.B. 560, 564–565 (2004); Quality House of
Graphics, 336 N.L.R.B. 497, 516–517 (2001); Ironton Publications, 313 N.L.R.B.
1208, 1208 n. 4 (1994); Consumers Asphalt Co., 295 N.L.R.B. 749, 752 (1989); and
Ford Bros., 284 N.L.R.B. 211, 211–12 (1987)). But the Board indicated that any
reference to the deduction of interim earnings in these cases was “inadvertently
682, 683 (1970) (emphasis added). Thus, Ogle could be limited to cases where there
is neither a cessation of employment nor interim earnings. Under this reading, when
an employee makes interim earnings during the backpay period, the Woolworth
formula would apply irrespective of whether there has been a cessation of
employment. But the Hospital has not advanced this reading. Instead, the Hospital,
the Board, and the D.C. Circuit all agree that Ogle does not clearly address the
present issue. And even if it did, the Board is free to reconsider its position with the
benefit of specific facts, so long as the new remedy aligns with the NLRA’s
underlying policies. NLRB v. Curtin Matheson Scientific, Inc., 494 U.S. 775, 787
(1990) (“[A] Board rule is entitled to deference even if it represents a departure from
the Board’s prior policy.”).
11
mistaken, rather than intentional” and that they “represent a tiny fraction of the
hundreds in which Ogle Protection Service has been correctly cited and applied.” Id.
at *7. Notwithstanding these cases to the contrary, the Board expressed that its
general policy “has been to preclude the deduction of interim earnings from other
jobs when applying Ogle Protection Service to remedy employees’ monetary losses
where there is no cessation of employment and attendant duty to mitigate damages.”
Id.
The Hospital takes issue with the Board’s analysis of Ogle and its progeny,
contending the Board was merely speculating when it described the decisions in
which it deducted interim earnings, despite no cessation of employment, as
“inadvertently mistaken.” Instead, the Hospital argues these decisions demonstrate
that, until now, the Board has never expressly declined to deduct interim earnings in
cases that do not involve a cessation of employment, and at best, the Board has been
inconsistent in its approach to backpay calculations in such cases.
We agree with the Hospital that the Board’s precedent has been unclear. But in
its Supplemental Order, the Board acknowledges this inconsistency and the need to
adopt a consistent approach for future cases.4 Thus, while the Board did not
4
Although inconsistent guidance from the Board could raise fair notice
concerns, the Hospital has not made a fair notice argument in the proceedings before
the Board, or in its appellate briefing. We therefore lack the power to consider this
issue. 29 U.S.C. § 160(e) (“No objection that has not been urged before the Board, its
member, agent, or agency, shall be considered by the court, unless the failure or
neglect to urge such objection shall be excused because of extraordinary
circumstances.”); Woelke & Romero Framing, Inc. v. NLRB, 456 U.S. 645, 665
(1982) (concluding that § 160(e) deprives appellate courts of jurisdiction to consider
12
sufficiently address its inconsistent precedent in the original Compliance Order, we
are satisfied that in its Supplemental Order, the Board adequately acknowledged its
anomalous decisions and correctly characterized Ogle and its progeny. We therefore
reject the Hospital’s invitation to overturn the Supplemental Order based on the
Board’s Ogle analysis.
B. The Board’s Policy Justifications Were Reasonable
We turn next to the Board’s policy justifications for concluding that interim
earnings should not be deducted from backpay awards when there has been no
cessation of employment.5 Because of the deference we owe to the Board’s remedial
issues “not raised during the proceedings before the Board”); see also Davis v.
McCollum, 798 F.3d 1317, 1320 (10th Cir. 2015) (“[Appellant] waived any potential
challenge to that conclusion by failing to address it in his opening brief on appeal.”).
5
As to the breadth of the Board’s Supplemental Order, we interpret it as
declining to deduct any interim earnings, regardless of their source. Thus, interim
earnings made from a new second job are treated the same as those made from
increased hours at a preexisting second job. We acknowledge the NLRB’s
Casehandling Manual lends some support for distinguishing between interim earnings
an employee makes by increasing hours at a preexisting second job from those made
at a new second job. See N.L.R.B. Casehandling Manual, pt. 3, § 10554.4 (2014),
https://www.nlrb.gov/reports-guidance/manuals. Specifically, section 10554.4
indicates that if an employee “held a second job prior to the unlawful action and then
increased the hours of employment at that job during the backpay period, earnings
derived from the increase in hours are deductible interim earnings.” But we interpret
the Board’s decision here as limiting the applicability of section 10554.4 and all
other rules regulating interim-earnings calculations to cases involving a cessation of
employment. The Casehandling Manual itself has signaled as much, noting in its
overview of the Interim Earnings section that “In Community Health Services, Inc.,
d/b/a Mimbres Memorial Hospital, 361 NLRB No. 25 (2014), the Board held that it
would ‘declin[e] to deduct interim earnings when applying the Ogle Protection
Service backpay formula for cases involving economic loss but no cessation of
employment.’” Id. § 10550.1 (alterations in original) (footnote omitted). Therefore,
13
decision, our limited role is to determine whether the Board’s policy justifications
represent “a patent attempt to achieve ends other than those which can fairly be said
to effectuate the policies of the NLRA.” NLRB v. Velocity Express, Inc., 434 F.3d
1198, 1202 (10th Cir. 2006) (brackets and internal quotation marks omitted). These
policies include “the promotion of industrial peace, the prevention of unfair labor
practices and protection for victimized employees.” Dayton Tire & Rubber Co. v.
