Introduction
“Let me explain it to you, let me run it down just briefly if I can. We’re looking for the American Dream, and we were told it was somewhere in this area.” The so-called “American Dream” has been invoked in popular discourse to represent the American ideal that one who is willing to work hard can achieve a better life than their parents. It may not come as a surprise that this ideal has not come remotely close to realization for most. According to Federal Reserve data, millennials own significantly less of the nation’s wealth than baby boomers and Generation X—millennials’ parents—did at the same median age, and they likely will never catch up. In 2022, forty-five percent of all new income went to the top one percent of American society; “three multibillionaires own[ed] more wealth than the bottom half of [the] American [population].” Wages have largely remained stagnant, cost of living has consistently increased, and American workers’ share of corporate income has continued to decrease, despite record-breaking corporate profits. Although each generation of Americans grew up on the promise that their hard work and determination alone would deliver them a better life than their parents, the hard truth is that the reality is to the contrary.
Americans—particularly young Americans—are looking for the American Dream. The second largest employer in the United States, Amazon, employs over one million Americans. On its hiring website and in the media, Amazon proudly boasts a competitive hourly wage, frequently citing its capitulation to the “Fight for 15” movement in 2018, raising its minimum hourly wage to $15 per hour. It is not surprising why such employment would be attractive to young Americans, where the federal minimum wage still sits at $7.25 per hour. Young Americans have come to Amazon and similar employers looking for the American Dream; they were told it was somewhere in the area.
In addition to its competitive wages, Amazon also touts its benefits, career advancement, and “[a] safe and inclusive work environment with team and management support.” However, career advancement rarely happens for Amazon workers. A former Amazon Vice President of Human Resources stated that, “Amazon intentionally limit[s] upward mobility for hourly workers.” Countless firsthand reports from Amazon workers have revealed harrowing working conditions. These conditions and the mistreatment of workers are not unique to Amazon. Where market capitalism is left unchecked by the government, owners can and will exploit the labor market to the highest degree possible in order to generate maximum profit. This dynamic is what makes unions and strong labor protections so essential: without them, Americans would not enjoy the weekend, the forty-hour work week, or child labor laws. Moreover, at-will employees would be entirely unable to negotiate their wages, benefits, and working conditions. Yet, today, workers reasonably fear retaliation for labor organizing. That, along with a general weakening of labor law’s worker protections, has led to a reality of fear and loathing in the workplace. As workers lose basic protections and feel an increasing threat of reprisal by their employers, union membership declines, and as union membership declines, income inequality rises at a near-equal rate. In order to cure these feelings of fear and loathing, workers must be afforded the robust protections that Congress has promised to provide.
The National Labor Relations Act (NLRA or the Act) was enacted in 1935 with the express purpose of “encouraging and protecting the collective-bargaining process.” Section 10(c) of the Act authorizes the National Labor Relations Board (NLRB or the Board) to direct wrongdoers to “take such affirmative action . . . as will effectuate the policies of [the Act].” Conceptually, the Act gives the Board “wide discretion” to determine the remedies that most appropriately effectuate the policies and spirit of the Act, and the particular means chosen are “for the Board not the courts to determine.” However, courts have greatly limited the Board’s discretion in granting remedies to effectuate the policies of the Act, namely by declaring that NLRA remedies may not be “punitive” and instead must be “remedial.” The result of the Republic Steel Corp. v. NLRB ruling is that the Board may not premise a particular remedy on a deterrence rationale; it may only happen to deter unfair labor practices.
In a later case, Justice Felix Frankfurter lamented the punitive-remedial distinction that came out of Republic Steel, criticizing the decision for entering the Court into what he called the “bog of logomachy.” Justice Frankfurter affirmed a common gripe among the legal community: that the law focuses too closely on minutiae and semantics, too often adhering to rigid understandings of words and absolute legal rules, instead of taking account of empirical evidence and real-world, material consequences.
Because the Board is limited to granting “remedial” measures, its traditional method of effectuating the policies of the Act in instances of an illegal discharge or demotion is the so-called “make-whole” remedy, in which the Board seeks to “restore the status quo ante and make the unit employees whole for any loss of earnings and benefits.” Traditionally, the make-whole remedy includes reinstatement and backpay to the aggrieved worker. Previous Board adjudications have waded deep into the bog of logomachy by labeling remedies for economic losses punitive, and therefore outside of the Board’s power. However, reinstatement and backpay often do not go far enough to make the aggrieved worker “whole,” as life’s obstacles have the tendency to snowball. Much like the story of Chris Gardner’s way out of poverty in the biographical drama film The Pursuit of Happyness (2006), one unfortunate circumstance can, and often does, lead directly to even more unfortunate circumstances, thus trapping individuals in a vicious cycle of poverty. As Isaiah Thomas, an Amazon worker and labor organizer, so aptly put it, “I live paycheck to paycheck. They fire me that ruins my life. They fire . . . anybody else, that could ruin their life.”
