7.5 Million Reasons to Pass the PRO Act

The dire need for labor law reform can be measured by employers' refusal to obey NLRB orders.

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(Shoutout to a practicing Labor Law Lite reader for pointing me in the direction of the case discussed below.)

The strength of any regulatory agency and its governing legislation can be measured by the degree to which parties under their jurisdiction willingly comply with the law. Many who practice before the National Labor Relations Board or study the National Labor Relations Act know that by this estimation, labor law enforcement in the United States is exceptionally weak. Both statistics and common wisdom bear out the fact that employers frequently defy the law with little to no repercussion, but sometimes it helps to analyze individual cases to see just how broken the NLRA is—and how badly the Protecting the Right to Organize Act is needed to fix it.

KRS Contractors LLC is a New Jersey contractor in the construction industry. It is apparently an explicitly non-union contractor, because when an organizer affiliated with Local 542 of the Operating Engineers called to apply for a job with the company in May 2018, the owner stated that it did not hire union workers. That person, David Sebastiao, further interrogated the organizer about his union affiliation and demanded that he provide three references as part of his application, a spontaneous component that was not required of non-union applicants. The organizer did not receive the job despite the company having advertised that it was hiring applicants with his qualifications.

The organizer filed unfair labor practice charges alleging violations of Sections 8(a)(1) and 8(a)(3) of the NLRA in May 2018. Region 4 in Philadelphia issued a complaint in August, which KRS Contractors never answered. The Region filed a Motion for Default Judgment in October that was granted by the Labor Board on February 4, 2019. Board orders are not self-enforcing under the NLRA, so the Board applied to the Third Circuit for enforcement of the order, was which was eventually granted in a late April judgment. But the company refused to comply with the order (or contact regional NLRB staff at all). The Board filed to enforce the Third Circuit’s judgment in federal district court and subpoena the company’s records to determine the size of the back pay remedy owed to the organizer (D.N.J., Case No. 3:19-cv-13887). Still, neither Sebastiao nor any other person involved with KRS Contractors complied with court orders to appear at hearings. The Board motioned for contempt in April 2020, which after multiple notices to show cause were issued and ignored, was finally granted by Judge Michael Shipp on February 9, 2021. The contempt order carried daily-accruing $250 fines beginning on February 16, but the Board stated this Monday that they had still not received any contact from the company.

At 43-days-old, this contempt bill stands at $10,750.00, a paltry sum considering the unfair labor practices occurred almost three years ago and the Board order came down over two years ago. While the company is adding a hefty sum to its back pay bill for having unlawfully denied the organizer a job, it faces no independent penalty for having spat in the face of federal labor law enforcement; its only fine comes from defying the district court. It’s clear from this case that the NLRA provides the Labor Board with virtually zero meaningful remedies against an employer that chooses to defy its oversight. But what would similar levels of intransigence have cost KRS Contractors if the PRO Act were already law?

The pending bill makes two major changes to the NLRA which deal with compliance proceedings. First, it makes Board orders self-enforcing, meaning the orders are automatically enforceable 30 days after their issuance unless the losing party moves to appeal the decision to federal circuit court. Second, the PRO Act installs daily-accruing $10,000 fines for ignoring Board orders. In this case, these fines would have begun stacking on March 7, 2019—30 days after the Board’s February 4 order went un-appealed. At 755 days since said start date, KRS Contractors would now owe $7,550,000.00 in compliance fines to the Labor Board, without even counting the fines for the unfair labor practices themselves (see this post). For those keeping track at home, that is roughly 702 times the amount actually owed by the company as of today.

Of course, the chances that a local construction contractor would have ignored Board orders and racked up such a bill in this alternate timeline is very low. But that’s the point. Labor law violators such as this would have either timely complied with the order, tried to remedy the unfair labor practices before trial, or simply never committed the unfair labor practices in the first place. The PRO Act thus would have accomplished the NLRA’s statutory mission; flat-out defiance of the law would not even have been contemplated.

This is a concrete example of how labor law needs teeth to back up its bite. As of now, the NLRA is a gum-filled mouth of stern words, notice-postings, and procedural delays. Only the PRO Act can bring people like David Sebastiao to justice in a timely fashion.