In late 2010 and earlier this month, we observed that the NLRB was getting more aggressive in its enforcement of settlement agreements by including onerous "Default" or "Performance" language in some agreements.  This language generally required the employer to agree that in the event of alleged non-compliance with the settlement, all factual allegations in a re-issued Complaint would be deemed admitted.  

Now it’s official. The Acting General Counsel has made this language mandatory. In General Counsel Memorandum No. 11-04 issued last week, Acting GC Lafe Solomon has directed Regional Offices to include the following language in all future settlement agreements:

The Charged Party/Respondent agrees that in case of non-compliance with any of the terms of this Settlement Agreement by the Charged Party/Respondent, and after 14 days notice from the Regional Director of the National Labor Relations Board of such non-compliance without remedy by the Charged Party/Respondent, the Regional Director will [issue/reissue] the [complaint/compliance specification] previously issued on [date] in the instant case(s). Thereafter, the General Counsel may file a motion for summary judgment with the Board on the allegations of the [complaint/compliance specification]. The Charged Party/Respondent understands and agrees that the allegations of the aforementioned [complaint/compliance specification] will be deemed admitted and its Answer to such [complaint/compliance specification] will be considered withdrawn. The only issue that may be raised before the Board is whether the Charged Party/Respondent defaulted on the terms of this Settlement Agreement. The Board may then, without necessity of trial or any other proceeding, find all allegations of the [complaint/compliance specification] to be true and make findings of fact and conclusions of law consistent with those allegations adverse to the Charged Party/Respondent, on all issues raised by the pleadings. The Board may then issue an order providing a full remedy for the violations found as is customary to remedy such violations. The parties further agree that the U.S. Court of Appeals Judgment may be entered enforcing the Board order ex parte.

One might expect that insistence on this language in a settlement agreement would make an employer far less willing to settle a case.  By requiring a waiver of the employer’s rights to defend itself on the substance of the charges, this language puts an employer in a more precarious position after settling than it is in before.  It significantly raises the stakes in a compliance proceeding.

The Board would argue, however, that is the point — that a charged party is more likely to abide strictly to the terms of the settlement agreement, and not risk being charged with non-compliance.  Of course, compliance disputes may be generated by anyone: the Board, individual employees, or a union.  This certainly provides an agitator or a union pursuing an aggressive organizing strategy with an additional potent weapon.

The Board asserts that its review of Regions historically using this language at their discretion have had higher rates of success both settling and litigating cases:

five Regions routinely propose[d], and three of those Regions regularly insist[ed] upon, inclusion of default language in all informal settlement agreements. With a settlement goal of 95%, these five Regions achieved settlement rates in FY 2009 of 96.9, 98.3, 95.6, 96.5 and 93 percent, respectively, and in FY 2010 of 100, 96.2, 94.2, 91.6 and 95.1 percent, respectively. These Regions also achieved litigation “win rates” in FY 2009 of 100, 75, 83.3, 90 and 93.3 percent, respectively, compared to a national rate in FY 2009 of 89.9 percent, and achieved litigation “win rates” in FY 2010 of 100, 100, 87.0, 87.5 and 100 percent, respectively, compared to the national rate in FY 2010 of 91.4 percent.

The Board thus continues its trend of strengthening remedies and enforcement options available to it to enforce the National Labor Relations Act.  We should not expect these developments to end anytime soon.