When an employee is discharged or demoted in violation of the Act, they too experience additional losses due to, and on top of, their loss of wages and benefits. For instance, they may experience interest charges or late fees on credit cards, additional health insurance and health care costs, or penalties from loan nonpayment, among many other things. In Voorhees Care and Rehabilitation Center, the Board welcomed public input about whether to add consequential damages for economic losses to its traditional make-whole remedy suffered as a direct and foreseeable result of an employer’s unfair labor practice. Less than a month later, NLRB General Counsel Jennifer A. Abruzzo issued a memorandum urging NLRB Regions to seek compensation for consequential damages where appropriate. The General Counsel further articulated several specific consequential damages to be considered, including inter alia interest or late fees on credit cards, loss of home or care due to nonpayment, and health insurance or medical expenses.
In December 2022, the Board addressed General Counsel Abruzzo’s guidance in Thryv, Inc. In that case, the Board recognized the inadequacy of its remedies where they do not cover direct and foreseeable pecuniary harms suffered as a result of an employer’s unfair labor practice, and ruled that all direct and foreseeable pecuniary harms suffered as a result of an employer’s unfair labor practice be included in the traditional make-whole remedy. Although the General Counsel’s memoranda and the Board’s decision in Thryv substantially improved the Board’s ability to effectuate the polices of the Act through appropriate remedies, there are still several gaps in the Board’s new conception of its make-whole relief. Just as President Biden and Treasury Secretary Yellen recently took immediate and drastic steps to ensure that depositors of the failed Silicon Valley Bank—predominantly businesses in lucrative industries—be made whole, so too should the NLRB take swift and substantial steps to ensure that the hard-working Americans who keep our society operational be made truly whole for all losses attributed to their employer’s unfair labor practices.
This Comment will address the current holes in the Board’s consequential damages guidance and will recommend several categories of economic losses that should be considered in order to effectuate the policies of the Act, and will offer a path forward for fully establishing and building upon the victory for workers that came out of the Thryv decision. Part I addresses the administrative framework of NLRB remedies, Part II outlines the current holes in NLRB protections, and Part III recommends that the Board and NLRB General Counsel issue memoranda and adjudicate unfair labor practice claims in a way that not only comports with Thryv, but endeavors to push and broaden the holding and rationale of that decision.
I. Administrative Framework
A. The NLRA and the Bog of Logomachy
In 1935, Congress passed the NLRA in response to the widespread employer denial of employees’ right to organize and employer refusal to acquiesce to the procedure of collective-bargaining. This phenomenon led to strikes, industrial strife, and unrest, which had “the intent or the necessary effect of burdening or obstructing commerce.” Congress further stated that,
The inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract, and employers who are organized in the corporate or other forms of ownership association substantially burdens and affects the flow of commerce, and tends to aggravate recurrent business depressions, by depressing wage rates and the purchasing power of wage earners in industry and by preventing the stabilization of competitive wage rates and working conditions within and between industries.
The express purpose of the Act is to “encourag[e] and protect[] the collective-bargaining process.”
Among the Act’s protections for organized labor and commerce in general, is an authorization for the NLRB to direct the perpetrators of unfair labor practices to “take such affirmative action . . . as will effectuate the policies of [the Act].” Abstractly, the Board has “wide discretion” to determine the most appropriate remedies to execute the policies and spirit of the Act, and such remedies are “for the Board not the courts to determine.” However, subsequent court opinions and political maneuvers have weakened this basic protection, and have further stymied the Act’s ability to conform its protections to the realities of the modern day. For instance, in Republic Steel, the Court held that NLRA remedies may not be “punitive” in nature, resulting in the Board’s inability to “premise a particular remedy on a deterrence rationale.”
A decade after Republic Steel, the Court upheld the Board’s traditional method of computing backpay despite the method overcompensating unlawfully discharged employees. Writing for the majority, Justice Frankfurter explained that it is the business of the Board, not the Court, “to give coordinated effect to the policies of the Act,” further saying,
We prefer to deal with these realities and to avoid entering into the bog of logomachy, as we are invited to, by debate about what is “remedial” and what is “punitive.” It seems more profitable to stick closely to the direction of the Act by considering what order does . . . and what order does not, bear appropriate relation to the policies of the Act.
