Acting General Counsel of the National Labor Relations Board (NLRB) Lafe E. Solomon issued Memorandum GC 13-02 on January 9, 2013 modifying existing Board policy to now permit Agency settlements to include front pay. The memorandum confirmed the long standing favoritism of Agency settlements towards reinstatement; however, it acknowledged that parties and discriminatees routinely negotiate a waiver of reinstatement in return for a monetary amount.

Compensation in lieu of reinstatement known as front pay is a remedial concept recognized in many areas of employment law. However, front pay is not a remedy the NLRB includes in remedial orders under existing law. The Agency is not confined to only those remedies the Agency would seek in formal proceedings when approving voluntary settlement agreements between parties. The Acting General Counsel indicated “[w]here parties in Board proceedings negotiate front pay in return for a waiver of reinstatement or instatement, the front pay is not ‘punitive,’ it is part of a mutually agreed-upon settlement.”

The Memorandum revises Compliance Casehandling Manual (CMH) § 10592.8 to remove the requirement that these greater-than-one-hundred-percent backpay agreements must be in a “side letter separate from any of the documentation regarding the Agency settlement.” CMH § 10592.8 will be revised to permit front pay in Board settlements to favor Board settlements over entirely non-Board settlements.

The CMH continues to provide that discriminatees should not be pressured to waive reinstatement, but indicates any offer of front pay in lieu of reinstatement should be communicated to the discriminatee. Additionally, the Region may raise the issue of front pay if the Region is confident that reinstatement will not be achieved absent litigation.

The Acting General Counsel’s modifications to the CMH continue the ongoing shift in labor law that has continued over the past several years. Employers facing potential labor issues should consult with experienced labor attorneys on a regular basis to consider how recent changes affect their individual situations.

By: Justin A. Morocco