In Oil Capital Sheet Metal, Inc., the National Labor Relations Board, in a 3-2 decision, recently changed its standard for determining backpay in “salting” cases. Salting occurs when a union sends union members to an unorganized jobsite to obtain employment and organize the employees. The Board has long held that that “salting” is protected activity and that it is unlawful for an employer to refuse to hire a union salt because of his or her union affiliation or plans to organize the company. Oil Capital, however, significantly changes how damages will be calculated when an employer has illegally refused to hire salts.
Oil Capital’s business is sheet metal contracting in Tulsa, Oklahoma. In 1998, Michael Couch applied for a job there. Couch was no ordinary applicant: he was a union organizer with the Sheet Metal Workers International Union who had been attempting to organize Oil Capital for several months. Couch had been a union organizer for four-and-a-half years and had tried both successfully and unsuccessfully to organize many companies in the Tulsa area. He applied at Oil Capital with the express purpose of organizing the company and company officials knew of his affiliation with the union when they declined to hire him. As a result, Couch and the union filed an unfair labor practice charge against Oil Capital. After a two-day hearing, the Administrative Law Judge found that the company had violated the National Labor Relations Act by refusing to hire Couch because of his union affiliation and intentions.
In refusal-to-hire cases, the Board traditionally orders the instatement of the employee and backpay. It has also developed a rebuttable presumption that the backpay period should continue indefinitely from the date of the discrimination until a valid offer of reinstatement is made. This rebuttable presumption effectively relieved the General Counsel and the union of any evidentiary burden with respect to the backpay amount and the employers bore the burden of providing evidence that union members would not have worked the entire period. This was often a terribly difficult burden to satisfy. As a result, especially given the snail’s pace at which cases move through the NLRB system, backpay amounts in refusal-to-hire cases could be quite large. The Oil Capital case is a prime example. The employer refused to hire Couch in 1998. Had the Board applied the rebuttable presumption of indefinite employment, the employer would have owed the salt over nine years of backpay.
The Board has now recognized that this rebuttable presumption is inconsistent with the realities of union salting. Unlike other applicants for employment, salts often do not seek employment for an indefinite duration. Rather, salts remain with a targeted employer only until the union’s defined objectives are achieved or abandoned. Then they move on to another employer.
The Board used Oil Capital as an opportunity to announce a new standard for calculating backpay damages in cases involving union salts. Where the evidence establishes that an applicant was a union salt, the Board will no longer apply a presumption of indefinite employment. The General Counsel must now present evidence and bears the burden of proving how long the salt would have worked for the company.
Furthermore, if an instatement order is sought, the General Counsel must prove that the salt would still be employed by the company if he or she had been hired.
Oil Capital marks a significant change in NLRB law. Employers should carefully note, however, what this decision does not change: the new Oil Capital standard only applies to backpay for union salts. It does not change the underlying law making it unlawful to refuse to hire based upon union affiliation.