What The Hell America!

In August of last year, I wrote a piece for the New York Times in which I argued that the Starbucks unionization campaign illustrates the inherent limitations of the National Labor Relations Board (NLRB) in facilitating mass unionization in America. The piece analyzes how much NLRB effort was required to produce 11,000 new union members at Starbucks and then concludes that the NLRB does not have even a tiny fraction of the budget that would be required to certify millions of new union members in a short period of time.

If this is how many government resources are required to certify just over 11,000 new union members, then it would clearly be unsustainable for the government if the enthusiasm we’ve seen at Starbucks were to spread to other companies and other unions. Without reforms, a huge wave of unionization would find itself paralyzed in the bottleneck of the N.L.R.B. process.

I was reminded of this while reading the first General Counsel memorandum (“GC memo”) of the Trump administration, which I summarized at NLRB Edge yesterday. The memo, GC 25-05, rescinds a long list of Biden-era guidance and signals that the new GC is going to try to roll back various worker protections. This is fairly standard when Republicans control the NLRB.

Interestingly, Acting General Counsel William Cowen begins the memo by referencing the resource limitation problem I discussed in my New York Times Starbucks piece.

Over the past few years, our dedicated and talented staff have worked diligently to process an ever-increasing workload. Notwithstanding these efforts, we have seen our backlog of cases grow to the point where it is no longer sustainable. The unfortunate truth is that if we attempt to accomplish everything, we risk accomplishing nothing.

Cowen is right that having a huge case backlog that makes it impossible to resolve unfair labor practices quickly makes the NLRB process essentially pointless. Most workers cannot wait for years to be reinstated to their job after being illegally fired, which also means that employers do not need to concern themselves with following the law.

Yet, simply refusing to enforce the law in certain ways also makes it so that employers do not need to concern themselves with following the law. A long queue denies justice to those who need a timely resolution of their unfair labor practice. But culling the queue denies justice to those subjected to the culling and to those who wind up victimized by changes in employer behavior that result from the relaxation of NLRB enforcement. The cure is worse than the disease.

The question we really should be asking ourselves is: Why is there such a backlog in the first place? One possible answer is that the NLRB’s budget is too small. I certainly agree that the agency should be allocated more funding to hire additional board agents, administrative law judges, and other staff needed to process cases.

But the problem goes much deeper than the NLRB budget. Case backlogs occur because many employers violate the law. And many employers violate the law because the penalties for doing so are so weak that breaking the law is the profit-maximizing choice. Most legal compliance, especially in these areas of employment regulation, is achieved, not through enforcement actions, but by employers deciding it is better to comply than to face penalties. This does not happen with the National Labor Relations Act (NLRA).

Consider the example of employers that insert non-disparagement or confidentiality clauses in severance agreements, company handbooks, or employment agreements. This is one of the areas of enforcement that Acting General Counsel Cowen is signaling that he wants to roll back, ostensibly because the agency has received so many charges from employees who are subject to these illegal clauses.

These clauses were explicitly illegal between 2004 and 2017 (the Lutheran Heritage era) and then again from 2023 to present (the Stericycle and McLaren Macomb era). If these clauses have been illegal for now two years, why haven’t employers simply rewritten their handbooks and standard agreements to remove these clauses? After all, if employers would just comply with the law, then the NLRB would not have a huge backlog of these cases.

The answer is that there is no real penalty for noncompliance. If an employer inserts an illegal non-disparagement or confidentiality clause into a company handbook or an employment agreement, the worst thing that can happen to them is that an employee will file a charge at the NLRB (already improbable) and that the NLRB will order them to remove the clause. Thus, the penalty for not complying is simply that you are ordered to comply.

It is not hard to see why employers conclude that it makes more sense to use these illegal clauses to discourage workers from engaging in protected activity than to comply with the law. From there, it is easy to see how, if virtually every employer decides to break the law this way, the NLRB will become overloaded with charges, even if only a small fraction of affected workers are actually bold enough to file charges with the agency.

As I argued in my Starbucks piece, all of this underscores how crucial it is to pass new laws like the PRO Act or the Employee Free Choice Act if you want to actually make labor law functional. Appointing labor-friendly NLRB members and NLRB general counsels simply cannot move the needle that much given the inherent limitations of the NLRA.