ALJ Backs Hospital’s Right to Delay Returning Strikers to Work

An NLRB administrative law judge recently confirmed that a California hospital system had the right to keep replacement workers on the job for the duration of its contractual commitment to a staffing agency even though striking employees were ready to return to work. The case, In re Sutter Valley Hospitals,¹ clarifies the legality of arrangements that healthcare employers commonly make after receiving a union strike notice to ensure continued patient care.

In anticipation of economic strikes at 20 of its facilities, Sutter Valley contracted with a staffing agency to provide replacements for approximately 7,000 nurses and technical employees. The staffing agency contract required Sutter Valley to pay for a minimum of five days’ (60 hours) work by each replacement worker. The hospital declined to put the strikers back to work until that period elapsed. The California Nurses Association and the Caregivers and Healthcare Employees Union filed unfair labor practice charges, claiming that the hospital broke the law by failing to “push back” on the staffing agency’s five-day minimum. The general counsel for the NLRB agreed and issued a complaint. The ALJ dismissed the complaint, however, finding that such a contract with the staffing agency was a legitimate part of the hospital’s right to continue operations during the strike.

Background

The unions represent 15 bargaining units at the hospitals. Each unit’s bargaining agreement expired in 2021. Because the unions had previously conducted strikes during contract negotiations, the hospital anticipated potential work stoppages. The hospital therefore contracted with staffing agencies to provide temporary replacements. The contracts between the hospital and staffing agencies required that the hospital pay agency-supplied replacements for a minimum of five days, regardless of how long strikes lasted.

The ALJ noted that over the course of the parties’ relationship, the hospital had entered similar staffing agency contracts with five-day minimums. The unions had previously challenged the hospital’s compliance with those minimums, but the practice had been upheld in prior unfair labor practice litigation at the NLRB.

On April 7, 2022, the unions provided notices that they would strike for 24 hours on April 18 and 19, 2022. The strikes would impact 20 hospital facilities and involve approximately 7,000 workers. The parties engaged in discussions prior to the strike seeking to avoid a work stoppage.  The hospital offered to pay the replacement workers and bargaining unit employees if the strikes were called off by a certain deadline. The unions refused, however, and strikers walked off the job as threatened. The bargaining unit employees made an unconditional offer to return to work on April 19, 2022, but the hospital did not reinstate most of the strikers until the end of the five-day guarantee period.

No Obligation to “Push Back”

The Board has historically found that contractual obligations an employer makes to secure replacement employees can constitute a legitimate and substantial business justification for delaying the reinstatement of strikers who offer to return to work. Pacific Mutual Door Co., 278 NLRB 854, 856 (1986). In the Sutter case, however, the unions and the general counsel sought to change this principle, arguing that the hospital failed to establish that the five-day minimum was necessary to get the temporary agencies to supply strike replacements.  They contended the hospital should have made counterproposals or some other attempt to “push back” against the contractual minimums with the temporary agencies. 

The ALJ rejected that argument, expressly recognizing the difficulties the hospital faced under the circumstances. The hospital established at trial that the staffing agency required such minimums in return for committing to supply the hospital with sufficient replacements. Evidence showed there was a shortage of available replacements in the market. Further, when the hospital entered into the replacement contracts it did not yet know how long the work stoppages would last. Thus, the ALJ found that the hospital had in fact established that the five-day minimum was reasonable and necessary – especially given that the same minimums, previously challenged by the unions, had been examined and held lawful by the NLRB. 

No Evidence of Anti-Union Animus

The unions argued that the hospital’s offer to pay both the replacement workers and the bargaining unit employees if the employees did not strike and its subsequent refusal to immediately reinstate the strikers was illegal because it was motivated by anti-union animus. The unions claimed that since the hospital was willing to pay both employees and replacements before the strike, its refusal to reinstate the strikers until temporary workers were no longer being paid was a pretext for anti-union retaliation. 

The ALJ rejected this argument, likening the employer’s pre-strike offer to a favorable proposal made in bargaining to avoid an economic strike. An employer is not obligated to provide such offered benefits after enduring a work stoppage it sought avoid, he said, and Sutter’s refusal to do so in these circumstances does not show illegal motivation.

Practical Considerations 

This decision confirms NLRB precedent that healthcare employers that contract for strike replacements can delay the reinstatement of striking workers until the minimum contractual replacement threshold has been met. The previous general counsel for the NLRB issued a complaint in this matter in an apparent attempt to change the Board precedent that contractual obligations to a staffing company may justify delaying the reinstatement of strikers. However, the ALJ adhered to that precedent and the Board is unlikely to change it.

While minimum staffing periods have been upheld as legitimate, employers should consider whether enforcing these periods would constitute a lockout under their respective state laws for unemployment compensation purposes. Moreover, while five-day minimums seem to be the most common, it is worth noting that the considerations may be different for longer periods or other alternate arrangements. 

We will continue to monitor critical developments in this area of the law and provide updates as appropriate.