NLRB, 591 F.2d 566, 570 (10th Cir. 1979); see also Nathanson v. NLRB, 344 U.S.
25, 27 (1952) (“A back pay order is a reparation order designed to vindicate the
public policy of the statute by making the employees whole for losses suffered on
account of an unfair labor practice.”); 29 U.S.C. § 151 (declaring the policies of the
NLRA). In its Supplemental Order, the Board described five policy reasons for its
decision. We address each rationale in turn to determine whether it fairly aligns with
the policies of the NLRA.
1. Encouraging Production and Employment
First, the Board reasoned that deducting interim earnings from backpay
calculations in this context would discourage production and employment by making
employees who seek additional work no better off than their counterparts who remain
underemployed. Cmty. Health Servs., Inc., 361 N.L.R.B. No. 25, at *7. As the Board
noted, “by declining to deduct interim earnings absent a cessation of employment, we
while section 10554.4 remains in force for all cessation cases, the Board has clarified
that it is inapplicable in cases like this one because interim earnings from any source
are no longer relevant.
14
offer employees a greater incentive to voluntarily seek interim employment, thereby
affirmatively promoting production and employment.” Id. (internal quotation marks
omitted). In support of its reasoning, the Board turned to Phelps Dodge Corp. v.
NLRB, in which the Supreme Court relied on the same underlying policy to justify
the imposition of a duty to mitigate and the deduction of interim earnings, including
amounts “which the workers ‘failed without excuse to earn,’” where there has been
an unlawful cessation of employment. 313 U.S. 177, 200 (1941).
Although it is seemingly counterintuitive to use the rationale underlying the
duty to mitigate in cases where no such duty exists, the goal of promoting production
and employment is advanced in both instances. In wrongful termination cases,
employees know their backpay award will be reduced by imputed interim earnings if
they breach their duty to mitigate and are motivated to seek actual employment.
Likewise, where the violation does not involve the cessation of employment,
employees who have no duty to mitigate will be encouraged to seek supplemental
employment if they can retain the benefit of that effort. Although the extent to which
productivity is impacted is greater in a termination case, we are not convinced the
Board’s reliance on this rationale in a case where there is no cessation of employment
constitutes a patent attempt to achieve ends contrary to those that can be said to fairly
effectuate the goals of the NLRA. This is so even though promoting production is not
one of the NLRA’s express policy objectives because, as the Supreme Court stated in
Phelps Dodge Corp., “[t]his consideration in no way weakens the enforcement of the
policies of the Act.” Id.15
2. Rewarding “Extra Effort”
Second, the Board posited that declining to deduct interim earnings in this
situation is more consistent with its backpay calculations in other contexts. Cmty.
Health Servs., Inc., 361 N.L.R.B. No. 25, at *7. Specifically, the Board analogized
employees who have a duty to mitigate but go above and beyond that duty with
employees who have no mitigation duty but nonetheless obtain additional work.
Under established Board policy, employees who perform more work than required
are entitled to retain the benefit of such “extra effort.” See N.L.R.B. Casehandling
Manual, pt. 3, § 10554.3 (2014), https://www.nlrb.gov/reports-guidance/manuals,
(explaining in the context of employees who have a duty to mitigate, “only interim
earnings based on the same number of hours as would have been available at the
gross employer should be offset against gross backpay”). Through this policy, the
Board rewards the employees who do more than is required, rather than the
wrongdoing employer. See In re Center Constr. Co., 355 N.L.R.B. 1218, 1221
(2010) (“[I]f a diligent backpay claimant chooses to work additional overtime during
interim employment it should operate to his advantage not that of the employer
required to make him whole for a discriminatory discharge.”); EDP Med. Comput.
