Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-14-09614/USCOURTS-ca10-14-09614-0/pdf.json

Parties Involved:
Community Health Services, Inc.
Petitioner
National Labor Relations Board
Respondent
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union
Intervenor

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

_________________________________ 

NATIONAL LABOR RELATIONS 

BOARD, 

 Petitioner, 

v. 

COMMUNITY HEALTH SERVICES, 

INC., d/b/a Mimbres Memorial Hospital 

and Nursing Home, 

 Respondent. 

------------------------------ 

UNITED STEEL, PAPER AND 

FORESTRY, RUBBER, 

MANUFACTURING, ENERGY, ALLIED 

INDUSTRIAL AND SERVICE 

WORKERS INTERNATIONAL UNION, 

 Intervenor. 

No. 14-9614 

_________________________________ 

Appeal from the National Labor Relations Board 

(NLRB No. 28-CA-016762)

_________________________________ 

Kaitlin Kaseta, Charleston, South Carolina (Bryan T. Carmody, Carmody & Carmody 

LLP, Glastonbury, Connecticut, on the briefs), for Respondent. 

Milakshmi V. Rajapakse, Attorney (Robert J. Englehart, Supervisory Attorney, 

Richard F. Griffin, Jr., General Counsel, Jennifer Abruzzo, Deputy General Counsel, 

John H. Ferguson, Associate General Counsel, and Linda Dreeben, Deputy Associate 

General Counsel, with her on the briefs), National Labor Relations Board, Washington, 

D.C., for Petitioner. 

_________________________________ 

FILED 

United States Court of Appeals

Tenth Circuit 

January 20, 2016

Elisabeth A. Shumaker 

Clerk of Court

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Before TYMKOVICH, Chief Judge, GORSUCH, and McHUGH, Circuit Judges. 

_________________________________ 

McHUGH, Circuit Judge. 

_________________________________ 

I. INTRODUCTION 

This challenge to the National Labor Relations Board’s (the Board) petition for 

enforcement questions whether the Board may disregard interim earnings when 

calculating backpay awards for employees whose labor injury falls short of unlawful 

termination. Respondent Mimbres Memorial Hospital and Nursing Home (the 

Hospital) argues the Board failed to provide adequate support for its decision to 

disregard interim earnings and therefore requests that we reverse the Board’s backpay 

calculation. We defer to the Board’s policy-based rationale in support of its remedial 

decision and affirm and enforce its order. 

II. BACKGROUND 

A. The Unfair Labor Practice Allegations and Proceedings 

The complicated procedural history of this case stems from the Hospital’s 

1999 decision to reduce the hours of its full-time, respiratory-department employees. 

Cmty. Health Servs., Inc., 342 N.L.R.B. 398, 400–02 (2004). As a result of this 

reduction in hours, the United Steelworkers of America, District 12, Subdistrict 2, 

AFL-CIO, a union representing respiratory-department employees under an exclusive 

collective bargaining agreement, filed charges against the Hospital on behalf of the 

impacted employees. Based on these allegations, the Board’s General Counsel filed a 

complaint with the Board, asserting the Hospital had violated § 8(a)(1), (5) of the 

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National Labor Relations Act (the Act or NLRA), 29 U.S.C. § 158. The Board 

ultimately agreed and ordered the Hospital to “make whole any employee for any 

loss of earnings and other benefits suffered as a result of its unlawful actions.” Cmty. 

Health Servs., Inc., 342 N.L.R.B. at 404. On petition for review in this court, we 

enforced the Board’s order in whole. NLRB v. Cmty. Health Servs., Inc., 483 F.3d 

683 (10th Cir. 2007). 

B. The Compliance Proceedings 

The case proceeded to the compliance phase, where an administrative law 

judge (ALJ) determined the Hospital owed thirteen current and former employees 

approximately $105,000 in backpay. Cmty. Health Servs., Inc., No. 28-CA-16762, 

2010 WL 3285384 (N.L.R.B. Div. of Judges July 28, 2010). In arriving at this 

amount, the ALJ rejected the Hospital’s argument that any income an employee had 

earned from secondary employment during the backpay period—i.e., interim 

earnings—should be deducted from that employee’s backpay calculation. Id. 

In reaching that conclusion, the ALJ applied a backpay formula the Board first 

pronounced in Ogle Protection Services, Inc., 183 N.L.R.B. 682 (1970). In Ogle, the 

Board determined that interim earnings should not be deducted from backpay awards 

when the underlying violation is something other than wrongful termination of 

employment. 138 N.L.R.B. at 683. The Board in Ogle apparently presumed that 

employees who remain employed by the wrongdoing employer will not make interim 

earnings. Id. Here, the ALJ determined that application of the Ogle formula was 

appropriate because to hold otherwise “would have the effect of imposing a duty on 

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employee victims of an unfair labor practice to moonlight in order to minimize the 

impact of the unlawful conduct for the benefit of the wrongdoer.” Cmty. Health 

Servs., 2010 WL 3285384. 

The Hospital filed exceptions and supporting briefs to the Board, challenging 

the ALJ’s decision. But in its Compliance Order, the Board affirmed the ALJ’s 

rulings, findings, and conclusions. Cmty. Health Servs., Inc., 356 N.L.R.B. No. 103, 

slip op. at *18 (Feb. 28, 2011). 

The Hospital next petitioned the United States Court of Appeals for the 

District of Columbia1

 for review of the Board’s Compliance Order. Deming Hosp. 

Corp. v. NLRB, 665 F.3d 196 (D.C. Cir. 2011). The D.C. Circuit rejected the Board’s 

interpretation of Ogle and the Board’s concern that deducting interim earnings would 

impose a duty to moonlight on the victims of wrongful hour reductions. Id. at 200. 

The circuit court further explained that the Compliance Order conflated two distinct 

concepts: an employee’s duty to mitigate (which is nonexistent when there is no 

cessation of employment) and the “rules governing when backpay should be reduced 

by interim earnings.” Id. 

The D.C. Circuit also noted that, since Ogle, the Board had been inconsistent 

in its approach to calculating backpay in the absence of a cessation of employment. 

Id. at 201. In light of this unclear precedent, the court ruled the Board had not 

 1

 Under 29 U.S.C. § 160(f), a party “aggrieved by a final order of the Board” 

may obtain review of the order “in any United States court of appeals in the circuit 

wherein the unfair labor practice in question was alleged to have been engaged in or 

wherein such person resides or transacts business, or in the United States Court of 

Appeals for the District of Columbia.” 

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adequately explained its rationale for refusing to consider interim earnings here. It 

therefore remanded the Compliance Order “for a more thorough analysis of the 

issue.” Id. 

