Client Alert - Employment Law Update
NLRB to Impose new Interest Penalties in Back Pay Claims
In a recent decision, the National Labor Relations Board (NLRB) stated that it will begin imposing compound daily interest for back pay awards. The ruling underscores the importance of making proper disciplinary decisions to employers with union workers.
The NLRB articulated its new policy in the case of Jackson Hospital Corp. d/b/a Kentucky River Medical Center, 356 NLRB No. 08 (October 22, 2010). Previously, where the NLRB found workers to have been terminated, suspended, or laid off without cause, it only issued back pay and wages. Now, awards in these types of cases can be considerably larger.
Looking to a statute covering federal employees, the IRS Code, and even private lending practices, the NLRB concluded that compound versus simple interest would "better serve the remedial policies of the National Labor Relations Act." It also found that interest should be compounded daily, instead of quarterly or annually because its "primary focus clearly must be on making employees whole." Significantly, the new rule applies retroactively to all pending NLRB cases.
What to Do
Disciplinary decisions for employers with union workforces have always presented unique challenges. However, the potential cost of grievances has just been increased substantially. Employers should take care to ensure that their disciplinary procedures comply with collective bargaining agreements, and that any decisions are supported by just cause.
If you would like more information about this decision, or have questions about your employment policies and practices in general, please contact Mr. Gonzalez at 312-558-9779 or at egonzalez@elvisgonzalezltd.com.
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