As Dems Mull Reconciliation, NLRA Civil Penalties Are Worth Fighting for

Recently, Senate Democrats have begun discussing plans to enable the National Labor Relations Board (NLRB) to levy civil monetary penalties on employers who commit unfair labor practices (ULPs) as part of their broader reconciliation bill on infrastructure.  While specifics are so far lacking, the proposal is based on what House Democrats already put forward in the Protecting the Right to Organize (PRO) Act, which would establish penalties of up to $50,000 per infraction for first-time violators and up to $100,000 for certain repeat offenders.

If enacted, a new monetary penalties regime would mark the most significant, pro-worker reform of the National Labor Relations Act (NLRA) since the Act’s passage in 1935 and could significantly boost workers’ ability to address violations of their right to organize.  This could, in turn, increase unions’ capacity to push for the type of broader reforms that are needed to revitalize labor law and the labor movement—reforms of the kind we called for in the Clean Slate report.  Crucially, moreover, Senate precedent shows that civil penalties should survive the rules of budget reconciliation, allowing Congress to pass these provisions with even the razor-thin Senate majority Democrats currently have.

Understanding the potential impact of the proposed civil penalties requires a recognition of the truly toothless nature of the NLRA’s current remedial scheme.  Since the Supreme Court has limited the NLRB to issuing compensatory relief, companies that unlawfully discharge their employees are at worst liable for what they would have otherwise paid their former workers (minus what the illegally discharged worker earns while waiting for the Board to act)—or, in the case of undocumented employees, nothing at all. When companies refuse to bargain with unions, their primary punishment is getting sent back to the bargaining table, where they can again refuse to bargain. For other violations, the remedy may consist of no more than an order to post a sign in the break room noting that the employer broke the law.

Given current remedies, the PRO Act’s civil penalties scheme would transform the nature of the NLRA remedial regime.  For many employers, $50,000 fines could deter misconduct in a way that notice postings and back-pay awards never do.  And in practice, it’s possible that total fines could be much more than this; as at least one labor commentator has noted, since the Supreme Court has endorsed the Board’s practice of tacking derivative 8(a)(1) charges onto 8(a)(3) and 8(a)(5) claims, almost all bargaining- and discrimination-related cases involve two alleged violations.  For serial lawbreakers, the total number of charges and potential fines could quickly stack up.

Civil penalties would also meaningfully extend organizing protections to undocumented workers.  While undocumented employees remain covered by the NLRA, the Supreme Court has restricted the Board from granting them backpay or reinstatement in unlawful termination cases, arguing that doing so would reward illegal employment relationships. But this principle (questionable on its own terms) does not apply to civil penalties, since those penalties are collected not by employees but by the government.

Most importantly, there is good reason to believe that the PRO Act’s civil penalties scheme can survive reconciliation’s arcane procedural rules.  As one of us wrote in February, laws passed through budget reconciliation generally must meet six criteria under the so-called “Byrd Rule.” Specifically, a provision can only pass through reconciliation if: (1) it alters government revenues or spending; (2) its fiscal impact complies with the instructions of the initial budget resolution; (3) it was inserted by the appropriate congressional committee; (4) its budgetary impact is not “merely incidental” to the non-budgetary aspects of the provision; (5) it does not increase the deficit beyond the allotted budgetary window; and (6) it does not affect Social Security.  Typically, the fourth prong—the “merely incidental” test—is the trickiest to meet, as Bernie Sanders’ failed attempt to raise the minimum wage through reconciliation showed. Whether a provision passes the Byrd Rule is left to the discretion of the Senate parliamentarian, who relies heavily on past reconciliation precedent to render case-by-case rulings.

Fortunately, civil penalties have passed time and again through reconciliation.  Since the Byrd Rule’s adoption, legislators from both parties have included similar fines in reconciliation bills passed in 1985, 1986, 1987, 1989, 1990, 1993, 1995, and 2005. In doing so, Congress has imposed civil monetary penalties on a wide range of private conduct, including bridge obstruction, foreign tobacco purchases, maritime shipping infractions, tax fraud, Medicaid non-compliance, and ERISA, OSHA, and FLSA violations, to name a few.  Such a rich legislative precedent indicates that the fiscal impact of NLRA civil penalties ought not to be considered “merely incidental” within the meaning of the Byrd Rule. Given that many past civil penalties were imposed on previously unregulated conduct, it may well be possible to impose fines even for things such as captive audience meetings not currently proscribed under federal labor law.

As for the other Byrd-Rule requirements, the measure’s qualifications are pretty straightforward. By collecting government revenues, civil penalties would have a direct, positive impact on the budget, as measured by both the Congressional Budget Office and outside advocates.  Since the measure clearly has no impact on the Social Security program, the only outstanding requirements are that Democrats follow the proper procedural rules in including the measure.  All of this means that a key provision of the PRO Act could pass Congress under reconciliation—bypassing the Senate filibuster with a simple majority vote.

To be clear, we should not be satisfied with new penalties. For one thing, companies like Amazon and McDonalds might well decide to pay even the heightened fees under consideration rather than respect their workers’ right to organize. Moreover, labor law is fundamentally broken; what is really needed is a fundamental rewrite of the statute, as outlined in the Clean Slate report.  But that doesn’t mean we shouldn’t also push for other victories that can make it easier for many workers to build power in the short-term. After nearly 80 years of labor law’s uninterrupted erosion, Congress’s enactment of enhanced penalties through reconciliation would be historic and deserves our support.