Legal Alert: Board Finds ULP Charges Barred by Release in Termination
Agreement

12/18/2007
D. Coker



The National Labor Relations Board (NLRB) recently held that waivers
signed by a group of terminated employees in exchange for enhanced
severance benefits barred unfair labor practice (ULP) charges filed
by a union on behalf of the employees. See BP Amoco Chemical-
Chocolate Bayou, 351 NLRB No. 39 (Sept. 29, 2007). In its 2-1
decision, the Board majority applied the factors it considers in
determining whether a private settlement of a ULP is valid.


The Board majority rejected the dissenting member's opinion that
these factors should not apply where no ULP charge has been filed at
the time the release is executed, noting that whether charges have
been filed may be relevant to the analysis but is not dispositive.


In this case, a group of employees was selected for termination as
part of a reduction in force. At the time they were selected, the
employees were not represented by the union and there was no active
union organizing campaign. In exchange for enhanced severance
benefits, the employees all signed termination agreements in which
they agreed to release all claims arising out of their employment or
termination. The employees were given forty-five days to consider
whether to sign the agreements and had seven days after signing to
revoke them. The employer encouraged all of the employees to consult
with legal counsel before signing the agreements.


Subsequently, the union filed a ULP charge on behalf of the
employees, claiming they were selected for termination because of
their support for the union. The Administrative Law Judge recommended
dismissal of the charges based on the waivers signed by the
employees. The Board majority agreed with the ALJ.


In finding that the employees validly waived their right to file
unfair labor practice charges arising from their terminations, the
Board considered several factors, including:


Whether the parties to the Board case have agreed to be bound, and
the position taken by the General Counsel with regard to settlement;
Whether the settlement is reasonable in light of the violations
alleged, the risks inherent in litigation, and the stage of
litigation;
Whether there has been any fraud, coercion or duress by any party in
reaching settlement; and
Whether the employer has a history of violating the Act or has
previously breached settlement agreements.

In this case, the Board found that the standards set forth above were
met. The employees were all advised that they should consult legal
counsel before signing the releases, and many did so. The Board held
that the employees were aware of the content of the agreements,
advised as to the meaning, and knew that they were releasing claims
against the employer. Thus, the Board found that the employees
intended to be bound by the agreement.


Next, the Board held that the agreements were reasonable in light of
the violations alleged and the litigation risks presented. When the
agreements were signed, no ULP charges had been filed and the
prospect of litigation was not obvious. Additionally, the Board found
that there was a significant risk that a charge alleging
discriminatory selection would not be meritorious because:


Little or no union activity was occurring at the time of the
downsizing;
The record did not show that all of the employees selected for
termination had engaged in protected activity or that the employer
was aware of this;
The selection process was a careful and lengthy one supported by
business justifications;
Many of the employees presented by the General Counsel as witnesses
at the hearing were not supportive of the position of the General
Counsel or the union; and
Many of the terminated employees had work histories that were "less
than pristine."

Thus, the Board found "the termination agreements and attendant
enhanced benefits were a reasonable adjustment in light of the
litigation risks."


Further, the Board found no evidence that the agreements were
fraudulent, that they were signed under duress or the threat of
coercion, or that the employees attempted to revoke the agreements.
The Board pointed out that the employer had encouraged the employees
to consult attorneys, given them time to review and assess the
agreements, and provided them with an opportunity to revoke the
agreements after execution.


The Board also found that the employer did not have a history of
violating the National Labor Relations Act (NLRA).


The Board majority distinguished this situation from prior cases in
which the Board has refused to give effect to private settlement
agreements. In one case, the employer's history of serious violations
of the Act, as well as the opposition of the charging party and
General Counsel to the waiver, weighed against enforcing the waiver
provisions. The Board found that such concerns were not present in
this case. Additionally, the Board has refused to enforce waivers
that include provisions prohibiting employees from providing evidence
to the Board in cases involving other employees. However, the
agreements in this case did not contain such provisions – they only
precluded the claims of the employees who entered into the
agreements.


In consideration of all of these factors, the Board held that the
waivers barred the filing of ULPs on behalf of the employees by the
union.


Employers' Bottom Line:


The Board's decision in BP Amoco is instructive because it
illustrates the factors the Board will consider in determining
whether a waiver or release is enforceable with regard to alleged
violations of the NLRA. In response to this decision, Associate
General Counsel Richard Siegel has issued a memorandum instructing
NLRB regional office personnel to submit to the Division of Advice
all otherwise meritorious cases involving waivers that were executed
before a ULP charge was filed. We will continue to keep you updated
on the status of this issue.