Sys., 293 N.L.R.B. 857, 858 (1989) (“A backpay claimant who chooses to do the
extra work and earn the added income made available on the interim job may not be
penalized by having those extra earnings deducted from the gross backpay owed by
the Respondent.” (internal quotation marks omitted)). The Board reasoned it should
similarly reward employees who take on additional work in the absence of any
16
obligation to do so by not deducting the interim earnings that result from their extra
efforts. Id.The Hospital challenges this policy justification by advancing a different
definition of “extra effort.” In contrast with the Board’s definition, which equates
extra effort with any work employees perform beyond their legal obligation, the
Hospital would define extra effort as work employees perform beyond what they
would have done for the noncompliant employer. In this case, for example, the
Hospital unlawfully reduced its respiratory-department employees’ hours from forty
hours to between thirty-six and thirty-two per week. Under the Hospital’s definition,
“extra effort” would mean any work employees completed for a secondary employer
during the backpay period that exceeded the four to eight hours per week necessary
to meet a forty-hour work week.6
Although the Board could have adopted either version, we will uphold its
definition of extra effort for purposes of fashioning an appropriate remedy unless the
choice conflicts with the policies of the NLRA. We see no such conflict here.
3. Accounting for Additional Hardships
Third, the Board justified its decision to ignore interim earnings through its
observation that an employee who seeks work from a secondary employer generally
suffers additional hardships, “such as resolving scheduling conflicts between the two
jobs and traveling to a second workplace.” Cmty. Health Servs., 361 N.L.R.B. No. 25
6
The Hospital would exclude earnings made from secondary work the
employee held prior to the Hospital’s unlawful action.
17
at *8. By allowing the employee to retain the benefit of undertaking these hardships,
the Board’s policy “acknowledge[s] these practical considerations and encourage[s]
employees to address their financial situations contemporaneously.” Id.The Board could have conceivably accounted for some of these hardships by
requiring the wrongdoing employer to reimburse its employees for the costs
associated with working a second job, such as travel expenses. See Crossett Lumber
Co., 8 NLRB 440, 497 (1938) (discussing reimbursement for travel expenses in the
context of wrongfully terminated employees who found new employment). But not
all hardships an employee suffers when juggling two jobs are so tangible. For
example, it would be impractical, if not impossible, to ascribe a dollar amount to the
difficulties associated with resolving scheduling conflicts or accommodating the
demands of two employers. See Cmty. Health Servs., Inc., 361 NLRB No. 25 at *8
(“[T]he employee whose hours or wages have been unlawfully reduced continues to
work for the wrongdoing employer and must adjust any outside employment hours to
accommodate that employer’s demands.”). Therefore, by declining to deduct interim
earnings from backpay awards in this context, the Board’s decision better addresses
these intangible hardships.
The Hospital does not disagree that employees who work a second job while
remaining employed by the wrongdoing employer may face these added obstacles.
But it nonetheless challenges the Board’s reliance on this rationale because General
Counsel put forth no evidence of any additional hardships the employees actually
suffered in this case. But we are not convinced General Counsel was required to
18
introduce such evidence or that the Board needed to make specific findings on this
issue. The Board articulated a general policy that will apply beyond the facts of this
case. In doing so, “the Board is not confined to the record of a particular
proceeding.” NLRB v. Seven-Up Bottling Co. of Miami, 344 U.S. 344, 349 (1953).
Rather, the Board may rely on its “[c]umulative experience,” which “begets
understanding and insight by which judgments not objectively demonstrable are
validated or qualified or invalidated.” Id.When applying its general remedial policy to the facts of this case, the Board
was required to consider any unique circumstances that would make the remedy’s
“application to [the] particular situation oppressive and therefore not calculated to
effectuate a policy of the Act.” Id. But the Hospital, not General Counsel, had the
burden of putting forth evidence demonstrating the existence of unique
circumstances. See Velocity Express, 434 F.3d at 1203 (“[Respondent] had the burden
of proof on mitigation of its backpay obligation.”); Hansen Bros. Enters., 313
N.L.R.B. 599, 600 (1993) (“[T]he Respondent had the burden of showing why any
modifications should be made to the amounts set forth in the backpay
specification.”). Although the Hospital contends it was deprived of an opportunity to
discover any such evidence, its discovery requests in the NLRB proceedings
pertained only to general evidence regarding the affected employees’ interim
earnings. The Hospital never requested discovery regarding whether any of those
employees who made interim earnings suffered added hardships. Moreover, even if
the Hospital had put forward evidence demonstrating the added-hardships rationale
19
does not apply to all of the affected employees here, the other justifications for the
Board’s policy decision would remain intact. The Board therefore acted reasonably in
fashioning a remedy based on its cumulative experience that employees who take on
secondary employment will generally confront added hardships.
