On May 16, William B. Cowen, acting general counsel (GC) of the National Labor Relations Board (NLRB or the Board), issued Memorandum GC 25-06, which restored discretion to regional directors in settling with employers and narrowed the scope of mandatory remedies with respect to such settlements. In issuing this memorandum, Cowen has attempted to facilitate more effective and efficient settlements.
Background
The National Labor Relations Act (the Act) permits the Board to award "make-whole" relief to compensate for losses incurred by employees because of an unfair labor practice (ULP). Settlements are the primary method used by the NLRB to obtain such relief. Between 2019 and 2024, however, the rate of ULP cases resolved through settlement dropped from 99.3 percent to 96.3 percent.
Over the past several years, at the prompting of former GC Jennifer Abruzzo, the NLRB aggressively expanded the types of relief available. Specifically, in its 2022 Thryv, Inc. decision, the Board held that employees could recover for any financial harm that "directly" or "foreseeably" resulted from the employer's ULP. For example, in an unlawful discharge case, this broader standard allowed recovery for expenses such as relocation costs, bank overdraft fees, purchasing a new vehicle to replace an employer-provided vehicle and increased insurance premiums. Abruzzo instructed regional directors to actively pursue and require this expanded relief in settlement agreements.
Cowen Reverses Course
In Memorandum GC 25-06, Cowen reversed Abruzzo's directive to seek maximum remedies in settlements, advising regional directors to exercise discretion regarding the remedies they pursue when settling cases. His guidance emphasized agency efficiency and aligned with long-standing Board practices, marking a return to a measured case-by-case approach of evaluating settlements.
According to Cowen, regional directors should continue to seek complete and adequate relief for employees affected by ULPs, ensuring they are fully compensated for losses resulting from unlawful actions. He warned, however, against letting "remedial enthusiasm" hinder prompt and fair dispute resolution, stating that "if we attempt to accomplish everything, we risk accomplishing nothing." Regional directors should not automatically seek expanded remedies in ULP cases unless the conduct involved is "widespread, egregious, or severe." Further, settlement agreements do not automatically need to require these remedies. Regional directors now have significant discretion to resolve matters in the way they believe best fulfills the Act's purposes and policies. Cowen noted that when settlements are drafted, the relief sought should generally mirror what the Board would order in decisions adjudicating cases.
Cowen specifically addressed several issues regarding his approach to settlement provisions:
- Default language. Providing for entry of a default judgment in the event of a violation of a settlement agreement is no longer mandatory in every settlement agreement. According to Cowen, a regional director has the discretion to include such language and is encouraged to do so when appropriate. While default language helps quickly bring cases to the Board if terms are not followed, regions should not fail to reach a settlement based on a party's objection to the provision. Such language, however, should be included in cases involving repeat violations, installment arrangements, liquidated damages or other similar circumstances.
- Non-admissions clauses. Provisions whereby an employer disclaims having engaged in any violation of the Act can be included in settlement agreements, particularly early in a case. Cowen reversed Abruzzo's prior guidance, which had prohibited such language entirely; however, he continued to maintain that such provisions should be excluded in cases involving repeat violations.
- Unilateral settlements. The Board could approve settlements between employers and unions or employees without its involvement in the parties' negotiations.
- Make-whole relief. When appropriate, regional directors have the discretion to approve settlement agreements that provide less than 100 percent of what could be recovered if the region fully prevailed on all allegations in the case.
Cowen concluded his memorandum with a criticism of the Thryv, Inc. decision, noting that the majority opinion in Thryv, Inc. left unclear the proper standard for determining what is a direct and foreseeable harm. Cowen instead adopted the dissent in Thryv, Inc., instructing regions to focus on "foreseeable harms that are clearly caused by the unfair labor practice." Cowen noted that this test was the "only standard reasonably capable of application."
Cowen's memorandum builds on his February guidance, which rescinded numerous memoranda issued by Abruzzo, including several regarding remedies. It also echoes Cowen's February comments at an American Bar Association conference, where he encouraged regions to "go forth and settle." For employers, these pronouncements signal that it should be easier under the Trump Board to obtain reasonable settlements that may reduce the costs and inconvenience of protracted litigation.
Contributing Author: Summer Associate Patricia Bishop
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