In a departure from long-standing agency policy, NLRB Acting General Counsel issued Memorandum GC 13-2 on January 9, 2013, outlining a modified agency approach that allows front pay in lieu of reinstatement to be included in Board settlements.

Although agreements providing for monetary compensation in exchange for waiver of reinstatement occur routinely among parties in ULP settlements, the agency favors reinstatement as “the preferred means to vindicate statutory rights and restore the status quo after unlawful discrimination.” This pro-reinstatement approach has been evident in agency policies that: (a) refused to allow front pay to be included in Board settlements, requiring instead that parties handle agreements exchanging compensation for reinstatement waivers privately, in separate side arrangements as non-Board agreements and, (b) admonished Regions “not to encourage a waiver or advocate a premium above the make-whole remedy for any purpose whatsoever” during the settlement negotiation process. These policies have reflected the Board’s position that discriminatees need to be protected from being pressured to waive the right to reinstatement.

While reiterating that the agency continues to favor reinstatement as the remedy for unlawful discharge, the AGC acknowledged that, in reality, many discriminatees prefer monetary compensation to reinstatement. In his memo, the AGC stated:

[P]arties and discriminatees are free to negotiate a waiver in return for a monetary amount. In practice, they routinely do so and a significant number of settlements approved by Regions in recent years include payments to discriminatees of greater-than-one-hundred-percent backpay.

Noting that “[a]gency policy should favor Board settlements, not discourage them,” the AGC announced that the Case Handling Manual will be revised to permit front pay in Board settlements. The memorandum also outlines policy revisions that will: (1) require a written waiver in most cases where settlement does not include reinstatement and, (2) clarify the approach the Regions should take when negotiating settlements involving offers of front pay.