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The Devil is in the Details: Proposed Spending Package Has Pitfall for Employers

November 7, 2021

The current version of the $1.9 trillion Build Back Better (the “BBB”) spending package being proposed by the White House and Washington Democrats has many landmines for employers including first ever monetary penalties for unfair labor practices in violation of the National Labor Relations Act (“ULP”) violations.

The latest iteration of the bill has employer fines of up to $50,000 for each ULP violation and up to $100,000 for matters involving employees who were unlawfully terminated in violation of the National Labor Relations Act (the “NLRA”).  The NLRA is over 50 years old and intended to protect the rights of workers to unionize and/or join together to improve their working conditions.  Up until now violations of the Act have never included significant financial penalties, but that will change if Biden and the Democrats have their way.

Democrats hope the new fines will work as a powerful deterrent for employers, one which has been missing since the Act’s inception.  Currently, if an employer is found to have conducted a ULP (e.g., illegally firing a pro-union employee), the only financial impact was to offer reinstatement and back wages to the aggrieved employee.  Such payment would be reduced, by any wages the employee earned elsewhere after termination.    For violations where no money damages occurred, quite often employers are only required to hang a poster in their breakroom promising to oppose such similar conduct in the future.  Union advocates believe, based on the current penalties employers face, it is no wonder why many are willing to take the risk of losing a ULP action to keep their business free of union activity. 

Readers with a keen and/or skeptical eye may question “why” and “how” this provision is being incorporated into a bill designed to be a social safety net and help address climate change.  The “how” is straightforward.  Democrats incorporated the ULP penalties into the spending bill because the fines will raise revenue. As we have written previously on similar matters, for a provision like this to survive the budget reconciliation process, the provision needs to have a budgetary impact.  As Democrats are intending to pass the BBB legislation with a party-line vote (50 votes, plus Vice President Harris casting tie-breaking vote), all aspects of the BBB legislation must somehow have an impact on the budget.  Without the budgetary impact, this provision would not survive the reconciliation process and as a result it would be carved out of the final bill. 

So that’s the “how;” as for the “why,” that is politics.  It is clear Democrats and Biden are desirous of protecting workers rights and helping facilitate unionization efforts.  Adding penalties for ULP violations seems to be a natural fit for President’s pro-union agenda.

While fines of up to $50,000 or even $100,000 may not deter business giants like Amazon, most businesses will need to consider their actions more carefully if this measure is passed.

The adoption of a steep fine structure to the Act is just another example of how President Biden and the Democrats are looking to bolster unions in support of everyday workers.  If passed employers should heed extra caution when dealing with pro-union employees so as not to run the risk of being on the receiving end of a six-figure ULP fine.

Brody and Associates regularly advises its clients on all labor management issues, including union-related matters, and provides union-free training.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.