On remand, the Board issued a Supplemental Order reaffirming its original 

ruling. Cmty. Health Servs., Inc., 361 N.L.R.B. No. 25, slip op. (Aug. 25, 2014). The 

Board identified the sole issue on remand as “whether the Board should deduct an 

employee’s interim earnings from other employment when calculating backpay in 

cases where the employee suffers no cessation of employment with the wrongdoing 

respondent-employer and has no duty to mitigate by seeking interim employment” 

and concluded that “the deduction of interim earnings in this situation would not best 

effectuate statutory policy.” Id. at *1. In reaffirming its prior conclusion, the Board 

provided five new policy justifications for its choice of remedy. Specifically, the 

Board explained that declining to deduct interim earnings where there is no cessation 

of employment (1) encourages employment and production, (2) is more consistent 

with the Board’s policy of not deducting interim earnings obtained from work 

performed above and beyond an employee’s duty to mitigate, (3) better accounts for 

the hardships that arise when taking on secondary employment, (4) discourages 

employers from engaging in dilatory conduct such as delaying compliance with an 

order to rescind unfair labor practices, and (5) prevents a windfall to the wrongdoing 

employer. Id. at *7–*9. Although the Board acknowledged the existence of some 

inconsistent precedent on this issue, it argued that the cases in which it 

“inadvertently” deducted interim earnings from backpay calculations “represent a 

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tiny fraction of the hundreds of cases” in which the Board declined to deduct the 

interim earnings of employees whose injuries fall short of unlawful termination. Id. at 

*7. Based on these considerations, the Board reaffirmed its prior backpay order, 

concluding that “important statutory policies strongly support a practice of declining 

to deduct interim earnings when applying the Ogle Protection Service backpay 

formula for cases involving economic loss but no cessation of employment.” Id. at 

*9. 

Next, General Counsel filed an application in this court for enforcement of the 

Board’s decision, and the Hospital responded in opposition. We exercise jurisdiction 

under 29 U.S.C. § 160(e), (f). 

III. DISCUSSION 

On this petition for enforcement, we are asked to determine whether the Board 

provided sufficient support for its decision to exclude interim earnings from backpay 

calculations when the employer has wrongfully reduced employee hours, but not 

terminated employment. The Hospital contends the Board’s Supplemental Order is 

inadequate, arguing the Board’s reliance on Ogle Protection Service, Inc., 183 

N.L.R.B. 682 (1970), is flawed and its policy justifications are unfounded. General 

Counsel contends the Board selected a reasonable remedy that is in line with the 

policies underlying the NLRA. 

The Board’s power to award backpay arises under §10(c) of the NLRA, which 

permits the Board to “take such affirmative action including reinstatement of 

employees with or without back pay, as will effectuate the policies of [the Act].” 

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29 U.S.C. § 160(c). Because a backpay award is “only an approximation,” the Board 

“has considerable discretion in selecting a method reasonably designed to 

approximate the amount of pay” due to a wronged employee. NLRB v. Velocity 

Express, Inc., 434 F.3d 1198, 1202 (10th Cir. 2006) (internal quotation marks 

omitted). On review of a backpay order, our task is narrow. See id. (“The NLRB’s 

power to order backpay is a broad, discretionary one, ‘subject to limited judicial 

review.’” (quoting Fibreboard Corp. v. N.L.R.B., 379 U.S. 203, 216 (1964))). We 

will not disturb the Board’s remedial decision unless it is “arbitrary or unreasonable,” 

or, in other words, “is a patent attempt to achieve ends other than those which can 

fairly be said to effectuate the policies of the NLRA.” Id. (brackets and internal 

quotation marks omitted). 

It is through this deferential lens that we assess the Hospital’s opposition to the 

Board’s Supplemental Order. We first review the Board’s interpretation of Ogle and 

its progeny, and we then turn to the Hospital’s criticism of the Board’s policy 

justifications. 

A. The Supplemental Order Properly Interpreted Ogle

To properly assess the Board’s application of its decision in Ogle, we begin by 

explaining the Board’s historical approach to two underlying concepts: the duty to 

mitigate and the calculation of backpay awards. 

1. Board Precedent Regarding the Duty to Mitigate and Backpay Calculations 

First, we consider the duty to mitigate. Under longstanding Board and 

Supreme Court precedent, employees who believe they have been unlawfully 

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terminated have a duty to seek out substitute employment while they await a Board 

decision on that issue. Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 199–200 (1941) 

(recognizing the Board’s power to “give appropriate weight to a clearly unjustifiable 

refusal to take desirable new employment” when calculating backpay). Although the 

Board and courts frequently refer to this obligation as a duty to mitigate, the term is 

somewhat of a misnomer because the motivation for the obligation is more “the 

healthy policy of promoting production and employment” than “the minimization of 

damages.” Id. 

Where unlawfully terminated employees are under an obligation to seek work, 

the policy holds that backpay calculations logically should include a deduction for 

interim earnings. Without such a deduction, employees who are willing to bet on the 

outcome of the claims against the former employer or whose short-term financial 

needs are minimal would have little incentive to comply with their mitigation 

obligation. Instead, they could wait for a favorable decision from the Board to make 

them whole. The duty to seek interim employment gives these employees an 

incentive to remain productive during the period the claims against the former 

employer are unresolved. 

Conversely, employees who are not unlawfully terminated but suffer other 

labor injuries—e.g., reduction in hours or wage—have no duty to seek secondary 

employment pending a decision on their unfair labor practices claim. See 88 Transit 

Lines, Inc., 314 N.L.R.B. 324, 325 (1994) (explaining that employees who are not 

discharged are not required “as part of any mitigation obligation, to obtain additional 

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replacement work from some other employer during the backpay period”). But some 

employees who are unable to wait for the outcome of an NLRB action will make up 

the lost hours with supplemental work despite the lack of any legal duty to do so. The 

fact that employees who have no duty to seek secondary employment may 

nevertheless do so raises the question of whether the Board should account for such 

interim earnings when calculating a backpay award. 

The Board’s two seminal backpay decisions—F.W. Woolworth, Co., 90 

N.L.R.B. 289 (1950), and Ogle Protection Service, Inc., 183 N.L.R.B. 682 (1970)—

do not squarely address this issue. In Woolworth, the Board sought a method of 

curtailing employers’ incentive to delay reinstating wrongfully terminated 

employees.2

 Because the wrongfully terminated employee has a duty to seek interim 

employment, the longer the employer waited to reinstate the injured employee, “the 

greater would be the reduction in back-pay liability,” and the greater the likelihood 

the employee would find higher paying employment and reject an offer of 

reinstatement. Woolworth, 90 N.L.R.B. at 292. Woolworth remedied this problem by 

instituting a quarterly backpay formula, through which the Board subtracts the 

employees’ interim earnings in each quarter from what the employees would have 

 2

 Before the Board decided F.W. Woolworth, Co., 90 N.L.R.B. 289 (1950), it 

calculated backpay “by subtracting what an employee actually earned during the 

entire backpay period from what she would have earned during that period had the 

unlawful action not occurred.” Deming Hosp. Corp. v. NLRB, 665 F.3d 196, 199 

(D.C. Cir. 2011); see also Pennsylvania Greyhound Lines, Inc., 1 NLRB 1, 51 (1935) 

(calculating a backpay award by determining what the employee would have earned 

from the noncompliant employer during the backpay period, “less the amount which 

each [employee] earned subsequent to discharge”). 