Despite Justice Frankfurter’s eloquent words and sound reasoning in NLRB v. Seven-Up, reviewing courts, and the Board itself, have consistently waded into the “bog of logomachy,” asking “whether [the] proposed remedy is aimed at punishment or deterrence rather than effectuating the policies of the Act.”
B. The Make-Whole Remedy
The Board’s traditional method of effectuating the policies of the Act in instances of an illegal discharge or demotion is the so-called “make-whole” remedy, in which the Board seeks to “restore the status quo ante and make the unit employees whole for any loss of earnings [or] benefits.” The idea behind the make-whole remedy is to put the aggrieved worker back into the same material position they were in before their unlawful discharge or demotion, ideally rendering the unfair labor practice materially null. Traditionally, the make-whole remedy includes reinstatement and backpay to the aggrieved worker. However, it should come as no surprise that mere reinstatement and backpay do not always make unlawfully discharged or demoted workers “whole” with respect to their losses associated with the unfair labor practice.
A glaring hole in the traditional make-whole remedy, which the Board has recently sought to fill, is economic losses. Economic losses are those apart from loss of pay or benefits, like damage to an employee’s credit rating. In 2021, the issue of economic losses came before the Board in a case where an employer terminated its employees’ bargained-for health insurance plans without notice and unilaterally implemented an inferior plan, leading to employees incurring significant health care costs. In addition to standard cease and desist, backpay, and reinstatement orders, the Board ordered the employer to make unit employees whole for other costs attributable to the unlawful conduct, such as granting employees “all interest, emoluments, rights, and privileges in the health insurance plan provided for in the collective-bargaining agreement . . . that would have accrued to them but for the unlawful conduct,” and including all outstanding medical costs incurred as a result of the employer’s failure to pay the employees’ medical insurance, as well as any court judgments rendered against employees for failure to pay their medical bills.
In coming to this conclusion, Board Chairman McFerran noted that the Voorhees case
should prompt the Board to seek public input about whether to add a new, make-whole remedy to those [it] traditionally order[s]: an award of consequential damages to make employees whole for economic losses (apart from the loss of pay or benefits) suffered as a direct and foreseeable result of an employer’s unfair labor practice.
The Board specifically expressed that “where the employer’s egregious violations so harm employees that they may not be fully remedied by the Board’s traditional make-whole awards” it is necessary to consider consequential damages. Although NLRB General Counsel Abruzzo likely did not ask for consequential damages in Voorhees because the Board has never authorized such damages, she quickly accepted the Board’s new invitation.
In two September 2021 memoranda, less than a month after the Voorhees decision, General Counsel Abruzzo urged NLRB Regions to seek compensation for “consequential damages to make employees whole for economic losses . . . suffered as a direct and foreseeable result of an employer’s unfair labor practice.” Specifically, the General Counsel articulated several consequential damages to be considered by the Board in these situations: (1) interest or late fees on credit cards, (2) penalties for prewithdrawal of retirement accounts, (3) loss of home or car due to loan nonpayment, (4) damages to credit rating, (5) losses from liquidating savings or investment accounts, (6) expenses for professional licenses, (7) cost of health insurance or cost of medical expenses, (8) moving expenses, and (9) legal expenses. The NLRB quickly took her invitation.
C. Thryv, Inc. and the Board’s Power Moving Forward
Following Voorhees and General Counsel Abruzzo’s September 2021 memoranda, the Board considered granting consequential damages in Thryv, Inc. in December 2022. In that case, the Board clarified that,
[I]n all cases in which [the Board’s] standard remedy would include an order for make-whole relief, [the Board] shall expressly order that the respondent compensate affected employees for all direct or foreseeable pecuniary harms suffered as a result of the respondent’s unfair labor practice. [It] will apply this policy retroactively . . . in “all pending cases in whatever stage” given the absence of any “manifest injustice” in doing so.
The Board expressly avoided using the term “consequential damages,” explaining that it is a “legal term of art more suited for the common law of torts and contracts.” Instead, the Board ruled that “all direct or foreseeable pecuniary harms suffered as a result of [an employer’s] unfair labor practice” be included in the traditional make-whole remedy. In addition to expressly including direct and foreseeable pecuniary harms as a result of an employer’s unfair labor practice within the traditional make-whole remedy, the Thryv Board declined to enumerate all the pecuniary harms that may fall into this category. In doing so, it stated that future Board decisions regarding such damages will be guided by the Board’s own caselaw.