4. Preventing Dilatory Conduct
Fourth, the Board explained that the potential for an employer to engage in
dilatory conduct similar to that which prompted it to adopt the Woolworth formula is
present when an employer unlawfully reduces hours or wages. Cmty. Health Servs.,
361 N.L.R.B. No. 25 at *9. The Board reasoned that deducting interim earnings from
a backpay calculation would create an incentive for wrongdoing employers to delay
rescinding their unlawful conduct, “knowing that the longer an employee worked a
second job, the greater could be the reduction in backpay owed.” Id. The Board
explained that declining to deduct interim earnings in this context has the same
deterrent effect as the quarterly computation has in the context of an unlawful
termination. Id.The Hospital acknowledges the Board’s remedy would have this deterrent
effect, but argues the Board could simply have applied the Woolworth formula in this
context to achieve the same result. But so long as the Board provides reasonable
support for its selection of remedies and its rationale aligns with the policies of the
Act, we will not second guess the Board’s choice. Velocity Express, 434 F.3d at
1202. Thus, although the Board could have adopted the Woolworth formula in
noncessation cases and reduced back pay awards by quarter based on interim
20
earnings, it was not required to do so. Where the remedy chosen by the Board does
not conflict with the goals of the NLRA, we defer to the Board’s decision.
5. Allocating Windfalls
Finally, the Board considered the benefits conferred on the employer and
employee by the alternative approaches to calculating backpay under the present
circumstances. On the one hand, the Board concluded that deducting interim earnings
when an employee has no obligation to seek additional work “would represent an
unwarranted windfall to the employer and discourage compliance with the law.”
Cmty. Health Servs., 361 N.L.R.B. No. 25, at *8. Alternatively, however, if interim
earnings are not deducted, the Board acknowledged that the employee may enjoy a
windfall by collecting backpay and interim wages that total more than the employee
would have earned in the absence of a violation. The Board ultimately concluded that
where one of the parties will obtain a windfall, it is more appropriate for it to be the
employee whose extra effort resulted in the interim earnings, rather than the
recalcitrant employer. See United Aircraft Corp., 204 N.L.R.B. 1068, 1073 (1989)
(explaining that the Board is not concerned if an employee is made “more than
‘whole’” as a result of “extra effort”). Thus, in selecting between two imperfect
remedies, the Board expressed its preference for the one that requires the employer to
pay the full amount of backpay, while permitting the employees to retain the benefit
of their extra effort. The Board concluded this was preferable to adopting a remedy
that would reduce the wrongdoing employer’s liability while treating the industrious
employees no better than those who do nothing.
21
And we cannot agree with the Hospital’s argument that the potential for a
windfall to the employee makes the Board’s remedy punitive and therefore
impermissible. See Republic Steel Corp. v. NLRB, 311 U.S. 7, 12 (1940) (“[T]he
[Board’s] power to command affirmative action is remedial, not punitive.”). Under
the Board’s remedy, the Hospital is not required “to do more than make [the
employees] whole for the loss of earnings suffered as a result of [their] unlawful
[reduction in hours].” United Aircraft Corp., 204 N.L.R.B. at 1073. The interim
earnings are unrelated to the loss of earnings caused by the employer’s wrongdoing.
Instead, those earnings are the result of the employees’ extra effort in working a
second job, despite no obligation to do so. Thus it is the employees, not the
employer, who make themselves more than whole. The Board’s remedy does not
require the Hospital to pay more than the extent of the injury it caused and does not
impose a fine or other penal consequence. It is therefore not impermissibly punitive.
In summary, the Board provided reasonable justifications for declining to
deduct interim earnings in cases where there is no cessation of employment.
Although other reasonable remedies undoubtedly exist, so long as the Board’s
selected remedy is not contrary to the policies of the NLRA, we must defer to its
remedial choice.
IV. CONCLUSION
For the reasons explained above, we affirm and enforce the Board’s
Supplemental Order.
22
No. 14-9614, NLRB v. Community Health Services, Inc.
GORSUCH, Circuit Judge, dissenting.
The NLRB’s order effectively seeks to adopt a new rule governing the
calculation of backpay in cases where a collective bargaining employer
unlawfully reduces the hours of unionized employees. There can, of course, be
no doubt that Congress has invested the Board with considerable power to shape
labor relations in this country and to provide remedies like backpay in response to
employer misconduct. But in our legal order federal agencies must take care to
respect boundaries of their congressional charters. They may not treat similarly
situated classes of persons differently without a rational explanation. And they
may not depart from their own existing rules and precedents without a persuasive
explanation. See, e.g., Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 29 (1983). Respectfully, I believe the NLRB’s new rule fails to
abide each of these settled legal principles and, in that way, seeks to make new
law unlawfully.
Since 1935 Congress has tasked the Board with the job of “eliminat[ing]
the causes of certain substantial obstructions to the free flow of commerce” by
promoting collective bargaining. 29 U.S.C. § 151. In aid of that expansive
charge, Congress has endowed the Board with considerable remedial authority. If
and when it should find that an employer subject to its jurisdiction has engaged in
an unlawful labor practice, the Board may issue an order “requiring such person
to cease and desist from such unfair labor practice, and to take such affirmative
action including reinstatement of employees with or without backpay, as will
effectuate the policies” of the Act. 29 U.S.C. § 160(c).
