Continuing the trend that we have blogged about previously, the NLRB has recently issued two decisions that implement another concept contained in the failed Employee Free Choice Act – enhanced penalties for labor law violations.  These decisions also follow a movement throughout the Obama Administration to enhance penalties against employers for legal transgressions.

In one case, Kentucky River Medical Center, 356 NLRB No. 8 (Oct. 22, 2010) (pdf), the NLRB announced a change in the long-standing practice of awarding simple back pay awards calculated on a quarterly basis.  In Kentucky River, the NLRB announced that all back pay awards would be subject to a daily compound interest penalty.  This is a change that has been contemplated by the NLRB on and off for the last twenty years, but has not been adopted until now.  Significantly, this change is retroactive for all pending cases as well as for all cases going forward.  What this change means in real terms is that the penalty to an employer who is found to have wrongfully discharged or otherwise financially harmed a complainant is greater than before this decision was issued.  Practically, given the long period of time it typically takes to contest an adverse NLRB determination, employers may feel pressure to settle the case rather than continue to defend themselves due to the cost of daily compounding interest on the back pay amount.  Other employers may be leery of taking justified actions that could trigger a NLRB investigation due to the potential of an enhanced penalty.

Issued at the same time was J. Picini Flooring, 356 NLRB No. 9 (Oct. 22, 2010) (pdf), where the NLRB announced a new policy requiring remedial postings to be displayed electronically in addition to physically.  Traditionally, one standard remedy for a violation of the National Labor Relations Act is the posting of a remedial notice.  The purpose of this notice is to inform employees of their rights and the steps being taken by the offending party (either the company or the union in most cases) to remedy the violation of those rights.  The NLRB also believes that this notice serves as a deterrent to future violations.  The NLRB’s standard notice posting provision requires violators to post a remedial notice for a period of 60 days “in conspicuous places including all places where notices to employees [members] are customarily posted.”  This provision has traditionally been applied to require posting of paper copies at fixed locations, usually on bulletin boards as well as at time clocks, department entrances, meeting hall entrances, and dues payment windows.  The NLRB determined, however, in J. Picini Flooring, that such physical postings are no longer sufficient in today’s workplace with its emphasis on electronic communication and the use of technology.  Therefore, the NLRB ruled, it will now require posting in “conspicuous” places, including all places where notices are customarily posted and electronic distribution of remedial notices by email and/or posting on an intranet or the internet if a violator customarily communicates by any of those means.  Like in Kentucky River, this new rule will apply retroactively to all cases currently pending before the NLRB.  The impact of this new rule could be significant, as many employers have come to view the posting of a notice normally placed in a sea of required notices as insignificant; whereas the actual emailing of the notice into an employee’s email box could heighten its impact.