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earned from the wrongdoing employer during that same quarter, had they not been 

terminated. Id. at 292–93. Under this formula, interim earnings made in prior quarters 

have no impact on the backpay calculation for subsequent quarters, and vice versa. 

For example, if an employee suffered lost pay before securing interim employment, 

the employer could not avoid paying that amount based on the employee’s success in 

finding a higher paying job in a subsequent quarter. 

Ogle, on the other hand, involved employees who had not been unlawfully 

terminated, and thus had no duty to mitigate, but who were otherwise injured when 

their employer repudiated the terms of a collective bargaining agreement. 183 

N.L.R.B. at 683. In Ogle, the Board concluded that Woolworth’s “quarterly 

computation is unnecessary and unwarranted” in cases that do not “involve cessation 

of employment status or interim earnings that would in the course of time reduce 

backpay.” Id. The Board therefore held that the Woolworth formula is not applicable 

where there is no cessation of employment, apparently failing to anticipate that 

employees who are not terminated may nonetheless be motivated to seek secondary 

employment if, for example, the employer’s unfair labor practices result in reduced 

wages or hours. As a result, the Board did not clearly address in Ogle whether 

backpay awards should be reduced by interim earnings in cases where there is no 

cessation of employment and therefore no duty to mitigate.3

 3

 In creating the exception to the Woolworth formula, the Board in Ogle 

explained that a quarterly computation is unnecessary for “a violation of the Act 

which does not involve cessation of employment status or interim earnings that 

would in the course of time reduce backpay.” Ogle Prot. Serv., Inc., 183 N.L.R.B. 

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2. The Board’s Assessment of Ogle in the Supplemental Order 

With this backdrop in mind, we turn to the Board’s discussion of Ogle in its 

Supplemental Order. The Board acknowledged that “the literal language of Ogle

Protection Service does not compel the conclusion that interim earnings, where 

proven, should not be deducted in cases where there is no job loss.” Cmty. Health 

Servs., Inc., 361 N.L.R.B. No. 25, slip op. at *7 (Aug. 25, 2014). The Board also 

recognized that in at least six of its prior decisions, it allowed for the deduction of 

interim earnings where there was no cessation of employment. Id. at *6 (citing to 

Atlantis Health Care Group (P.R.) Inc., 356 N.L.R.B. No. 26, slip op. at *1 (Nov. 15, 

2010); Willamette Industries, 341 N.L.R.B. 560, 564–565 (2004); Quality House of 

Graphics, 336 N.L.R.B. 497, 516–517 (2001); Ironton Publications, 313 N.L.R.B. 

1208, 1208 n. 4 (1994); Consumers Asphalt Co., 295 N.L.R.B. 749, 752 (1989); and 

Ford Bros., 284 N.L.R.B. 211, 211–12 (1987)). But the Board indicated that any 

reference to the deduction of interim earnings in these cases was “inadvertently 

 

682, 683 (1970) (emphasis added). Thus, Ogle could be limited to cases where there 

is neither a cessation of employment nor interim earnings. Under this reading, when 

an employee makes interim earnings during the backpay period, the Woolworth 

formula would apply irrespective of whether there has been a cessation of 

employment. But the Hospital has not advanced this reading. Instead, the Hospital, 

the Board, and the D.C. Circuit all agree that Ogle does not clearly address the 

present issue. And even if it did, the Board is free to reconsider its position with the 

benefit of specific facts, so long as the new remedy aligns with the NLRA’s 

underlying policies. NLRB v. Curtin Matheson Scientific, Inc., 494 U.S. 775, 787 

(1990) (“[A] Board rule is entitled to deference even if it represents a departure from 

the Board’s prior policy.”). 

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mistaken, rather than intentional” and that they “represent a tiny fraction of the 

hundreds in which Ogle Protection Service has been correctly cited and applied.” Id.

at *7. Notwithstanding these cases to the contrary, the Board expressed that its 

general policy “has been to preclude the deduction of interim earnings from other 

jobs when applying Ogle Protection Service to remedy employees’ monetary losses 

where there is no cessation of employment and attendant duty to mitigate damages.” 

Id. 

The Hospital takes issue with the Board’s analysis of Ogle and its progeny, 

contending the Board was merely speculating when it described the decisions in 

which it deducted interim earnings, despite no cessation of employment, as 

“inadvertently mistaken.” Instead, the Hospital argues these decisions demonstrate 

that, until now, the Board has never expressly declined to deduct interim earnings in 

cases that do not involve a cessation of employment, and at best, the Board has been 

inconsistent in its approach to backpay calculations in such cases. 

We agree with the Hospital that the Board’s precedent has been unclear. But in 

its Supplemental Order, the Board acknowledges this inconsistency and the need to 

adopt a consistent approach for future cases.4

 Thus, while the Board did not 

 4

 Although inconsistent guidance from the Board could raise fair notice 

concerns, the Hospital has not made a fair notice argument in the proceedings before 

the Board, or in its appellate briefing. We therefore lack the power to consider this 

issue. 29 U.S.C. § 160(e) (“No objection that has not been urged before the Board, its 

member, agent, or agency, shall be considered by the court, unless the failure or 

neglect to urge such objection shall be excused because of extraordinary 

circumstances.”); Woelke & Romero Framing, Inc. v. NLRB, 456 U.S. 645, 665 

(1982) (concluding that § 160(e) deprives appellate courts of jurisdiction to consider 

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sufficiently address its inconsistent precedent in the original Compliance Order, we 

are satisfied that in its Supplemental Order, the Board adequately acknowledged its 

anomalous decisions and correctly characterized Ogle and its progeny. We therefore 

reject the Hospital’s invitation to overturn the Supplemental Order based on the 

Board’s Ogle analysis. 

B. The Board’s Policy Justifications Were Reasonable 

We turn next to the Board’s policy justifications for concluding that interim 

earnings should not be deducted from backpay awards when there has been no 

cessation of employment.5

 Because of the deference we owe to the Board’s remedial 

 

issues “not raised during the proceedings before the Board”); see also Davis v. 

McCollum, 798 F.3d 1317, 1320 (10th Cir. 2015) (“[Appellant] waived any potential 

challenge to that conclusion by failing to address it in his opening brief on appeal.”). 