Over the last eighty years, the Board has developed a finely reticulated set
of rules aimed at implementing these statutory directives. Of special relevance in
this case about backpay, the Board has held that when an employer unlawfully
fires an employee or reduces her hours the employer must pay all the wages the
employee lost as a result. N.L.R.B. Casehandling Manual, pt. 3, § 10536.1. At
the same time, this general rule sometimes yields to more specific ones in order to
avoid over- or under-compensating the employee. So, for example, after an
unlawful labor action an employee may find a new job or increase her hours at a
pre-existing second job and in that way replace some or all of her lost wages.
Allowing the employee in these circumstances to keep both her “interim earnings”
and a full backpay award would mean she’d be paid twice for the same hours,
leaving her better off than she would have been but-for the employer’s
misconduct. To avoid this sort of “windfall” the Board has, from its first order
and still to this day, generally deducted interim earnings from its backpay awards.
In re Pa. Greyhound Lines, Inc., 1 N.L.R.B. 1 (1935); N.L.R.B. Casehandling
Manual, pt. 3, § 10554. Indeed, if the employer can prove the employee could’ve
found a second job after being unlawfully fired but unreasonably refused the
work, the employee’s intentionally forgone interim earnings may also be deducted
from a backpay award. N.L.R.B. Casehandling Manual, pt. 3, § 10558.1. At the
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same time, though, if the employee incurs costs in finding or retaining a second
job thanks to the employer’s misconduct, those costs are fully compensable. Id.
§ 10555. And if in the second job the employee takes on “extra work” —
working hours beyond those she would otherwise have spent with the wrongdoing
employer — compensation for that extra work remains hers and isn’t used to
offset any backpay award. Id. § 10554.3. All of these additions and subtractions
share the common aim of ensuring that a backpay award restores the employee to
the same position she would’ve enjoyed but-for the employer’s misconduct,
without a windfall accruing to either employer or employee.
Now eighty years on, the Board seeks to carve out a class of cases from its
tested and pretty ancient backpay procedures. When the employer unlawfully
reduces the employee’s hours to zero (termination cases), the Board says it will
continue to employ its traditional backpay rules. But when the employer
unlawfully reduces the employee’s hours to anything short of zero (hours-
reduction cases), the Board now says it will never, under any circumstances,
deduct interim earnings from a backpay award. Thus treating cases that seem to
differ mostly in degree as different in kind.
The hospital-employer in our case first challenged the Board’s new carve-
out rule for hours-reduction cases in the D.C. Circuit. There the Board tried to
suggest that its new rule wasn’t really anything new at all but compelled by an
existing administrative decision, Ogle Protection Service, Inc., 183 N.L.R.B. 682-3-
(1970). The D.C. Circuit quickly exposed this claim as mistaken. Yes, the D.C.
Circuit acknowledged, the Board in Ogle ordered backpay and authorized no
deductions for interim earnings. But, the court observed, Ogle wasn’t an hours-
reduction case and the employees there had no interim earnings that could have
been deducted from their backpay awards. Accordingly, the D.C. Circuit
observed, Ogle just “does not address” hours-reduction cases where (as here) the
employer does proffer evidence of interim employee earnings that might be
deducted. Deming Hosp. Corp. v. NLRB, 665 F.3d 196, 200 (D.C. Cir. 2011). In
fact, the D.C. Circuit noted, in many past hours-reduction cases the Board has
ordered the deduction of proven interim earnings. See id. at 201 (citing
examples). And the Board’s own casehandling manual states that interim
earnings deductions are generally appropriate with only a few exceptions — and
hours-reduction cases are nowhere among those exceptions. See N.L.R.B.
Casehandling Manual, pt. 3, § 10554.
Forced to acknowledge that its carve-out rule represents a departure from
preexisting practice, the Board offered an alternative rationale in its defense.
Now the Board argued that, in response to unlawful reductions in their hours,
employees should not face a duty to seek out secondary employment — to
mitigate their losses— like employees in termination cases do. For its part the
D.C. Circuit noted that employees in termination cases have a duty to mitigate
their losses in the sense that, if they refuse to take new work, they will have their
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backpay award reduced by the amount of intentionally forgone income they
could’ve earned. And for purposes of the appeal, the D.C. Circuit and hospital-
employer accepted that there’s a sound reason to avoid imposing a parallel duty to
mitigate on employees in hours-reduction cases — because in hours-reduction
cases employees seeking secondary work will have to work around the demands
of their still-existing primary employer and may not be able to secure a
replacement job or as many hours in a replacement job as the employee might
wish. At the same time, the court noted, this consideration speaks only to a need
to waive any duty to seek secondary employment in hours-reduction cases — to
eschew backpay deductions when employees don’t have interim earnings. It does
not provide a rational basis for distinguishing between termination and hours-
reduction cases when employees are able to and do choose to find other work —
when employers do have interim earnings during the backpay period. Given all
this, the D.C. Circuit held that the Board’s “explanation for its refusal to consider
interim earnings is inadequate” and remanded the matter for reconsideration.
