Labor & Employment Law Daily Wrap Up, LABOR—UNFAIR LABOR PRACTICES—N.D. Cal.: NLRB granted Sec. 10(j) injunction barring employer from implementing commission changes, (Jan 27, 2025)

By Ronald Miller, J.D.

The court rejected the regional director’s contention that the mere existence of unfair labor practice charges against the employer precluded a finding of good faith impasse.

An NLRB regional director was granted a Section 10(j) injunction enjoining an employer from implementing a policy eliminating renewal commissions for insurance agents who selected a union as their bargaining representative. Although a federal district court in California found the regional director had not shown that the Board was likely to deem the employer’s proposal to eliminate renewal commissions evidence of bad faith bargaining, an exchange of communications raised serious questions going to the merits of the regional director’s claim the impasse was not declared in good faith. On the other hand, the court denied a Section 10(j) injunction with regard to unfair labor practices engaged in by the employer more than three years prior to the petition for an injunction (NLRB Region #32 v. American Automobile Association of Northern California, Nevada & Utah, No. 24-cv-07978-HSG (N.D. Cal. Jan. 23, 2025)).

In June 2021, the employer’s insurance sales agents in Northern California organized a union and selected a collective-bargaining representative. The union filed several unfair labor practice charges against the employer beginning that same month. In June 2022, the NLRB regional director brought a complaint against the employer alleging that it violated various provisions of the NLRA.

Unfair labor practice allegations. Among the allegations brought by the regional director were that the employer terminated a union supporter in retaliation for her union activism; eliminated bargaining positions in retaliation for employees organizing a union; diverted work away from the bargaining unit in retaliation for organizing; and changed policies for unit employees regarding time and attendance, work from home, and paid time off in retaliation for organizing and without giving the union notice and an opportunity to bargain.

In August 2023, the regional director filed a second complaint against the employer based on additional unfair labor practice charges. It was alleged that the employer unilaterally changed employees’ working conditions without reaching an overall good-faith impasse in bargaining for a first contract; implemented its last, best, and final contract offer without first reaching a good-faith impasse; bargained in bad faith; and threatened employees and disparaged the union.

In November 2024, the regional director sought a temporary injunction under Section 10(j) based on the employer’s alleged misconduct in the two complaints. After outlining the legal standards for issuance of a restraining order under Section 10(j), the court addressed the sufficiency of the region’s petition as to each set of allegations in the two complaints.

First complaint. The first complaint alleged that the employer violated the NLRA by taking various actions in 2021 and 2022 to retaliate against employees for organizing a union. Based on these allegations, the region asked the court to enjoin the employer from investigating employees or retaliating against them for union activities; enforcing any policies unilaterally implemented “since the time the Union won election” in June 2021; and diverting work away from unit employees. The region also asked the court to reinstate the discharged employee and restore all bargaining unit work.

Passage of time. The employer countered that since the events in question had occurred more than three years ago, an injunction would be an empty formality. However, the court pointed out that in the Section 10(j) context, the purpose of an interim injunctive order is to prevent an unfair labor practice from “reach[ing] fruition” while Board proceedings are pending.

The court concluded that here, so much time has passed since the conduct at issue in the first complaint was alleged to have taken place that it was doubtful an interim order was necessary to ensure the efficacy of the Board’s order. The court agreed with the region that “delay by itself is not a determinative factor in whether the grant of interim relief is just and proper.” However, under the circumstances here, the 28-month delay between the complaint allegations and the related 10(j) petition was significant because the region has failed to show that an injunction would be more effective to remedy the harm allegedly caused by the violations than an order by an administrative law judge or the Board.

In sum, “[t]he record here does not clarify how interim relief now would be more effective than it would be after the ALJ reaches a decision and recommends relief, or after the Board renders a final adjudication.” Accordingly, the court found that, because “a preliminary injunction would not actually make a practical difference here,” the relief sought as to allegations in the first complaint was more appropriately granted in the administrative proceedings if justified by a fully developed record.

Second complaint. On the other hand, the violations in the second complaint were more recent. The complaint’s core allegation was that the employer unlawfully declared a bargaining impasse in June 2023, and on that basis was not permitted to implement its Last, Best, and Final Offer (LBFO) in August 2023. The regional director sought to enjoin the employer from implementing the LBFO policies and to require it to re-engage in good faith bargaining for a minimum of two days per week for at least six hours per session until an agreement or good faith impasse was reached.

As an initial matter, the court rejected the regional director’s contention that the mere existence of unfair labor practices charges against the employer precluded a finding of good faith impasse. Moreover, the court found that the regional director did not establish that the employer negotiated in bad faith throughout the entire bargaining period. Rather, the record showed that the parties were able to reach tentative agreements on several provisions over the years. Further, the employer presented the union with economic counterproposals during negotiations.

Elimination of renewal commissions. The court also found that the regional director had not shown that the Board was likely to deem the employer’s proposal to eliminate renewal commissions so irrational as to evidence bad faith bargaining. While the proposal to eliminate renewal commissions affects an important but limited aspect of agents’ income, the regional director did not argue that the employer proposed other terms that would give it exclusive and unilateral control over wages or working conditions more generally.

Declaration of impasse. The court, however, found that the regional director established at least serious questions going to the merits of its claim that the employer’s declaration of impasse was unlawful based on the parties’ communications in the negotiations preceding impasse. Although the employer maintained that its declaration of impasse was lawful because both sides were at “irreconcilable odds” on the central issue of renewal commissions, the evidence undermined the credibility of that characterization.

In the bargaining session, the union presented six demands, including keeping renewal commissions. Further, the parties engaged in an exchange of communications that raised serious questions going to the merits of the regional director’s claim that the impasse was not declared in good faith. The parties’ final pre-impasse communications suggested that the employer may have been the only party that was unwilling to compromise at the time it declared impasse. Further, the record suggested that the employer failed to respond in good faith to the union’s proposal.

The employer essentially predicted a deadlock on the commissions issue based on its own assumptions about the terms it believed the union would accept, rather than the union’s actual response to a counteroffer from the employer. This approach was likely insufficient to constitute a good faith justification for outright rejecting the union’s proposal. The record did not support the employer’s characterization that both parties were deadlocked when it declared impasse.

Accordingly, the court concluded that the regional director established the Board was likely to find that impasse was not declared in good faith and that the employer’s unilateral implementation of the LBFO was unlawful on that basis.

The case is No. 24-cv-07978-HSG.

Judge: Gilliam, H., Jr.

Attorneys: Leigh Kathryn Davenport for NLRB. Thomas Posey (Seyfarth Shaw) for American Automobile Association of Northern California, Nevada & Utah.

Companies: American Automobile Association of Northern California, Nevada & Utah

Cases: Labor UnfairLaborPractices Bargaining Retaliation Discharge Procedure AgencyNews CaliforniaNews GCNNews