The General Counsel (“GC”) of the National Labor Relations Board (“NLRB” or “Board”) is urging the Board to upend nearly 60 years of precedent and adopt a new legal standard that significantly limits employers’ ability to hire permanent replacements for striking employees. Under current law, employers have a general right to permanently replace workers who go on strike to obtain economic concessions from their employer, so long as an employer does not hire the replacements for an “independent unlawful purpose.” In an Advice Memorandum released on December 30, 2022, the GC confirmed her intention to push for the Board to impose a more restrictive standard that would require employers to show specific business reasons justifying the decision to replace strikers.

    Employers’ Right to Hire Permanent Strike Replacements Under Current Law

    The law of the land for the last 60 years has permitted employers to permanently replace employees engaged in an economic strike, providing employers with the right to hire workers to continue business operations in response to a union’s use of its most potent economic weapon. In its decision in Hot Shoppes, Inc., 146 NLRB 802 (1964),the Board held that employers may lawfully hire permanent replacements and that this action is not inherently destructive of the right to strike under the National Labor Relations Act (“Act”), making the employer’s motive for hiring the replacements immaterial. Accordingly, an employer does not need to prove it had a business necessity when hiring permanent replacements or that the employer’s ability to continue operations during a strike required the hiring of the replacements. Rather, the GC has the burden of proving the employer violated the Act by permanently replacing strikers because of an “independent unlawful purpose.” 

    The GC Seeks to Place the Burden of Demonstrating the Need to Hire Permanent Strike Replacements on Employers

    In the case leading to the GC’s issuance of the Advice Memorandum, the employer permanently replaced several employees who went out on strike during the negotiation of a collective bargaining agreement. The employer asserted it permanently replaced striking employees for legitimate, non-discriminatory reasons, while the union alleged that the employer threatened to fire a “huge number” of employees at the time the employer communicated its plan to permanently replace striking employees.

    In the Advice Memorandum, the GC concluded that under Hot Shoppes the employer unlawfully replaced the striking employees because the employer’s decision was motivated by an “independent unlawful purpose.” The GC reasoned that the employer’s alleged threat to fire striking employees demonstrated an intent to retaliate against employees for engaging in protected strike activity, rather than merely seeking to pressure employees to return to work.

    The GC Calls For Hot Shoppes To Be Set Aside

    After making this finding, the GC recommended that the Region issue complaint and instructed the Region to use this case as a vehicle to urge the Board to overrule Hot Shoppes. If the Region had issued Complaint, the GC intended to argue that permanently replacing economic strikers is “inherently destructive” of employees’ right to strike as it bears “its own indicia” of unlawful intent and that such action “violates the Act absent a legitimate and substantial business reason.” Under this proposed framework, the GC would need only show that an employer hired a permanent replacement during an economic strike to establish a prima facie violation of the Act, and the employer would have to prove it had a substantial and legitimate business reason for its actions, thereby shifting the initial burden of proof from the GC to the employer. The Advice Memorandum goes further and suggests that, in the GC’s view, there is virtually no “realistic basis for the assumption that employers need the option of offering permanent replacement positions in order to weather a strike,” pointing to unspecified “changes in the nature of employment” including the “steady growth of a flexible contingent workforce” and “easier access to temporary workers.”

    The Advice Memorandum is just the latest salvo in the GC’s efforts to remake the NLRB according to her union-friendly agenda. The GC had previously stated her intent to “carefully examine” the permanent replacement doctrine and she further criticized the doctrine in a Twitter thread on December 1, 2021, stating the doctrine “does not appear anywhere in the text of the NRLA.”

    Impact of Overturning Precedent

    While this Advice Memorandum is only an outline of the GC’s legal theory regarding permanent strike replacements, it represents the legal analysis that will be applied by Regional Directors when investigating similar unfair labor practice charges. The Board has not yet considered and ruled on this issue, but should the NLRB overturn 60 years of settled precedent in the Hot Shoppes permanent strike replacement doctrine, the impact would be significant. Employers would face substantially greater restrictions on their ability to efficiently staff their operations during an economic strike. The Advice Memorandum also indicated that the standard should be applied retroactively, which could impact cases currently pending before the Board.

    Overturning the doctrine could have far-reaching consequences especially as several employers are heading into momentous contract negotiations in 2023. Unions have already signaled an increased willingness to engage in aggressive tactics, including large scale strikes, during these negotiations. If the Board follows the GC’s recommendation to overrule Hot Shoppes, employers who hire permanent replacements will be faced with a nearly impossible standard to overcome. Where a union has filed unfair labor practice charges against the employer alleging a violation of the Act for their permanent replacement of economic strikers, the GC is nearly assured to view any legitimate business justification as suspect. Coupled with the Board’s recent decision concerning consequential damages, Employer’s facing potential strike activity should carefully weigh the potential litigation risks posed by the GC’s declared intent to overturn longstanding precedent in this area of law.

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