Deming Hosp. Corp., 665 F.3d at 201.
Now the Board has tried again, and the hospital-employer has petitioned for
review again — this time to our court. In an apparent abundance of caution the
Board has offered five new rationales to replace the two the D.C. Circuit found
wanting. But though the Board’s rationales may now be more prolific, I do not
find them more persuasive for it.
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1. “Promoting Production and Employment.” First and primarily the Board
argues that its new policy of refusing to deduct interim earnings in hours-
reduction cases will allow employees who take on second jobs to keep both their
interim earnings and backpay for the same hours they would have worked for
their primary employer. Of course this means a whole class of employees (those
in hours-reduction cases who seek and win second jobs) won’t be restored to the
same position they would’ve been in but-for the employer’s misconduct, but will
be made better off instead. The Board accepts that its new rule creates an
employee “windfall” in just this way and seemingly at odds with its prior
practice. Yet it defends this consequence not as a bug in the design of its new
rule but as its whole point. Promising employees double payment for the same
hours, the Board says, will offer them a “greater incentive to voluntarily seek
interim employment” and in this way advance the policy of “promoting
production and employment.” Cmty. Health Servs., Inc., 361 N.L.R.B. No.25,
slip op. at *7; see Maj. Op. at 14-15.
It seems to me that this line of argument fundamentally misconceives the
Board’s remedial charter. The Board’s statutory charge isn’t to promote full
employment. See 29 U.S.C. § 151. It’s not some sort of reincarnation of the
Works Progress Administration. Instead, Congress invested the Board with the
more prosaic — if still vital — job of providing “backpay” arising from “unfair
labor practices.” 29 U.S.C. § 160(c). And the Supreme Court has held that this
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statutory charter means exactly what it says — allowing the Board to restore the
“actual losses” employees suffer — no more or less. Phelps Dodge v. NLRB, 313
U.S. 177, 197-98 (1941). Yet, rather than seeking to restore the earnings
employees would have enjoyed but-for the employer’s misconduct, the Board’s
new rule candidly seeks to pursue a quite different and entirely extra-statutory
objective — the promotion of “production and employment” — and to achieve
that end it abandons any pretense of seeking to fulfill its duty of ensuring
compensation for actual losses. The Supreme Court long ago rejected Board
efforts to use its remedial backpay authority to pursue policy ends other than
those specified by the NLRA. Back in the 1940s, and in words equally fitting
here, the Court held that while the Board may freely pursue “remedial objectives
which the Act sets forth,” it is not licensed to pursue “a distinct and broader
policy with respect to unemployment.” Republic Steel Corp. v. NLRB, 311 U.S.
7, 12-13 (1940); see also Phelps Dodge, 313 U.S. at 197-98 (holding that the
NLRA limits the Board’s backpay authority to restoring “actual losses”). I do not
see how we might come to a different conclusion today.
In saying this much, I hardly mean to suggest the Board lacks leeway in
carrying out its remedial charge. Any attempt to recreate a lost but-for world and
calculate losses due to a defendant’s misconduct always requires a degree of
estimation. As well, the Board must balance its two statutory remedial duties —
providing backpay for actual losses and promoting reinstatement — and those two
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duties can sometimes conflict in interesting and difficult ways. See, e.g., NLRB v.
Seven-Up Bottling Co. of Miami, 344 U.S. 344 (1953). Finally, the Supreme
Court has observed that, when a backpay award does aim to restore “actual
losses,” its virtue may be additionally recommended by its capacity to promote
employment because, in that scenario, the consideration of extra-statutory
policies like that one “in no way weakens the enforcement of the policies of the
Act.” Phelps Dodge, 313 U.S. at 200. But none of these principles suffices to
save the Board’s order in this case. After all, no one before us disputes that the
Board’s existing and longstanding backpay rules allow it to supply employees
with all of their actual losses in hours-reduction cases. The Board itself doesn’t
even attempt to suggest its new carve-out rule offers a superior way to calculate
actual losses. Instead, the Board seeks to justify its new carve-out backpay rule
exclusively on the ground that it will better promote an entirely distinct policy
that lies beyond its statutory authority to pursue.
