Know Your Rights

Hoffman Plastic Compounds I: The Need for Labor Law Reform
by Doug Bonney


Ever since August 22, 1947 —the day the Taft-Hartley Act became law—union supporters have known that the Nation's labor laws need reform. Since 1947, Congress has for the most part turned a deaf ear to union calls for changes needed to protect workers' rights to organize, to engage in concerted activities, and to bargain collectively with their employers. Because it has been such a long struggle, we need occasional reminders about what is wrong with the law. The Supreme Court provided such a reminder on March 27 when it decided Hoffman Plastic Compounds, Inc. v. National Labor Relations Board.

In 1988, employees at Hoffman Plastic Compounds were involved in an organizing campaign mounted by the United Rubber Workers (now part of the United Steel Workers of America). In January 1989, the company decided it had had enough of the organizing drive and laid off Jose Castro and four other employees engaged in efforts to bring in the union. The union filed unfair labor practice charges against the company contending that the layoffs discriminated against the employees based on their protected union activities. In 1991, after a hearing, an administrative law judge (ALJ) found that Hoffman "selected the four union adherents to be included in the layoff on January 31 in order to rid itself of the employees it knew to be supporters of the Union" in violation of the National Labor Relations Act. As a remedy, the ALJ ordered that Hoffman (1) cease and desist from further violations of the NLRA, (2) post a notice to its employees about the ALJ's decision, and (3) reinstate the employees with back pay.

Predictably, the company appealed, and in January 1992 the NLRB upheld the ALJ's decision with a few minor modifications. In June 1993, the ALJ held a compliance hearing and ultimately determined the amount of back pay Hoffman owed the employees, but the ALJ denied back pay to Jose Castro because he was not legally entitled to work in the United States at the time Hoffman laid him off. In September 1998, the NLRB reversed the ALJ's decision on Castro's entitlement to back pay, holding that his immigration status did not bar a back pay remedy. Ultimately, the ALJ found that Hoffman owed Castro $66,951 in back pay plus interest, but he cutoff Castro's back pay as of the day the employer learned that he was not legally authorized to work in the United States. Hoffman duly appealed the Castro back pay order to the court of appeals in Washington, D.C., and finally to the Supreme Court.

In a 5 to 4 ruling, the Supreme Court held that the immigration laws prohibit the NLRB from ordering back pay for an illegal worker. Four Justices forcefully disagreed with the majority's ruling, pointing out that the decision let the employer off without any significant penalty for its admitted violations of federal labor law.

Whatever you may think of people working illegally in the United States, the Supreme Court's recent decision highlights two important problems with the Nation's labor laws. First, the legal process is so slow that it proves the truth of the old saying: "Justice delayed is justice denied." Hoffman violated the law by laying off the union supporters on January 31, 1989. The ALJ's original decision came out on February 28, 1991, more than two years after the unlawful anti-union discrimination! Almost a year later the NLRB issued its order adopting the ALJ's primary conclusions. It then took over ten more years for the back pay question to wind its way through the NLRB process and through the federal courts. These types of delays are the rule rather than the exception, and such delays play right into the hands of the employers, who use the delays to out wait union supporters—hoping they will tire of the organizing effort and give up or move on to a different job.

The other lesson to be learned from the Hoffman case is that the law does not give the NLRB the authority to issue effective remedial orders that might impose serious sanctions and penalties for blatant violations of the federal labor laws. The Supreme Court's decision also shows that the Justices in the majority are out of touch with the real world. Specifically, Chief Justice Rehnquist's majority opinion states that "the Board has already imposed other significant sanctions against Hoffman—sanctions Hoffman does not challenge." (emphasis added) The Chief Justice was referring to the NLRB's cease and desist order and its requirement that Hoffman post a notice regarding its unlawful actions. But, contrary the wisdom of the Justices, these sanctions are trivial, bordering on meaningless. No sane employer would fear such paper orders. Nor are such remedies likely to deter employers from engaging in illegal anti-union discrimination. In fact, such slight sanctions mean that, in effect, employers have one free bite at union supporters who are working illegally in this country. This encourages employers to hire potential illegal immigrants with a wink and a nod at the restrictions imposed by the immigration laws.

Even when back pay is a possibility because the employee is a citizen or is working here legally, the NLRB deducts interim earnings from back pay, requires employees to make reasonable efforts to mitigate their losses by looking for and taking comparable work, and denies back pay to employees who fail to mitigate. Such adjustments often take the sting out of the NLRB's back pay awards.

In reality, the NLRB's quiver of remedial arrows is nearly empty. In 1940, the Supreme Court ruled that the NLRB cannot impose punitive damages. And, in 1958, the Court noted that "Congress did not establish a general scheme authorizing the Board to award full compensatory damages for injuries caused by wrongful conduct." In essence, this means the NLRB cannot award money damages for the mental and emotional distress a union supporter suffers at the hands of a discriminatory employer. The NLRB is left with cease and desist orders, notice posting, and perhaps back pay if the employee has not earned too much and has mitigated his damages. These are insignificant and ineffective remedies by any measure.

As part of the remedial scheme to encourage employers to comply with laws prohibiting other types of discrimination (based on race and sex, for instance), Congress has specifically authorized awards of punitive damages and compensatory damages for mental and emotional distress. Congress should now amend the National Labor Relations Act to enhance the NLRB's arsenal of remedies for unfair labor practices. Without the threat of significant awards of compensatory and punitive damages, in addition to traditional back pay remedies, bad employers are unlikely to change their behavior and suddenly respect employee rights to unionize. After all, in our system, money talks, and employers respond to threats to their bottom lines. History has clearly shown that they do not respond to supposedly significant paper remedies like cease and desist orders and notice postings.