5

 As to the breadth of the Board’s Supplemental Order, we interpret it as 

declining to deduct any interim earnings, regardless of their source. Thus, interim 

earnings made from a new second job are treated the same as those made from 

increased hours at a preexisting second job. We acknowledge the NLRB’s 

Casehandling Manual lends some support for distinguishing between interim earnings 

an employee makes by increasing hours at a preexisting second job from those made 

at a new second job. See N.L.R.B. Casehandling Manual, pt. 3, § 10554.4 (2014), 

https://www.nlrb.gov/reports-guidance/manuals. Specifically, section 10554.4 

indicates that if an employee “held a second job prior to the unlawful action and then 

increased the hours of employment at that job during the backpay period, earnings 

derived from the increase in hours are deductible interim earnings.” But we interpret 

the Board’s decision here as limiting the applicability of section 10554.4 and all 

other rules regulating interim-earnings calculations to cases involving a cessation of 

employment. The Casehandling Manual itself has signaled as much, noting in its 

overview of the Interim Earnings section that “In Community Health Services, Inc., 

d/b/a Mimbres Memorial Hospital, 361 NLRB No. 25 (2014), the Board held that it 

would ‘declin[e] to deduct interim earnings when applying the Ogle Protection 

Service backpay formula for cases involving economic loss but no cessation of 

employment.’” Id. § 10550.1 (alterations in original) (footnote omitted). Therefore, 

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decision, our limited role is to determine whether the Board’s policy justifications 

represent “a patent attempt to achieve ends other than those which can fairly be said 

to effectuate the policies of the NLRA.” NLRB v. Velocity Express, Inc., 434 F.3d 

1198, 1202 (10th Cir. 2006) (brackets and internal quotation marks omitted). These 

policies include “the promotion of industrial peace, the prevention of unfair labor 

practices and protection for victimized employees.” Dayton Tire & Rubber Co. v. 

NLRB, 591 F.2d 566, 570 (10th Cir. 1979); see also Nathanson v. NLRB, 344 U.S. 

25, 27 (1952) (“A back pay order is a reparation order designed to vindicate the 

public policy of the statute by making the employees whole for losses suffered on 

account of an unfair labor practice.”); 29 U.S.C. § 151 (declaring the policies of the 

NLRA). In its Supplemental Order, the Board described five policy reasons for its 

decision. We address each rationale in turn to determine whether it fairly aligns with 

the policies of the NLRA. 

1. Encouraging Production and Employment 

First, the Board reasoned that deducting interim earnings from backpay 

calculations in this context would discourage production and employment by making 

employees who seek additional work no better off than their counterparts who remain 

underemployed. Cmty. Health Servs., Inc., 361 N.L.R.B. No. 25, at *7. As the Board 

noted, “by declining to deduct interim earnings absent a cessation of employment, we 

 

while section 10554.4 remains in force for all cessation cases, the Board has clarified 

that it is inapplicable in cases like this one because interim earnings from any source 

are no longer relevant. 

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offer employees a greater incentive to voluntarily seek interim employment, thereby 

affirmatively promoting production and employment.” Id. (internal quotation marks 

omitted). In support of its reasoning, the Board turned to Phelps Dodge Corp. v. 

NLRB, in which the Supreme Court relied on the same underlying policy to justify 

the imposition of a duty to mitigate and the deduction of interim earnings, including 

amounts “which the workers ‘failed without excuse to earn,’” where there has been 

an unlawful cessation of employment. 313 U.S. 177, 200 (1941). 

Although it is seemingly counterintuitive to use the rationale underlying the 

duty to mitigate in cases where no such duty exists, the goal of promoting production 

and employment is advanced in both instances. In wrongful termination cases, 

employees know their backpay award will be reduced by imputed interim earnings if 

they breach their duty to mitigate and are motivated to seek actual employment. 

Likewise, where the violation does not involve the cessation of employment, 

employees who have no duty to mitigate will be encouraged to seek supplemental 

employment if they can retain the benefit of that effort. Although the extent to which 

productivity is impacted is greater in a termination case, we are not convinced the 

Board’s reliance on this rationale in a case where there is no cessation of employment 

constitutes a patent attempt to achieve ends contrary to those that can be said to fairly 

effectuate the goals of the NLRA. This is so even though promoting production is not 

one of the NLRA’s express policy objectives because, as the Supreme Court stated in 

Phelps Dodge Corp., “[t]his consideration in no way weakens the enforcement of the 

policies of the Act.” Id.

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2. Rewarding “Extra Effort” 

Second, the Board posited that declining to deduct interim earnings in this 

situation is more consistent with its backpay calculations in other contexts. Cmty. 

Health Servs., Inc., 361 N.L.R.B. No. 25, at *7. Specifically, the Board analogized 

employees who have a duty to mitigate but go above and beyond that duty with 

employees who have no mitigation duty but nonetheless obtain additional work. 

Under established Board policy, employees who perform more work than required 

are entitled to retain the benefit of such “extra effort.” See N.L.R.B. Casehandling 

Manual, pt. 3, § 10554.3 (2014), https://www.nlrb.gov/reports-guidance/manuals, 

(explaining in the context of employees who have a duty to mitigate, “only interim 

earnings based on the same number of hours as would have been available at the 

gross employer should be offset against gross backpay”). Through this policy, the 

Board rewards the employees who do more than is required, rather than the 

wrongdoing employer. See In re Center Constr. Co., 355 N.L.R.B. 1218, 1221 

(2010) (“[I]f a diligent backpay claimant chooses to work additional overtime during 

interim employment it should operate to his advantage not that of the employer 

required to make him whole for a discriminatory discharge.”); EDP Med. Comput. 

Sys., 293 N.L.R.B. 857, 858 (1989) (“A backpay claimant who chooses to do the 

extra work and earn the added income made available on the interim job may not be 

penalized by having those extra earnings deducted from the gross backpay owed by 

the Respondent.” (internal quotation marks omitted)). The Board reasoned it should 

similarly reward employees who take on additional work in the absence of any 

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obligation to do so by not deducting the interim earnings that result from their extra 

efforts. Id. 

The Hospital challenges this policy justification by advancing a different 

definition of “extra effort.” In contrast with the Board’s definition, which equates 

extra effort with any work employees perform beyond their legal obligation, the 

Hospital would define extra effort as work employees perform beyond what they 

would have done for the noncompliant employer. In this case, for example, the 

Hospital unlawfully reduced its respiratory-department employees’ hours from forty 

hours to between thirty-six and thirty-two per week. Under the Hospital’s definition, 

“extra effort” would mean any work employees completed for a secondary employer 

during the backpay period that exceeded the four to eight hours per week necessary 

to meet a forty-hour work week.6

 

Although the Board could have adopted either version, we will uphold its 

definition of extra effort for purposes of fashioning an appropriate remedy unless the 

choice conflicts with the policies of the NLRA. We see no such conflict here. 

3. Accounting for Additional Hardships 

Third, the Board justified its decision to ignore interim earnings through its 

observation that an employee who seeks work from a secondary employer generally 

suffers additional hardships, “such as resolving scheduling conflicts between the two 

jobs and traveling to a second workplace.” Cmty. Health Servs., 361 N.L.R.B. No. 25 

 6

 The Hospital would exclude earnings made from secondary work the 

employee held prior to the Hospital’s unlawful action. 

