NLRB Limits an Employer's Right to Permanently Replace Economic Strikers

Submitted by Firm:
Cross, Gunter, Witherspoon & Galchus, P.C.
Firm Contacts:
Abtin Mehdizadegan, J. Bruce Cross, Misty Wilson Borkowski
Article Type:
Legal Update

A new National Labor Relations Board (NLRB) decision dramatically restricts the ability of employers to "permanently replace" economic strikers.  Since 1938, it has been understood that employers have a broad right to "permanently replace" employees who are on an economic strike.  Previously, the employer's right to "permanent replacement" was considered a key part of the system of "economic weapons" available to parties during labor negotiations.  Just as employees have a right to strike, the law granted employers a right to permanently replace those strikers. 

New Motives Analysis

For the first time ever, the NLRB now injects a motives analysis into the employer's decision to permanently replace economic strikers.  On May 31, 2016, the NLRB held that the use of permanent replacements will be considered unlawful if the decision is motivated by "a purpose that is prohibited by the NLRA."  According to the NLRB, "prohibited purposes" include a desire on the employer's part to "punish" the strikers or a desire to deter future strikes. 

Under the prior legal standard, the employer's "motive" in permanently replacing the strikers was irrelevant.  In its recent ruling, the NLRB concluded that the employer acted with an unlawful motive when a representative for the employer said the employer would permanently replace 20 strikers because "it wanted to teach the employees and the union a lesson." Finding the replacements were unlawfully motivated, the NLRB ordered reinstatement and six years of back pay for 20 economic strikers replaced by the employer.

Additionally, the NLRB suggested that any retaliatory intent on the part of the employer, or any attempt by the employer to interfere with future protected activities, would also be considered an "unlawful purpose" in the context of permanent replacements. The prior NLRB standard recognized that the employer could use permanent replacement offensively, both to enforce contract demands and to counter future strike activity. 

What should Employers do?

If upheld by the courts, the NLRB decision will have dramatic consequences for employers, both in the context of economic strikes and in the context of organizing campaigns.

When faced with the question of whether to permanently replace strikers, employers should now assess the business reasons to use permanent, as opposed to temporary, strike replacements.  Employers should be prepared to defend the decision to permanently replace strikers based on legitimate business reasons, such as hiring costs, training costs, and workforce consistency following a long strike.  Employers should avoid communicating that strikers have been permanently replaced for any reason that might imply a retaliatory motive on the employer's part.

In the organizing context, employers are still free to communicate to employees that a vote for unionization could lead to a strike, which could in turn lead to permanent replacement of strikers.  However, employers should avoid implying that they might seek to retaliate against the union or strikers by permanently replacing strikers.  Instead, employers should point to the legitimate business reasons that could lead to the permanent replacement of strikers. 

To read the NLRB's decision in its entirety, click here.