Acting General Counsel Issues Memorandum Changing Methods Used To Calculate Backpay

And Other Remedial Changes Under The National Labor Relations Act

The General Counsel’s (GC) office of the National Labor Relations Board (NLRB) issued a guideline memorandum on March 11, 2011, regarding the calculation of backpay following the pro-employee decision issued in Jackson Hospital Corporation d/b/a Kentucky River Medical Center, 356 NLRB No. 8 (2010).  In Kentucky River, the NLRB changed its policy with regard to assessment of interest on backpay in make whole orders finding that interest is to be compounded daily, as compared with assessing interest on backpay by calculating simple interest, compounded quarterly.  As a result, the acting GC has instructed Regions to calculate daily compound interest by first determining the earliest date on which backpay is first owed.  Additionally, Regions are instructed to assess interest on a pay period basis with backpay due and owing on the day following the end of the pay period, and interest compounded daily thereafter.

Furthermore, contrary to established practice requiring interim earnings before a discriminatee can receive search-for-work and interim work-related expenses, the acting GC has established calculation of search-for-work and interim work-related expenses regardless of whether the discriminatee received interim earnings during the period.  Additionally, Regions are instructed to seek a tax component in all future cases to reimburse discriminatees for the excess federal and state income taxes owed as a result of receiving a lump-sum backpay award covering more than one year of backpay.  Finally, Regions are instructed to seek a remedy requiring the employer to notify the Social Security Administration (SSA) of the appropriate periods to which backpay should be allocated so discriminatees will receive the appropriate allocation of SSA benefits.

Based on this memorandum, employers may be ordered to pay increased amounts of backpay and damages in addition to being required to calculate backpay amounts on a yearly basis and report those numbers to the SSA for appropriate allocation of benefits.

Guideline Memorandum Regarding Changes To The Methods Used To Calculate Backpay

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