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at *8. By allowing the employee to retain the benefit of undertaking these hardships, 

the Board’s policy “acknowledge[s] these practical considerations and encourage[s] 

employees to address their financial situations contemporaneously.” Id. 

The Board could have conceivably accounted for some of these hardships by 

requiring the wrongdoing employer to reimburse its employees for the costs 

associated with working a second job, such as travel expenses. See Crossett Lumber 

Co., 8 NLRB 440, 497 (1938) (discussing reimbursement for travel expenses in the 

context of wrongfully terminated employees who found new employment). But not 

all hardships an employee suffers when juggling two jobs are so tangible. For 

example, it would be impractical, if not impossible, to ascribe a dollar amount to the 

difficulties associated with resolving scheduling conflicts or accommodating the 

demands of two employers. See Cmty. Health Servs., Inc., 361 NLRB No. 25 at *8 

(“[T]he employee whose hours or wages have been unlawfully reduced continues to 

work for the wrongdoing employer and must adjust any outside employment hours to 

accommodate that employer’s demands.”). Therefore, by declining to deduct interim 

earnings from backpay awards in this context, the Board’s decision better addresses 

these intangible hardships. 

The Hospital does not disagree that employees who work a second job while 

remaining employed by the wrongdoing employer may face these added obstacles. 

But it nonetheless challenges the Board’s reliance on this rationale because General 

Counsel put forth no evidence of any additional hardships the employees actually 

suffered in this case. But we are not convinced General Counsel was required to 

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19 

introduce such evidence or that the Board needed to make specific findings on this 

issue. The Board articulated a general policy that will apply beyond the facts of this 

case. In doing so, “the Board is not confined to the record of a particular 

proceeding.” NLRB v. Seven-Up Bottling Co. of Miami, 344 U.S. 344, 349 (1953). 

Rather, the Board may rely on its “[c]umulative experience,” which “begets 

understanding and insight by which judgments not objectively demonstrable are 

validated or qualified or invalidated.” Id. 

When applying its general remedial policy to the facts of this case, the Board 

was required to consider any unique circumstances that would make the remedy’s 

“application to [the] particular situation oppressive and therefore not calculated to 

effectuate a policy of the Act.” Id. But the Hospital, not General Counsel, had the 

burden of putting forth evidence demonstrating the existence of unique 

circumstances. See Velocity Express, 434 F.3d at 1203 (“[Respondent] had the burden 

of proof on mitigation of its backpay obligation.”); Hansen Bros. Enters., 313 

N.L.R.B. 599, 600 (1993) (“[T]he Respondent had the burden of showing why any 

modifications should be made to the amounts set forth in the backpay 

specification.”). Although the Hospital contends it was deprived of an opportunity to 

discover any such evidence, its discovery requests in the NLRB proceedings 

pertained only to general evidence regarding the affected employees’ interim 

earnings. The Hospital never requested discovery regarding whether any of those 

employees who made interim earnings suffered added hardships. Moreover, even if 

the Hospital had put forward evidence demonstrating the added-hardships rationale 

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20 

does not apply to all of the affected employees here, the other justifications for the 

Board’s policy decision would remain intact. The Board therefore acted reasonably in 

fashioning a remedy based on its cumulative experience that employees who take on 

secondary employment will generally confront added hardships. 

4. Preventing Dilatory Conduct

Fourth, the Board explained that the potential for an employer to engage in 

dilatory conduct similar to that which prompted it to adopt the Woolworth formula is 

present when an employer unlawfully reduces hours or wages. Cmty. Health Servs., 

361 N.L.R.B. No. 25 at *9. The Board reasoned that deducting interim earnings from 

a backpay calculation would create an incentive for wrongdoing employers to delay 

rescinding their unlawful conduct, “knowing that the longer an employee worked a 

second job, the greater could be the reduction in backpay owed.” Id. The Board 

explained that declining to deduct interim earnings in this context has the same 

deterrent effect as the quarterly computation has in the context of an unlawful 

termination. Id.

The Hospital acknowledges the Board’s remedy would have this deterrent 

effect, but argues the Board could simply have applied the Woolworth formula in this 

context to achieve the same result. But so long as the Board provides reasonable 

support for its selection of remedies and its rationale aligns with the policies of the 

Act, we will not second guess the Board’s choice. Velocity Express, 434 F.3d at 

1202. Thus, although the Board could have adopted the Woolworth formula in 

noncessation cases and reduced back pay awards by quarter based on interim 

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21 

earnings, it was not required to do so. Where the remedy chosen by the Board does 

not conflict with the goals of the NLRA, we defer to the Board’s decision. 

5. Allocating Windfalls 

Finally, the Board considered the benefits conferred on the employer and 

employee by the alternative approaches to calculating backpay under the present 

circumstances. On the one hand, the Board concluded that deducting interim earnings 

when an employee has no obligation to seek additional work “would represent an 

unwarranted windfall to the employer and discourage compliance with the law.” 

Cmty. Health Servs., 361 N.L.R.B. No. 25, at *8. Alternatively, however, if interim 

earnings are not deducted, the Board acknowledged that the employee may enjoy a 

windfall by collecting backpay and interim wages that total more than the employee 

would have earned in the absence of a violation. The Board ultimately concluded that 

where one of the parties will obtain a windfall, it is more appropriate for it to be the 

employee whose extra effort resulted in the interim earnings, rather than the 

recalcitrant employer. See United Aircraft Corp., 204 N.L.R.B. 1068, 1073 (1989)

(explaining that the Board is not concerned if an employee is made “more than 

‘whole’” as a result of “extra effort”). Thus, in selecting between two imperfect 

remedies, the Board expressed its preference for the one that requires the employer to 

pay the full amount of backpay, while permitting the employees to retain the benefit 

of their extra effort. The Board concluded this was preferable to adopting a remedy 

that would reduce the wrongdoing employer’s liability while treating the industrious 

employees no better than those who do nothing. 

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22 

And we cannot agree with the Hospital’s argument that the potential for a 

windfall to the employee makes the Board’s remedy punitive and therefore 

impermissible. See Republic Steel Corp. v. NLRB, 311 U.S. 7, 12 (1940) (“[T]he 

[Board’s] power to command affirmative action is remedial, not punitive.”). Under 

the Board’s remedy, the Hospital is not required “to do more than make [the 

employees] whole for the loss of earnings suffered as a result of [their] unlawful 

[reduction in hours].” United Aircraft Corp., 204 N.L.R.B. at 1073. The interim 

earnings are unrelated to the loss of earnings caused by the employer’s wrongdoing. 

Instead, those earnings are the result of the employees’ extra effort in working a 

second job, despite no obligation to do so. Thus it is the employees, not the 

employer, who make themselves more than whole. The Board’s remedy does not 

require the Hospital to pay more than the extent of the injury it caused and does not 

impose a fine or other penal consequence. It is therefore not impermissibly punitive. 