The Board’s review of its caselaw in Thryv revealed wide latitude to grant damages for direct and foreseeable pecuniary harms resulting from an employer’s unfair labor practice. Importantly, the Board has “wide discretion” to effectuate the policies of the Act and is not limited to reinstatement with or without backpay. The Supreme Court has interpreted the Board’s power to order “reinstatement of employees with or without back pay” as not to limit the general grant of power to award affirmative relief, but to merely illustrate such power. Additionally, the Board has historically updated and revised its remedial policies in order to ensure that victims of unlawful conduct are truly made whole. Relying on these authorities, the Board in Thryv clearly articulated its power to grant such damages, and further made clear that such remedies are, by their very nature, remedial and not punitive. This articulation averts Republic Steel’s prohibition of punitive damages and avoiding becoming yet another mummified body in the bog of logomachy. Moving forward, the Board, relying on Thryv, may now issue remedies above and beyond mere reinstatement and backpay without being hamstrung to the archaic and wrongly decided holding in Republic Steel.
II. Existing Gaps in Protection
Although the categories expressed by General Counsel Abruzzo and the Board’s subsequent decision in Thryv certainly allow the Board to more forcefully effectuate the policies of the Act, expressly defining these direct and foreseeable pecuniary harms is crucial because the Board is simultaneously wading into uncharted waters and eluding the fruitless descent into the bog of logomachy. Several holes remain in the General Counsel’s guidance, all of which leave countless workers made only partially whole, often having a significant impact on those workers’ lives.
A. Child Care Costs
One category of economic losses not covered by General Counsel Abruzzo’s memoranda is economic losses from new child care costs resulting from an unlawful discharge or demotion. In a January 2023 report issued by the Department of Labor, the Women’s Bureau found that child care consumed a significant amount of median family income across all care types, age groups, and local population sizes. Specifically, the report found that child care is unaffordable in almost every county across the United States, with single parents and those below the poverty line most significantly impacted. Child care costs outpaced inflation during the pandemic. At minimum, families are putting eight percent of their income toward child care costs. On the higher end, child care expenses account for thirty-five percent of low-income families’ earnings, with the cost expected to continue to increase each year.
Consider the story of displaced steelworker Shannon Mulcahy. Shannon was a second-shift worker at the now-closed Rexnord Corporation steel factory in Indiana. Like most Americans, her responsibilities did not end when she arrived home after a day’s work at the factory. Shannon is a single mother of two, and her son, Kent, depended on her to help support his disabled four-year-old daughter, Carmella. When the factory closed, Shannon had to look for work, and this search included traveling to attend job fairs, participating in trainings, and conducting general networking. For a worker in Shannon’s position, this situation would pose a problem: who is going to care for Carmella now that Shannon is forced to look for work during those hours to keep a roof over her family’s collective head? Unless a family member or friend is willing and able to provide such support—which is not always readily available in working-class communities—Shannon will likely have to pay to ensure her granddaughter receives the care that she would normally provide had she not lost her job.
Crucially, losing one’s job often disrupts a worker’s career path in lasting and predicable ways. Laid-off workers, particularly low-wage workers, generally experience long stretches of unemployment, and evidence shows that periods of unemployment make workers less employable. Job loss also produces significant and sustaining losses in earnings. Where displaced workers find new jobs, they will on average earn seventeen percent less than they would have had they not lost their previous job. Most discouraging is evidence demonstrating that earnings losses of laid-off workers persists for as long as twenty years. Considering this evidence, the average displaced worker will spend more time unemployed, earning less than with their previous position, and will spend the next decade or two trying to catch back up to their pre-displacement earnings. Therefore, when a worker is unlawfully terminated, they will need to spend more time searching for work, and will ultimately need to take on more hours or additional jobs to cover what they lost from their displacement and maintain their family’s quality of life. In this standard scenario, someone like Shannon would need to take on additional costs to cover Carmella’s care, as the time she had previously budgeted to spend providing that care is now spent working additional hours that she would not have needed to take on but for her displacement.
B. Student Loan Penalties
While General Counsel Abruzzo’s memoranda included economic damages resulting from loss of home or car due to loan nonpayment, another category of economic losses not covered by the memoranda are penalties for nonpayment of student loans. Where an employee is unlawfully discharged or demoted, their ability to make payments on their student loans will likely be negatively impacted, and any default on such loans will result in substantial penalties to the borrower.
