NLRB Issues Revised Policy Concerning Inclusion of Front Pay in Settlements

January 22, 2013

Generally, the NLRB favors reinstatement as the preferred means of restoring the “status quo” after a finding of unlawful discrimination is made in a discharge case. However, parties are permitted to and often negotiate settlements which substitute monetary compensation (known as “front pay”) for reinstatement. Front pay is often given in addition to back pay owed. Under current NLRB practice, front pay settlements in return for a waiver of reinstatement cannot be included in a Board settlement, and therefore such settlements are non-Board settlements. Seeking to maintain an active role in the settlement process where front pay is desired by the parties, the NLRB has announced that while reinstatement remains the preferable remedy where unlawful discrimination is found, if front pay in lieu of reinstatement is proposed and agreeable to all parties, such settlements may be reached through the Board’s processes. The Board will even raise the prospect of front pay if it is confident that reinstatement will not be achieved absent litigation. The revised policy shows the Board’s desire to take a more active role in effectuating favorable settlements for individual workers. While NLRB involvement may accelerate settlement negotiations, employers should be wary of pitfalls where Board Agents are acting in tandem with union representatives during settlement negotiations. For more information on the practical implications of the Board’s policy change and strategy recommendations on negotiating favorable settlements in discharge cases, please contact James J. McGovern, III Esq., or Douglas J. Klein, Esq.,, in the Labor Law Practice Group.

Tags: GeneralNLRBFront Paybackpay