In summary, the Board provided reasonable justifications for declining to 

deduct interim earnings in cases where there is no cessation of employment. 

Although other reasonable remedies undoubtedly exist, so long as the Board’s 

selected remedy is not contrary to the policies of the NLRA, we must defer to its 

remedial choice. 

IV. CONCLUSION 

For the reasons explained above, we affirm and enforce the Board’s 

Supplemental Order. 

Appellate Case: 14-9614 Document: 01019557275 Date Filed: 01/20/2016 Page: 22 
No. 14-9614, NLRB v. Community Health Services, Inc.

GORSUCH, Circuit Judge, dissenting.

The NLRB’s order effectively seeks to adopt a new rule governing the

calculation of backpay in cases where a collective bargaining employer

unlawfully reduces the hours of unionized employees. There can, of course, be

no doubt that Congress has invested the Board with considerable power to shape

labor relations in this country and to provide remedies like backpay in response to

employer misconduct. But in our legal order federal agencies must take care to

respect the boundaries of their congressional charters. They may not treat

similarly situated classes of persons differently without a rational explanation. 

And they may not depart from their own existing rules and precedents without a

persuasive explanation. See, e.g., Motor Vehicle Mfrs. Ass’n v. State Farm Mut.

Auto. Ins. Co., 463 U.S. 29 (1983). Respectfully, I believe the NLRB’s new rule

fails to abide each of these settled legal principles and, in that way, seeks to make

new law unlawfully.

Since 1935 Congress has tasked the Board with the job of “eliminat[ing]

the causes of certain substantial obstructions to the free flow of commerce” by

promoting collective bargaining. 29 U.S.C. § 151. In aid of that expansive

charge, Congress has endowed the Board with considerable remedial authority. If

and when it should find that an employer subject to its jurisdiction has engaged in

an unlawful labor practice, the Board may issue an order “requiring such person

to cease and desist from such unfair labor practice, and to take such affirmative

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action including reinstatement of employees with or without backpay, as will

effectuate the policies” of the Act. 29 U.S.C. § 160(c). 

Over the last eighty years, the Board has developed a finely reticulated set

of rules aimed at implementing these statutory directives. Of special relevance in

this case about backpay, the Board has held that when an employer unlawfully

fires an employee or reduces her hours the employer must pay all the wages the

employee lost as a result. N.L.R.B. Casehandling Manual, pt. 3, § 10536.1. At

the same time, this general rule sometimes yields to more specific ones in order to

avoid over- or under-compensating the employee. So, for example, after an

unlawful labor action an employee may find a new job or increase her hours at a

pre-existing second job and in that way replace some or all of her lost wages. 

Allowing the employee in these circumstances to keep both her “interim earnings”

and a full backpay award would mean she’d be paid twice for the same hours,

leaving her better off than she would have been but-for the employer’s

misconduct. To avoid this sort of “windfall” the Board has, from its first order

and still to this day, generally deducted interim earnings from its backpay awards. 

In re Pa. Greyhound Lines, Inc., 1 N.L.R.B. 1 (1935); N.L.R.B. Casehandling

Manual, pt. 3, § 10554. Indeed, if the employer can prove the employee could’ve

found a second job after being unlawfully fired but unreasonably refused the

work, the employee’s intentionally forgone interim earnings may also be deducted

from a backpay award. N.L.R.B. Casehandling Manual, pt. 3, § 10558.1. At the

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same time, though, if the employee incurs costs in finding or retaining a second

job thanks to the employer’s misconduct, those costs are fully compensable. Id.

§ 10555. And if in the second job the employee takes on “extra work” —

working hours beyond those she would otherwise have spent with the wrongdoing

employer — compensation for that extra work remains hers and isn’t used to

offset any backpay award. Id. § 10554.3. All of these additions and subtractions

share the common aim of ensuring that a backpay award restores the employee to

the same position she would’ve enjoyed but-for the employer’s misconduct,

without a windfall accruing to either employer or employee.

Now eighty years on, the Board seeks to carve out a class of cases from its

tested and pretty ancient backpay procedures. When the employer unlawfully

reduces the employee’s hours to zero (termination cases), the Board says it will

continue to employ its traditional backpay rules. But when the employer

unlawfully reduces the employee’s hours to anything short of zero (hoursreduction cases), the Board now says it will never, under any circumstances,

deduct interim earnings from a backpay award. Thus treating cases that seem to

differ mostly in degree as different in kind.

The hospital-employer in our case first challenged the Board’s new carveout rule for hours-reduction cases in the D.C. Circuit. There the Board tried to

suggest that its new rule wasn’t really anything new at all but compelled by an

existing administrative decision, Ogle Protection Service, Inc., 183 N.L.R.B. 682

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(1970). The D.C. Circuit quickly exposed this claim as mistaken. Yes, the D.C.

Circuit acknowledged, the Board in Ogle ordered backpay and authorized no

deductions for interim earnings. But, the court observed, Ogle wasn’t an hoursreduction case and the employees there had no interim earnings that could have

been deducted from their backpay awards. Accordingly, the D.C. Circuit

observed, Ogle just “does not address” hours-reduction cases where (as here) the

employer does proffer evidence of interim employee earnings that might be

deducted. Deming Hosp. Corp. v. NLRB, 665 F.3d 196, 200 (D.C. Cir. 2011). In

fact, the D.C. Circuit noted, in many past hours-reduction cases the Board has

ordered the deduction of proven interim earnings. See id. at 201 (citing

examples). And the Board’s own casehandling manual states that interim

earnings deductions are generally appropriate with only a few exceptions — and

hours-reduction cases are nowhere among those exceptions. See N.L.R.B.

Casehandling Manual, pt. 3, § 10554.

Forced to acknowledge that its carve-out rule represents a departure from

preexisting practice, the Board offered an alternative rationale in its defense. 

Now the Board argued that, in response to unlawful reductions in their hours,

employees should not face a duty to seek out secondary employment — to

mitigate their losses— like employees in termination cases do. For its part the

D.C. Circuit noted that employees in termination cases have a duty to mitigate

their losses in the sense that, if they refuse to take new work, they will have their

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backpay award reduced by the amount of intentionally forgone income they

could’ve earned. And for purposes of the appeal, the D.C. Circuit and hospitalemployer accepted that there’s a sound reason to avoid imposing a parallel duty to

mitigate on employees in hours-reduction cases — because in hours-reduction

cases employees seeking secondary work will have to work around the demands

of their still-existing primary employer and may not be able to secure a

replacement job or as many hours in a replacement job as the employee might

wish. At the same time, the court noted, this consideration speaks only to a need

to waive any duty to seek secondary employment in hours-reduction cases — to

eschew backpay deductions when employees don’t have interim earnings. It does

not provide a rational basis for distinguishing between termination and hoursreduction cases when employees are able to and do choose to find other work —

when employers do have interim earnings during the backpay period. Given all

this, the D.C. Circuit held that the Board’s “explanation for its refusal to consider

interim earnings is inadequate” and remanded the matter for reconsideration. 

