NLRB Ruling May Encourage Employee Dishonesty

Awards of backpay in unfair labor practice cases are intended to make whole an employee who suffers a loss of earnings because of an unfair labor practice.  Because awards of backpay are typically limited to an employee's actual loss, an award of backpay is usually offset by any post termination earnings.

In Atlantic Veal & Lamb, Inc., 355 NLRB No. 38 (May 28, 2010), National Labor Relations Board ruled in favor of a terminated employee claiming he was terminated as a result of engaging in protected activity. At issue was the question of whether the administrative law judge who initially considered the matter properly determined that the employee's claim for backpay was barred because the employee falsified his post termination employment history on a mortgage application. 

The administrative law judge hearing the matter initially agreed with the employer that the employee's falsification of his post termination employment history should bar the employee from being awarded backpay for the time period at issue. The administrative law judge expressed concern that the employee's falsification of his post-termination employment history would hinder an accurate determination of the employee's actual post-termination earnings for purposes of applying those post-termination earnings as an offset against an award of backpay.

On review, a three-member panel of the recently reconstituted NLRB reversed the administrative law judge's decision and remanded the matter back to the administrative law judge for further proceedings. The NLRB panel ruled that the administrative law judge gave too much significance to the discrepancies between the information the employee provided on his mortgage application and the information the employee submitted as part of his claim for an award of backpay and ruled that the employee should not be barred from receiving an award of backpay for the time period in question. The NLRB panel also criticized the administrative law's judge's credibility determinations and the impact of those credibility determinations on what may be a broader scope of backpay liability than the NLRB panel would consider appropriate.  

The NLRB panel's instructions to the administrative law judge will very likely increase the employee's recovery in the case as the discrepancies and credibility issues will weigh less heavily on backpay calculations.

More broadly, the ruling stands to reward employee dishonesty and reward incomplete or inconsistent employee accounts of their post termination employment and earnings. This may encourage employees and unions to increase their resort to the NLRB to challenge employment related decisions and to enhance leverage and employer exposure during organizing campaigns.

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