Besides exceeding its congressional charter, the Board’s rationale faces still
two more problems. In the first place, a consistent (non-arbitrary) application of
its new rule would seem to forbid the deduction of interim earnings for both
termination and hours-reduction cases. After all, if double pay for the same hours
will encourage you to take on outside work when the hours in your primary job
are reduced to something short of zero, it will encourage you to take on outside
work in cases when the hours in your primary job are reduced to zero too.
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Nothing about the Board’s rationale is rationally confined to hours-reduction
cases. Yet it’s those cases alone the Board today wishes to carve out, without any
explanation why. Beyond even that, by enforcing a backpay regime that is
markedly more generous in hours-reduction cases than termination cases the
Board’s new rule would seem to create a paradoxical incentive for employers to
engage in behavior even more inimical to the “promotion of production and
employment” — pushing them in marginal cases toward termination and away
from hours-reductions in order to reduce their backpay liability. Yet another
problem the Board neither ponders nor offers reason for disregarding.
2. “Rewarding Extra Work.” If its primary rationale should fail, the
Board argues alternatively that its new carve-out rule is justified by the “well
established” principle found in § 10554.3 of its casehandling manual providing
that “[i]n cases where a discriminatee worked substantially more hours for an
interim employer than he or she would have worked for the gross employer, only
interim earnings based on the same number of hours as would have been available
at the gross employer should be offset against gross backpay.” N.L.R.B.
Casehandling Manual, pt. 3, § 10554.3.
By its terms, however, this provision can be fairly described as no better
than irrelevant. Section 10554.3 merely provides that an employee gets to keep
interim earnings for hours above and beyond those she would have worked at the
original employer — promising that the employee can always retain earnings from
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a true second or “moonlighting” job. And exactly none of this is at issue here.
Everyone before us readily accepts that the sort of wages § 10554.3 discusses
belong to the employee. The only question presented in this case is what to do
about earnings for those hours the employee would have worked for the original
employer but-for the unlawful action — and on that question § 10554.3 stands
mute.
Maybe the Board’s citation to § 10554.3 is meant less than literally, as a
sort of analogy. Maybe the Board means to suggest that, just as an employee
shouldn’t have her backpay hours reduced for hours beyond those she could have
worked at her employer, she shouldn’t ever have her hours reduced for taking on
a second job when she didn’t have to. But if that’s the analogy that’s intended,
it’s one that fails. It fails because the point of § 10554.3 is to ensure that the
employee is made whole for her actual losses by guaranteeing that her backpay
award isn’t reduced by earnings she would have enjoyed whether or not her
primary employer engaged in an unfair labor practice. Section § 10554.3 removes
from the backpay analysis interim earnings without a causal connection to the
employer’s misconduct. The rule is, in this way, all about helping create an
accurate picture of what the world would’ve looked like but-for the employer’s
misconduct — and in that way all about helping fulfill the Board’s statutory
remedial charge. Meanwhile, the Board’s new carve-out rule has again (and
admittedly) nothing to do with its statutory charter. The Board doesn’t attempt to
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defend its new rule on the ground that it helps create a more accurate picture of
an employee’s actual losses. Or that it has anything to do with that purpose at all.
Instead, it argues the rule aims to reward “extra work” in the very particular (and
very different) sense that, thanks to the windfall it offers employees, it
encourages them to take on second jobs and, in that way, promotes “production
and employment.” So it is the Board’s second, “extra work” rationale at best
folds right back into its first and returns us to all the problems we’ve already
encountered.
3. “Accounting for Additional Hardships.” Here the Board points to the
fact that, unlike employees in termination cases, employees who face reductions
in their hours and proceed to seek a second job must “adjust any outside
employment hours to accommodate [the primary] employer’s demands.” So, for
example, they have to “resolv[e] scheduling conflicts between the two jobs and
traveling to a second workplace.” By refusing to deduct interim earnings, the
Board seems to imply, its new rule will ensure that the particular costs borne by
employees in hours-reduction cases are fully compensated.
The problem is the Board’s existing rules already do this. Under its
existing remedial regime, the Board is indubitably free to compensate an
employee for any costs incurred in taking on or holding a second job thanks to the
employer’s unlawful actions — including costs associated with resolving
scheduling conflicts or traveling between workplaces. N.L.R.B. Casehandling
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Manual, pt. 3, § 10555. Indeed, the Board’s order identifies no class of costs its
existing remedial rules fail to capture. And before departing from its existing
rules the Board must offer some reason for doing so, some reason why its new
rule might be rationally preferred to its existing authorities. It doesn’t even try.
