Beginning of the End for Default Language in NLRB Informal Settlement Agreements?

After a union files an unfair labor practice charge, the charge is investigated by the National Labor Relations Board. If the Board believes the company violated the National Labor Relations Act, the Board will seek a settlement before filing a complaint against the company. Those settlements are called “informal settlements” and must be posted for (generally) 60 days in an area commonly frequented by employees. Many companies choose to settle cases they would win if litigated because they do not have the resources to litigate. Informal settlements are in no way admissions of wrongdoing, and such is explicitly stated in the settlement agreement.

A few years ago, the Board appointed by the-President Obama required certain language in all informal settlements saying that if the company breaches the settlement agreement, the Board’s General Counsel may reopen the settled case and move for default judgment. The employer loses the right to litigate the underlying issues it settled and can litigate only whether it breached the settlement agreement. I have never liked this “default language.”

Neither did the employer in Outokumpu Stainless USA. After entering into an informal settlement agreement and posting the agreement for all employees to see, he posted a letter next to the agreement that criticized the union for filing the charges and emphasized that the Board did not find the company guilty of the alleged violations. The Board ruled that the employer’s posting undermined the authority of the Board and breached the settlement agreement.

Thankfully Miscimarra dissented, and his dissent may foreshadow the direction the Board is heading regarding default language in informal settlement agreements. Miscimarra found that the letter did not breach the settlement agreement because the agreement did not prohibit the side letter. He would, however, set aside the settlement agreement because the side letter detracted from the purpose of the notice, but he would not invoke the default judgment provisions and would give the employer an opportunity to defend itself against the underlying unfair labor practice charges.

Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can reach Matt by calling him at (614) 614-843-3041 or emailing him at