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By:  Dan Cohen – 6/7/16

On May 31, 2016, in a 2-1 decision by Chairman Mark Pearce and Member Kent Hirozawa, the NLRB has once again disrupted an employer’s right to protect its business interests. The case is American Baptist Homes of the West, 364 NLRB No. 13, and the issue pertains to an employer’s right to permanently replace economic strikers.  Nearly 80 years ago, the Supreme Court established an employer’s right to permanently replace economic strikers as an “economic weapon” when faced with an economic strike. Mackay Radio & Telegraph Company, 304 U.S. 333 (1938).  While it is true that neither the Mackay Radio decision nor subsequent Board decisions suggested that the employer’s right was absolute, the Board adopted a rule back in 1964 disallowing scrutiny into the employer’s motive for hiring permanent replacements.  Indeed, the Board had held that the employer’s motive for such replacement to be immaterial absent evidence of “an independent unlawful purpose” extrinsic to the strike.  Thus, an employer had a recognized right to permanently replace economic strikers to continue is operation and counteract the union’s ultimate economic weapon.

After receiving notice from the SEIU that workers would go on strike on August 2 and unconditionally return on August 7, American Baptist retained a staffing firm to temporarily staff its continuing care facility in Oakland, California during the strike. American Baptist extended temporary employment offers to 60-70 staffing employees at a cost of $300,000.  Eighty of the 100 bargaining unit employees went out on strike on August 2.  Shortly thereafter, American Baptist started permanently replacing the striking employees by making 44 permanent job offers.  Within 24 hours of the anticipated return to work date set by the SEIU, striking employees were notified that they would be placed on a preferential hiring list.  When the striking employees returned on August 7 consistent with the prior offer of unconditional return, only some were permitted to work.  The majority were advised they had been permanently replaced and would be placed on a preferential hiring list.

The ALJ concluded that American Baptist’s’ motivation for permanently replacing the strikers—to teach the strikers “a lesson” and ensure that employees would not strike again—was related to the underlying strike and therefore did not constitute an “independent unlawful purpose.” The Board disagreed and found the permanent replacement of the strikers in violation of the NLRA. According to Chairman Pearce and Member Hirozawa, General Counsel does not have the burden of showing an unlawful purpose extrinsic to the strike, but, rather, only that the hiring of permanent replacements was motivated by a purpose prohibited by the Act.  The majority then determined that hiring permanent replacements to “teach the union a lesson” and to “curtail future strikes” were both independently unlawful.  As for the latter reason, the majority concluded that the evidence established an independent unlawful motive, specifically, a desire to interfere with employees’ future protected activity.

Replacing striking workers always has the effect of dissuading future strikes, but until this ruling, it was a long-recognized economic weapon of management. Apparently, this Board intends to divest management of their “equalizer” economic weapon.  This should not come as much of a surprising given the Board and General Counsel’s objectives of strengthening unions at every chance they get.  By changing the meaning of “independent unlawful purpose” to nothing more than antistrike animus, which the Supreme Court long ago recognized as a given when faced with a potentially devastating economic strike, the majority now suggests that economic strikes should be a “risk free” proposition for strikers. American Baptist is likely to appeal this decision, but for now, employers facing strikes and entertaining the idea of permanent replacements must be exceedingly careful.  One word to the wise—it is probably not a good idea to tell the Union that you permanently replaced the workers to “teach the union a lesson” and to “curtail future strikes.”  I would suggest making the decision to permanently replace economic strikers as a means of carrying on the business, nothing more and nothing less!