Deming Hosp. Corp., 665 F.3d at 201.

Now the Board has tried again, and the hospital-employer has petitioned for

review again — this time to our court. In an apparent abundance of caution the

Board has offered five new rationales to replace the two the D.C. Circuit found

wanting. But though the Board’s rationales may now be more prolific, I do not

find them more persuasive for it.

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1. “Promoting Production and Employment.” First and primarily the Board

argues that its new policy of refusing to deduct interim earnings in hoursreduction cases will allow employees who take on second jobs to keep both their

interim earnings and backpay for the same hours they would have worked for

their primary employer. Of course this means a whole class of employees (those

in hours-reduction cases who seek and win second jobs) won’t be restored to the

same position they would’ve been in but-for the employer’s misconduct, but will

be made better off instead. The Board accepts that its new rule creates an

employee “windfall” in just this way and seemingly at odds with its prior

practice. Yet it defends this consequence not as a bug in the design of its new

rule but as its whole point. Promising employees double payment for the same

hours, the Board says, will offer them a “greater incentive to voluntarily seek

interim employment” and in this way advance the policy of “promoting

production and employment.” Cmty. Health Servs., Inc., 361 N.L.R.B. No.25,

slip op. at *7; see Maj. Op. at 14-15. 

It seems to me that this line of argument fundamentally misconceives the

Board’s remedial charter. The Board’s statutory charge isn’t to promote full

employment. See 29 U.S.C. § 151. It’s not some sort of reincarnation of the

Works Progress Administration. Instead, Congress invested the Board with the

more prosaic — if still vital — job of providing “backpay” arising from “unfair

labor practices.” 29 U.S.C. § 160(c). And the Supreme Court has held that this

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statutory charter means exactly what it says — allowing the Board to restore the

“actual losses” employees suffer — no more or less. Phelps Dodge v. NLRB, 313

U.S. 177, 197-98 (1941). Yet, rather than seeking to restore the earnings

employees would have enjoyed but-for the employer’s misconduct, the Board’s

new rule candidly seeks to pursue a quite different and entirely extra-statutory

objective — the promotion of “production and employment” — and to achieve

that end it abandons any pretense of seeking to fulfill its duty of ensuring

compensation for actual losses. The Supreme Court long ago rejected Board

efforts to use its remedial backpay authority to pursue policy ends other than

those specified by the NLRA. Back in the 1940s, and in words equally fitting

here, the Court held that while the Board may freely pursue “remedial objectives

which the Act sets forth,” it is not licensed to pursue “a distinct and broader

policy with respect to unemployment.” Republic Steel Corp. v. NLRB, 311 U.S.

7, 12-13 (1940); see also Phelps Dodge, 313 U.S. at 197-98 (holding that the

NLRA limits the Board’s backpay authority to restoring “actual losses”). I do not

see how we might come to a different conclusion today. 

In saying this much, I hardly mean to suggest the Board lacks leeway in

carrying out its remedial charge. Any attempt to recreate a lost but-for world and

calculate losses due to a defendant’s misconduct always requires a degree of

estimation. As well, the Board must balance its two statutory remedial duties —

providing backpay for actual losses and promoting reinstatement — and those two

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duties can sometimes conflict in interesting and difficult ways. See, e.g., NLRB v.

Seven-Up Bottling Co. of Miami, 344 U.S. 344 (1953). Finally, the Supreme

Court has observed that, when a backpay award does aim to restore “actual

losses,” its virtue may be additionally recommended by its capacity to promote

employment because, in that scenario, the consideration of extra-statutory

policies like that one “in no way weakens the enforcement of the policies of the

Act.” Phelps Dodge, 313 U.S. at 200. But none of these principles suffices to

save the Board’s order in this case. After all, no one before us disputes that the

Board’s existing and longstanding backpay rules allow it to supply employees

with all of their actual losses in hours-reduction cases. The Board itself doesn’t

even attempt to suggest its new carve-out rule offers a superior way to calculate

actual losses. Instead, the Board seeks to justify its new carve-out backpay rule

exclusively on the ground that it will better promote an entirely distinct policy

that lies beyond its statutory authority to pursue.

Besides exceeding its congressional charter, the Board’s rationale faces still

two more problems. In the first place, a consistent (non-arbitrary) application of

its new rule would seem to forbid the deduction of interim earnings for both

termination and hours-reduction cases. After all, if double pay for the same hours

will encourage you to take on outside work when the hours in your primary job

are reduced to something short of zero, it will encourage you to take on outside

work in cases when the hours in your primary job are reduced to zero too. 

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Nothing about the Board’s rationale is rationally confined to hours-reduction

cases. Yet it’s those cases alone the Board today wishes to carve out, without any

explanation why. Beyond even that, by enforcing a backpay regime that is

markedly more generous in hours-reduction cases than termination cases the

Board’s new rule would seem to create a paradoxical incentive for employers to

engage in behavior even more inimical to the “promotion of production and

employment” — pushing them in marginal cases toward termination and away

from hours-reductions in order to reduce their backpay liability. Yet another

problem the Board neither ponders nor offers reason for disregarding.

2. “Rewarding Extra Work.” If its primary rationale should fail, the

Board argues alternatively that its new carve-out rule is justified by the “well

established” principle found in § 10554.3 of its casehandling manual providing

that “[i]n cases where a discriminatee worked substantially more hours for an

interim employer than he or she would have worked for the gross employer, only

interim earnings based on the same number of hours as would have been available

at the gross employer should be offset against gross backpay.” N.L.R.B.

Casehandling Manual, pt. 3, § 10554.3. 

By its terms, however, this provision can be fairly described as no better

than irrelevant. Section 10554.3 merely provides that an employee gets to keep

interim earnings for hours above and beyond those she would have worked at the

original employer — promising that the employee can always retain earnings from

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a true second or “moonlighting” job. And exactly none of this is at issue here. 

Everyone before us readily accepts that the sort of wages § 10554.3 discusses

belong to the employee. The only question presented in this case is what to do

about earnings for those hours the employee would have worked for the original

employer but-for the unlawful action — and on that question § 10554.3 stands

mute.

Maybe the Board’s citation to § 10554.3 is meant less than literally, as a

sort of analogy. Maybe the Board means to suggest that, just as an employee

shouldn’t have her backpay hours reduced for hours beyond those she could have

worked at her employer, she shouldn’t ever have her hours reduced for taking on

a second job when she didn’t have to. But if that’s the analogy that’s intended,

it’s one that fails. It fails because the point of § 10554.3 is to ensure that the

employee is made whole for her actual losses by guaranteeing that her backpay

award isn’t reduced by earnings she would have enjoyed whether or not her

primary employer engaged in an unfair labor practice. Section § 10554.3 removes

from the backpay analysis interim earnings without a causal connection to the

employer’s misconduct. The rule is, in this way, all about helping create an

accurate picture of what the world would’ve looked like but-for the employer’s

misconduct — and in that way all about helping fulfill the Board’s statutory

remedial charge. Meanwhile, the Board’s new carve-out rule has again (and

admittedly) nothing to do with its statutory charter. The Board doesn’t attempt to

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defend its new rule on the ground that it helps create a more accurate picture of

an employee’s actual losses. Or that it has anything to do with that purpose at all. 

