Pay the Piper: NLRB Orders Hospital to Reimburse Union for Negotiating Expenses

By a 2-1 vote, a three-member panel of the National Labor Relations Board (the NLRB or Board) ordered a California hospital found to have bargained in bad faith to reimburse the Union for its negotiating expenses and extended the certification year by another 12 month period. Fallbrook Hospital Corporation, 360 NLRB No. 73 (April 14, 2014). The panel consisted of NLRB Chairman Mark Pearce and Members Kent Hirozawa and Harry Johnson, III.

The California Nurses Association/National Nurses Organizing Committee (the Union or Charging Party) was certified to represent the registered nurses at Fallbrook Hospital (the Hospital or Respondent) on May 24, 2012. The first bargaining session took place on July 3, 2012. After the Union filed an unfair labor practice charge and the case went to a hearing, the Administrative Law Judge (the ALJ or Judge) found that the Hospital deliberately acted to prevent any meaningful progress during bargaining sessions by failing to provide any proposals or counterproposals during the first eight bargaining sessions until it received a full set of proposals from the Union. The Hospital left the September 12 bargaining session abruptly and without explanation, and also left the October 11 bargaining session three minutes after arriving.

In addition, although the Hospital proffered some proposals during the next three bargaining sessions, it subsequently threatened that it would not continue bargaining if the Union persisted in encouraging employees’ use of the Union’s assignment despite objection (ADO) form. At a bargaining session on January 8, 2013, the Hospital falsely claimed that the nurses’ use of the ADO forms caused the parties to be at impasse, refused to bargain further, and left the meeting after about 15 minutes. Thereafter, the Hospital reaffirmed its refusal to bargain when it refused to respond to the Union’s requests for future bargaining dates.

Based on the above facts, the ALJ found that the Hospital violated its duty to bargain in good faith under Section 8(a)(5) of the National Labor Relations Act (the NLRA or Act) and ordered an extension by six (6) months of the “certification year,” during which time the Union could not be subject to a decertification vote or have its recognition withdrawn. However, the ALJ stopped short of ordering the Hospital to reimburse the Union for its negotiating expenses.

“The Board found that ‘the Respondent’s misconduct infected the core of the bargaining process to such an extent that its effects cannot be eliminated by the mere application of our traditional remedy of an affirmative bargaining order.’”

On appeal, by a 2-1 margin, the Board decided to amend the remedy. According to the Board, an extension of the certification year is warranted where, as here, “an employer’s refusal to bargain with a newly certified union during part or all of the year immediately following certification deprives the union of the opportunity to bargain during the time of the union’s greatest strength.” The appropriate length for the extension must be determined by considering “the nature of the violations, the number, extent, and dates of the collective-bargaining sessions, the impact of the unfair labor practices on the bargaining process, and the conduct of the union during negotiations.”

Here, the Union was certified as the exclusive collective-bargaining representative of the Respondent’s nurses on May 24, 2012, and the parties held their first bargaining session on July 3, 2012. As found by the Judge, the Respondent engaged in bad-faith bargaining from the outset, and this conduct continued until the final bargaining session on January 8, 2013. Thereafter, the Respondent refused to respond to any of the Union’s requests for future bargaining dates. The Board held that, by its conduct, the Respondent effectively precluded any meaningful bargaining for virtually the entire certification year. “In these circumstances, we find that a full 1-year extension of the certification year is warranted, beginning when the parties commence good-faith negotiations, rather than the 6-month period recommended by the judge.”

Although in most refusal-to-bargain cases, the remedies are limited to an order to bargain in good faith and to cease and desist unlawful conduct and the requirement to post a notice, citing precedent, the Board observed that:

In cases of unusually aggravated misconduct … where it may fairly be said that a respondent’s substantial unfair labor practices have infected the core of a bargaining process to such an extent that their effects cannot be eliminated by the application of traditional remedies, an order requiring the respondent to reimburse the charging party for negotiation expenses is warranted both to make the charging party whole for the resources that were wasted because of the unlawful conduct, and to restore the economic strength that is necessary to ensure a return to the status quo ante at the bargaining table … [T]his approach reflects the direct causal relationship between the respondent’s actions in bargaining and the charging party’s losses (citations omitted).

The Board found that “the Respondent’s misconduct infected the core of the bargaining process to such an extent that its effects cannot be eliminated by the mere application of our traditional remedy of an affirmative bargaining order.” It held that, in these circumstances, “requiring the Respondent to reimburse the Union’s negotiation expenses is also ‘warranted both to make the [Union] whole for the resources that were wasted because of the [Respondent’s] unlawful conduct, and to restore the economic strength that is necessary to ensure a return to the status quo ante at the bargaining table.’” Accordingly, the Board amended the ALJ’s remedy to require the Respondent to reimburse the Union for the expenses it incurred for the collective-bargaining negotiations held from July 3, 2012 through the final bargaining session on January 8, 2013.

Member Johnson agreed that the Respondent unlawfully refused to bargain over the terms of an initial collective bargaining agreement. However, he did not find that “the Respondent’s request for a full set of proposals from the Union during bargaining — a position that in other circumstances may serve to speed bargaining to either agreement or a good-faith impasse and thus serve the Act’s goals — reflected an unlawful refusal to bargain.” Member Johnson also agreed with the Judge that, in the circumstances here, a six-month extension of the certification year was appropriate. He further agreed with the Judge that an award of negotiating expenses was not warranted because the Respondent’s misconduct during this period was not so “unusually aggravated” as to “have infected the core of [the] bargaining process.”

This case demonstrates the sometimes blurry line between hard bargaining and bargaining in bad faith, and the risk of being on the wrong side of that line. If you have any questions about this case, please contact the authors or any other member of the Arent Fox Labor & Employment practice, or the Arent Fox professional who regularly handles your matters.