In the short-term, where a student loan borrower fails to make their monthly payments, the borrower can be saddled with late fees, have their tax refund withheld, or even have their wages garnished. The long-term consequences of nonpayment include default where the entire balance immediately comes due, loss of eligibility for future aid, a drop in credit score, and potential lawsuits. General Counsel Abruzzo’s memoranda cover both damages to credit rating and legal expenses, protecting student loan borrowers from the latter two long-term consequences. However, the current guidance leaves a hole in its protection of unlawfully discharged or demoted workers who are hit with late fees, withheld tax returns, or wage garnishments as a result of their inability to make monthly payments. Perhaps General Counsel Abruzzo omitted such consequential damages because at the time of her issuing the memoranda student loan payments were paused across the country, but the pause has since lifted following the Supreme Court’s decision in Biden v. Nebraska.
Take the experience of Rick Tallini, for instance. Rick has a current outstanding student loan balance of $350,000, which he feels he has no hope of ever recovering from. After finishing law school, Rick was unable to land a higher-paying legal job and was laid off from the day job that got him through law school. He applied for forbearance and deferments but was unsuccessful. Although he went through Chapters 13 and 7 bankruptcy after going through a messy divorce and losing his law license due to his inability to make child support payments and entered into several income-based repayment (IBR) student loan repayment plans, his student loan debt obligation ballooned to $350,000. While there are certainly other factors that played a role in producing that remarkable sum of debt, the snowball effect began when he was laid off, and Rick’s inescapable debt cycle thus took off. Had Rick not been discharged from the job he was relying on to make his early student loan repayments, it is likely that his initial $60,000 debt obligation would pale in comparison to his ultimate $350,000 obligation. Although it is difficult to calculate what portion of Rick’s $350,000 obligation was the direct result of his job displacement, an attempt at such a calculation is essential to ensure that the Board’s remedies truly make aggrieved workers saddled with snowballing student loan debt truly whole.
C. Side or Second Jobs
In 2022, according to the Bureau of Labor Statistics (BLS), over 400,000 Americans worked two full-time jobs and over 7.7 million workers held two or more job positions. Roughly forty-four percent of Americans work a side hustle to make ends meet, and an increasing number of Americans are working part-time jobs. Millions of Americans rely on the income generated from second or side jobs, and where a union worker is unlawfully discharged or demoted, their ability to generate income from these alternate avenues may be damaged.
For instance, a union worker who is unlawfully demoted to a different shift may be unable to make their shift at their second job, resulting in additional loss of income. Similarly, an individual working on the side as an Uber driver who loses their full-time job may be unable to make their car payments and lose their car, thus rendering them unable to produce income from their side job of which they now entirely rely due to their job displacement.
Consider the story of Pam and Ned in Matthew Desmond’s nonfiction, Pulitzer-Prize-winning Evicted: Poverty and Profit in the American City. Pam and Ned were victims of entrenched cyclical poverty in Milwaukee; Ned worked as a construction worker and Pam got a job at a commercial printing plant forty minutes from home. Although they were initially able to make ends meet under this arrangement, once winter came around, Ned’s job shut down for the colder months, disabling Ned and Pam’s ability to afford necessary repairs to the car Pam relied on to get to and from work. As a result, Pam lost her job at the printing plant. This scenario applies equally to a single individual working two jobs as it does to a couple with their own respective jobs, and it illustrates how one job displacement can lead to the loss of a second or side job.
D. Loss of Utilities
Although General Counsel Abruzzo’s memoranda cover the loss of home or car due to loan nonpayment, a union worker whose unlawful discharge or demotion leads to their loss of utilities due to nonpayment remains uncovered. Utilities like electricity, gas, water, sewer, internet, telephone, cable, security systems, and trash collection, in most cases, require monthly payments to continue service. Where a worker has been unlawfully discharged or demoted, their access to such services may be disrupted due to the change in their economic circumstances.
During the COVID-19 pandemic, utility debt increased from around $12 billion pre-pandemic to an estimated $32 billion at the end of 2020, and between the beginning of 2020 and October 2022, utility companies have disconnected U.S. households more than 5.7 million times. Stacy Mason’s household became one of those 5.7 million after she was laid off from her auto plant job in Ohio during the COVID-19 pandemic. After getting laid off, Stacy’s bills began to pile up, and despite Ohio’s moratorium on utility shutoffs, the gas company cut off her service. Stacy then had to boil water on her stove for bathing and washing dishes, and her children were forced to endure without heat. Although in Stacy’s case, the gas company had a duty to continue her gas service, the utility shutoff moratorium was a temporary measure in response to the pandemic, and such moratoriums are rapidly coming to an end, if they have not already ceased.
Stacy’s story demonstrates it is easy to see how an unlawful discharge can lead to one’s utilities being shut off due to the inability to make payments. This type of economic loss is clearly foreseeable, as every American relies on basic utilities to survive.