Instead, it argues the rule aims to reward “extra work” in the very particular (and

very different) sense that, thanks to the windfall it offers employees, it

encourages them to take on second jobs and, in that way, promotes “production

and employment.” So it is the Board’s second, “extra work” rationale at best

folds right back into its first and returns us to all the problems we’ve already

encountered.

3. “Accounting for Additional Hardships.” Here the Board points to the

fact that, unlike employees in termination cases, employees who face reductions

in their hours and proceed to seek a second job must “adjust any outside

employment hours to accommodate [the primary] employer’s demands.” So, for

example, they have to “resolv[e] scheduling conflicts between the two jobs and

traveling to a second workplace.” By refusing to deduct interim earnings, the

Board seems to imply, its new rule will ensure that the particular costs borne by

employees in hours-reduction cases are fully compensated.

The problem is the Board’s existing rules already do this. Under its

existing remedial regime, the Board is indubitably free to compensate an

employee for any costs incurred in taking on or holding a second job thanks to the

employer’s unlawful actions — including costs associated with resolving

scheduling conflicts or traveling between workplaces. N.L.R.B. Casehandling

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Manual, pt. 3, § 10555. Indeed, the Board’s order identifies no class of costs its

existing remedial rules fail to capture. And before departing from its existing

rules the Board must offer some reason for doing so, some reason why its new

rule might be rationally preferred to its existing authorities. It doesn’t even try.

Perhaps the Board might respond by suggesting that some costs employees

suffer are intangible and incalculable — and that its new carve-out rule does a

better job of compensating for such costs. But it’s far from clear the Board means

to pursue such an argument. After all, the Board itself cites by way of support the

entirely tangible and calculable costs associated with “traveling to a second

workplace.” And even if it were fair to read the Board as making a sort of

“intangible cost” argument, it would still face its problems. For the Board

nowhere explains how its statutory charge to order backpay entails with it the

authority to afford tort-like remedies for psychic and other losses not associated

with lost wages. And even on its own terms the Board’s argument proves too

much. While employees in hours-reduction cases may face unique costs in

traveling between and juggling two jobs, it’s surely not the case that they alone

suffer intangible hardships: you might even expect the intangible human costs

associated with wrongful terminations to be worse than those associated with

wrongful hours-reductions. Yet the Board’s new rule seeks to distinguish

between the two types of cases when it comes to intangible hardships — and does

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so without offering an explanation why the one situation should receive solicitude

the other does not.

4. “Preventing Dilatory Conduct.” Here the Board points out that the duty

to provide backpay sometimes can have unintended consequences on “the

companion remedial requirement” of reinstatement — by giving employers an

incentive to prolong their unlawful labor practices while an employee’s interim

earnings grow and the employer’s corresponding backpay obligation diminishes. 

The Board suggests its new carve-out rule will help curb this incentive.

I don’t see how. No one doubts that the Board must create remedial rules

that balance between the statutorily authorized remedies of backpay and

reinstatement. No one doubts either that pursuing one remedy without an eye on

the other can create strange incentives like the one the Board has identified. But

many decades ago the Board identified and devised a solution to the very problem

it points to today. Before In re F.W. Woolworth Co., 90 N.L.R.B. 289 (1950), the

Board’s blanket deduction of interim earnings almost perfectly achieved the

policy of making employees whole when it came to backpay — they received no

more and no less than they would have received at their original job. But

employers would sometimes delay reinstatement to reduce their backpay

obligations, a result inimical to the Board’s second statutorily prescribed remedial

objective and preventing “a restoration of the situation, as nearly as possible, to

that which would have obtained but for the illegal discrimination.” Id. at 292. 

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The Board’s solution, approved by the Supreme Court in Seven-Up, was a

quarterly deduction formula that, while sometimes resulting in a less-than-perfect

award of backpay, effectively eliminated the employer’s incentive to drag out

reinstatement and thus achieved a reasonable balance between the Board’s two

remedial charges. 344 U.S. at 345-48. In our case, the Board acknowledges that

it faces the same problem it solved in Woolworth. And it doesn’t disparage the

Woolworth solution or even question that it adequately eliminates the unwanted

employer incentive. In fact, it continues to apply the Woolworth solution to

termination cases. And (again) I just don’t see how the agency might be

permitted to depart from a well-established policy or eschew an obvious

alternative without offering some reasoned explanation consistent with its

statutory charter. 

5. “Allocating Windfalls.” Finally, the Board contends that, if it deducts

interim earnings, employers will receive a windfall. But if it refuses to deduct

interim earnings, employees will receive a windfall. One side or the other will

inevitably come out better than they would have but-for the unlawful labor

practice, the Board says, so it should have the discretion to allocate the windfall

as it wishes. And because the employee seeking additional work is promoting

production and employment through her extra effort (back once more to that

doubtful rationale), that’s tie-breaker enough. 

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This is perhaps the Board’s most curious argument yet. Over eight decades

the Board has taken pains to develop a set of rules that prevents windfalls for

either side. To prevent employee windfalls, the Board has long deducted interim

earnings. And to prevent employer windfalls, the Board’s existing rules and

precedents afford it the power to order the employer to (1) pay backpay without

deduction if an employee chooses not to find a second job in hours-reduction

cases, (2) pay any and all costs an employee incurs if she does take on a second

job, and (3) ensure any backpay deductions for interim earnings are limited to the

hours the employee would’ve worked for the wrongdoing employer. In this light,

it’s hard to see what windfall might fall into the employer’s lap — or how, should

the problem arise, the Board could not lawfully get at it. For again, the Board’s

existing remedial precedents and rules permit it to order compensation for all

actual losses. Strangely, the Board ignores all this — all the careful handiwork of

generations of Board members aimed at securing a tailored remedy approximating

actual losses — nowhere explaining why those efforts fail only now and only in

the context of hours-reduction cases.

In the end, it’s difficult to come away from this case without wondering if

the Board’s actions stem from a frustration with the current statutory limits on its

remedial powers — a frustration that it cannot pursue more tantalizing goals like

punishing employers for unlawful actions or maximizing employment; that it is

limited instead to the more workmanlike task of ensuring employees win backpay

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awards that approximate the actual losses they’ve suffered. A frustration that

seems to parallel the frustration the Board experienced when it sought in Republic

Steel and Phelps Dodge to issue similarly expansive extra-statutory remedies. 

But then as now frustration should not beget license. In our legal order the proper

avenue for addressing any dissatisfaction with congressional limits on agency

authority lies in new legislation, not administrative ipse dixit. I respectfully

dissent.

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