On May 24, 2024, in Thryv, Inc. v. NLRB, No. 23-60132,  (5th Cir. May 24, 2024), a unanimous three judge panel for the Fifth Circuit Court of Appeals vacated a National Labor Relations Board order finding that the Employer violated the Act when it laid off employees pursuant to the terms of a last best final offer while the parties were bargaining for a successor contract. However, the court declined to rule on whether the Board had authority to issue its new consequential damages remedy – a primary reason this case was being closely watched as it moved through the appeal process.   

What Happened

The parties’ CBA expired and after a year of bargaining, the Employer, an internet ad sales company, declared an impasse and implemented its last best final offer in September 2018. Notably, the NLRB’s General Counsel declined to prosecute the charge the union filed over the impasse declaration.  

Then, in the Summer of 2019, the Employer notified the Union that it needed to lay off some of its sales representatives in 30 days and that it would do so pursuant to its LBFO which included detailed terms for conducting layoffs including a right for the Union to meet and discuss the terms of the layoffs. The Union told the Employer it could not meet for another 21 days. But eventually the Employer and the Union held a series of meetings related to the layoffs. In those meetings, the Employer made clear it was planning to proceed with the layoffs under the procedures prescribed in the LBFO, which also happened to be the status quo, but also that it was open to any counterproposals. Little progress was made in the talks, the notice period expired, and the Employer proceeded with the layoffs following the terms of the LBFO.

NLRB Thryv Decision

In response to the layoffs, the Union filed unfair labor practice charges, and ultimately, the case came before the NLRB. The Board, in reversing the ALJ, found the Employer violated the NLRA by conducting the layoffs because the Employer was precluded from making unilateral changes of any kind while it was engaged in CBA negotiations with a union and because the parties’ impasse was broken when they resumed negotiations on a successor CBA. The Board ordered reinstatement and a new expanded make whole remedy for all the losses incurred as a direct or foreseeable result of the layoffs.

The NLRB opinion did not lay out an exhaustive list of the “direct and foreseeable pecuniary harms,” but suggested they could include the costs associated with job searching, incurring credit card debt while unemployed, out-of-pocket medical expenses due to loss of medical insurance, and other costs to make ends meet while unemployed. Since the Thryv opinion was issued in December 2022, this unprecedented expansion of the traditional make-whole labor law remedy has been one of the most debated issues of the Biden Board’s tenure.

Fifth Circuit Addresses the Merits

The Employer sought review of the Board’s order in the Fifth Circuit Court of Appeals. The court said the Board was wrong about the Employer being precluded from making unilateral changes while bargaining. It held the Employer was privileged to conduct the layoffs without bargaining so long as it complied with the terms of its LBFO. The Court explained this was true even though the LBFO gave the Employer discretion when conducting layoffs because employers are permitted to implement management rights clauses at impasse, and that such clauses in fact privilege employers to take unilateral action on subjects like layoffs that would otherwise require bargaining.

The court also rejected the Board’s argument that impasse had broken prior to the layoffs. The Court explained that an impasse breaks when something happens to create a possibility of fruitful discussion and the Board showed no evidence of this. Rather, it merely asserted that the ALJ “found the parties . . . were in the process of negotiating a new collective-bargaining agreement when [the Employer] implemented the unilateral layoffs on September 20.”

No Ruling on Remedies

The court addressed only the merits of the appeal and did not rule on the Board’s authority to issue the remedies it sought. However, the court referred to the remedies as “draconian steps” and “a novel, consequential-damages-like labor law remedy,” suggesting some skepticism at the very least.

Nevertheless, practically speaking, a finding that the Board lacked authority to issue the remedies would have little effect because the NLRB follows a policy known as nonacquiescence – a commitment to act on its own interpretation of the federal labor laws, come what may from federal courts below the Supreme Court. So at least for now, it appears likely the Board will assess remedies according to the Thryv case, and it would have done so in future cases even if the appeals court had weighed in on the issue.