In a unanimous decision issued Friday, the National Labor Relations Board held that henceforth it would order daily compound interest on backpay awards — "deviating" from its long-standing practice of issuing simple interest in unfair labor practice cases.  The 4-0 decision in Jackson Hospital Corporation, 356 NLRB No. 9 (October 22, 2010) explains:

For nearly 50 years, the Board has ordered interest to be paid on backpay awards under the Act. For more than 20 years, a succession of NLRB General Counsels has urged the Board to order compound, rather than simple, interest. The Board has consistently declined to do so—without ever addressing the merits of the issue, except for a preliminary endorsement of daily compounding in a notice of proposed rulemaking issued in 1992, which was withdrawn in 1998. Over the years, Board decisions have deferred a final ruling on the issue of compounding, denying the General Counsel’s request for that remedy, but always leaving open the possibility of a change in policy. Today, we make that change, after full briefing of the issue in response to our invitation. We adopt a policy under which interest on backpay will be compounded on a daily basis, using the established methods for computing backpay and for determining the applicable rate of interest. As we will explain, the daily compounding of interest is used under other comparable legal regimes (including the Internal Revenue Code, which the Board has followed in other respects related to awards of interest), and it will better serve the remedial policies of the National Labor Relations Act.

Back in May, we indicated that we thought this development was coming, pointing out a footnote in San Juan Teachers Assn., 355 NLRB No. 28 (Apr. 30, 2010), which read:

In his exceptions and supporting brief, the General Counsel seeks compound interest computed on a quarterly basis for any backpay or other monetary award. Having duly considered the matter, we are not prepared at this time to deviate from our current practice of assessing simple interest. See, e.g., Cardi Corp., 353 NLRB No. 97, slip op. at 1 fn. 2 (2009); Rogers Corp., 344 NLRB 504, 504 (2005).

Now, after having solicited and considered amicus briefs on the issue from the National Right to Work Legal Defense Foundation, the S.E.I.U., and the AFL-CIO, the Board has decided to do so.

More resources: