Labor & Employment Law Daily Wrap Up, LABOR—BARGAINING—7th Cir.: NLRB properly entered default judgment after employer breached settlement agreement, (Sep 9, 2026)

By Ronald Miller, J.D.

By entering the settlement agreement, the employer agreed that the Board’s General Counsel could file a motion for default judgment after the agency filed a complaint alleging it breached the agreement.

Substantial evidence supported the NLRB’s entry of default judgment against an employer that breached a prior settlement agreement with a union by withdrawing its recognition of the union without a showing of good cause, ruled the Seventh Circuit. The employer had argued that entry of default judgment was improper because it had sufficiently placed at issue before the Board whether it had breached its obligation to bargain in good faith when it refused to attend a second negotiation session with the union. Because the employer offered nothing to specifically refute the union’s detailed account of its breach of the settlement agreement, the Board’s decision to grant the motion for default judgment not only found substantial evidence in the record but also had a reasonable basis in law (American Backflow & Fire Prevention, Inc. v. NLRB, Nos. 24-2155 & 24-2434 (7th Cir. Sept. 8, 2026)).

Union vote. The employer employs plumbers who install and repair backflow, plumbing, and fire line safety inspection equipment. In June 2021, the employer’s plumbers voted to unionize. Six months later, the union filed charges against the employer with the Board, alleging that the employer had engaged in numerous unfair labor practices, including: posting a petition to decertify the union on the employer’s bulletin board; emailing employees to encourage them to sign the decertification petition; threatening not to negotiate with the union in good faith; failing to provide the union with requested information; and refusing to meet with union representatives.

Settlement. To resolve these allegations, the parties entered into a settlement agreement in April 2022. Among other things, the employer agreed to “meet at reasonable times and intervals and bargain in good faith with the Union as employees’ recognized bargaining representative” upon the union’s request. The employer also acknowledged that, if it breached the agreement and failed to cure the breach within 14 days, the Board’s regional director could file complaint with the Board recounting the employer’s prior unfair labor practices that had spurred the settlement.

Further, the agreement provided that, in such circumstances, the Board’s General Counsel could file a second complaint with the Board to remedy the employer’s breach of the agreement itself, as well as a motion for default judgment as to the breach. Moreover, the employer acknowledged that, in the event of default, the Board could impose a remedy for each prior unfair labor practice that had led to the agreement.

Withdrawal of recognition. In March 2023, the parties held one bargaining session and scheduled another. Shortly thereafter, the employer canceled the scheduled session and notified the union that it was immediately withdrawing recognition of the union as the exclusive bargaining representative of its plumbers. The employer claimed that the union no longer enjoyed the support of an uncoerced majority of the employees.

About a month later, the Board notified the employer that its denial of the union’s authority and refusal to bargain in good faith constituted a breach of the agreement. The notice cautioned that, if the employer did not cure its default within fourteen days, the regional director would issue two complaints: one alleging unfair labor practices, and another seeking default judgment as to the company’s breach of the agreement.

Thereafter, the regional director filed the complaints. In its answer to the first complaint, the employer admitted that it had refused to participate in a bargaining session because it had withdrawn its recognition of the union. In the second complaint, the regional director sought default judgment in accordance with the agreement.

The General Counsel filed a motion for default judgment, arguing that by withdrawing recognition and canceling any future bargaining sessions, the employer violated its obligations to recognize the union as “the exclusive bargaining representative” and to meet with the union.

Default judgment. The Board issued a notice to show cause why the motion for default judgment should not be granted. The employer admitted it had canceled the second bargaining session but denied that documents supporting decertification were the reason for its withdrawal of recognition.

In its decision, a divided Board panel explained that an employer may withdraw recognition only if it has an objective basis for believing that the union has lost majority support. The Board ordered the employer to bargain collectively and in good faith with the union, and, if the parties came to an understanding, to embody the understanding in a signed agreement.

The employer’s choice to settle its dispute with the union had consequences. For one, it agreed that the Board’s General Counsel could file a motion for default judgment after the agency filed a complaint alleging it breached the agreement. Moreover, it agreed that the allegations in such a complaint would be deemed admitted and the only issue it could raise before the Board is whether it had defaulted on the terms of the agreement.

Here, the employer argued that entry of default judgment was improper because it had sufficiently placed at issue before the Board whether it had breached its obligation to bargain in good faith when it refused to attend the second negotiation session with the union.

Union certification. Upon certification by the NLRB, “a union enjoys an irrebuttable presumption of majority support” for one year. “An employer may rebut that presumption by showing that, at the time of the refusal to bargain, either (1) the union did not in fact enjoy majority support, or (2) the employer had a good-faith doubt, founded on a sufficient objective basis, of the union’s majority support.”

In support of the motion for default judgment, the union asserted that the employer could not rely on decertification petitions from employees that were dated prior to the close of the certification period to justify its decision to withdraw recognition. Nor could employee petitions dated after that date form the basis of the employer’s withdrawal because they were filed at a time when the company was employing unfair labor practices, which tended to cause employee dissatisfaction.

For its part, the employer baldly denied that it had relied on the decertification documents it had referenced in the notification of withdrawal. It then insisted without explanation or elaboration that its withdrawal of recognition was “lawful.”

The employer offered nothing to specifically refute the union’s detailed account of its breach of the settlement agreement. Moreover, it has not suggested any reason that would call into question the Board’s cited precedent. Accordingly, the Board’s decision to grant the motion for default judgment not only found substantial evidence in the record but also had a reasonable basis in law.

The cases are Nos. 24-2155 & 24-2434.

Judge: Lee, J.

Attorneys: George Svoboda (Law Office of George W. Svoboda) for American Backflow & Fire Prevention, Inc. Jennifer Abruzzo for NLRB.

Companies: American Backflow & Fire Prevention, Inc.

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