Perhaps the Board might respond by suggesting that some costs employees
suffer are intangible and incalculable — and that its new carve-out rule does a
better job of compensating for such costs. But it’s far from clear the Board means
to pursue such an argument. After all, the Board itself cites by way of support the
entirely tangible and calculable costs associated with “traveling to a second
workplace.” And even if it were fair to read the Board as making a sort of
“intangible cost” argument, it would still face its problems. For the Board
nowhere explains how its statutory charge to order backpay entails with it the
authority to afford tort-like remedies for psychic and other losses not associated
with lost wages. And even on its own terms the Board’s argument proves too
much. While employees in hours-reduction cases may face unique costs in
traveling between and juggling two jobs, it’s surely not the case that they alone
suffer intangible hardships: you might even expect the intangible human costs
associated with wrongful terminations to be worse than those associated with
wrongful hours-reductions. Yet the Board’s new rule seeks to distinguish
between the two types of cases when it comes to intangible hardships — and does
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so without offering an explanation why the one situation should receive solicitude
the other does not.
4. “Preventing Dilatory Conduct.” Here the Board points out that the duty
to provide backpay sometimes can have unintended consequences on “the
companion remedial requirement” of reinstatement — by giving employers an
incentive to prolong their unlawful labor practices while an employee’s interim
earnings grow and the employer’s corresponding backpay obligation diminishes.
The Board suggests its new carve-out rule will help curb this incentive.
I don’t see how. No one doubts that the Board must create remedial rules
that balance between the statutorily authorized remedies of backpay and
reinstatement. No one doubts either that pursuing one remedy without an eye on
the other can create strange incentives like the one the Board has identified. But
many decades ago the Board identified and devised a solution to the very problem
it points to today. Before In re F.W. Woolworth Co., 90 N.L.R.B. 289 (1950), the
Board’s blanket deduction of interim earnings almost perfectly achieved the
policy of making employees whole when it came to backpay — they received no
more and no less than they would have received at their original job. But
employers would sometimes delay reinstatement to reduce their backpay
obligations, a result inimical to the Board’s second statutorily prescribed remedial
objective and preventing “a restoration of the situation, as nearly as possible, to
that which would have obtained but for the illegal discrimination.” Id. at 292.
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The Board’s solution, approved by the Supreme Court in Seven-Up, was a
quarterly deduction formula that, while sometimes resulting in a less-than-perfect
award of backpay, effectively eliminated the employer’s incentive to drag out
reinstatement and thus achieved a reasonable balance between the Board’s two
remedial charges. 344 U.S. at 345-48. In our case, the Board acknowledges that
it faces the same problem it solved in Woolworth. And it doesn’t disparage the
Woolworth solution or even question that it adequately eliminates the unwanted
employer incentive. In fact, it continues to apply the Woolworth solution to
termination cases. And (again) I just don’t see how the agency might be
permitted to depart from a well-established policy or eschew an obvious
alternative without offering some reasoned explanation consistent with its
statutory charter.
5. “Allocating Windfalls.” Finally, the Board contends that, if it deducts
interim earnings, employers will receive a windfall. But if it refuses to deduct
interim earnings, employees will receive a windfall. One side or the other will
inevitably come out better than they would have but-for the unlawful labor
practice, the Board says, so it should have the discretion to allocate the windfall
as it wishes. And because the employee seeking additional work is promoting
production and employment through her extra effort (back once more to that
doubtful rationale), that’s tie-breaker enough.
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This is perhaps the Board’s most curious argument yet. Over eight decades
the Board has taken pains to develop a set of rules that prevents windfalls for
either side. To prevent employee windfalls, the Board has long deducted interim
earnings. And to prevent employer windfalls, the Board’s existing rules and
precedents afford it the power to order the employer to (1) pay backpay without
deduction if an employee chooses not to find a second job in hours-reduction
cases, (2) pay any and all costs an employee incurs if she does take on a second
job, and (3) ensure any backpay deductions for interim earnings are limited to the
hours the employee would’ve worked for the wrongdoing employer. In this light,
it’s hard to see what windfall might fall into the employer’s lap — or how, should
the problem arise, the Board could not lawfully get at it. For again, the Board’s
existing remedial precedents and rules permit it to order compensation for all
actual losses. Strangely, the Board ignores all this — all the careful handiwork of
generations of Board members aimed at securing a tailored remedy approximating
actual losses — nowhere explaining why those efforts fail only now and only in
the context of hours-reduction cases.
In the end, it’s difficult to come away from this case without wondering if
the Board’s actions stem from a frustration with the current statutory limits on its
remedial powers — a frustration that it cannot pursue more tantalizing goals like
punishing employers for unlawful actions or maximizing employment; that it is
limited instead to the more workmanlike task of ensuring employees win backpay
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awards that approximate the actual losses they’ve suffered. A frustration that
seems to parallel the frustration the Board experienced when it sought in Republic
Steel and Phelps Dodge to issue similarly expansive extra-statutory remedies.
But then as now frustration should not beget license. In our legal order the proper
avenue for addressing any dissatisfaction with congressional limits on agency
authority lies in new legislation, not administrative ipse dixit. I respectfully
dissent.
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