On March 9, 2016, the Office of the General Counsel issued an operations memorandum (OM-16-09) to the NLRB’s regional offices directing them to implement cost-saving measures to address a significant budget deficit facing the agency.  The measures are similar to those adopted in recent fiscal years, and include instructions to redouble existing efforts to obtain settlements in unfair labor practice cases; promote election agreements in representation (election) cases; and reduce litigation expenses with some common-sense efficiencies.

The memorandum does not explain the reasons for the current deficit.  Congressional appropriations for the NLRB have been steady in recent years and were maintained by the 2016 Omnibus Appropriations bill passed last December.  Previously, the NLRB has explained that additional resources are needed to address a number of developments and initiatives, including:  efforts to improve wages and working conditions of workers in the retail and fast food industries; increased attention to handbook provisions and workplace rules, particularly pertaining to technology and social media; challenges to employers’ use of arbitration agreements to resolve workplace disputes; and questions concerning the single or joint relationships between apparently separate employers (e.g. franchisor/franchisees).

One of the stated purposes of the amended election rules that were implemented by the NLRB, and effective in April of 2015, was to reduce unnecessary litigation.  The memorandum released on March 9 does not comment on the efficacy of the new election rules in producing a more streamlined, efficient casehandling process for representation cases, or whether the new rules are helping the agency meet budgetary constraints.  The memo suggests that many of the efficiencies that are recommended in unfair labor practice cases, such as avoiding unnecessary costs associated with witnesses and court reporters, and reducing unnecessary travel by staff, also apply in representation cases.

There are budget-busting expenditures at the NLRB despite a gradual reduction in new cases being submitted to the NLRB, and these appear to be attributable, at least in part, to more aggressive enforcement by the agency generally.  The number of new unfair labor practice charges fell annually in each of the past five fiscal years, from over 23,500 in FY 2010 to just over 20,000 in FY 2015, a reduction of over 14% overall.  Nevertheless, more administrative complaints alleging legal violations were issued by the NLRB’s regional offices in FY 2015 than in FY 2010, continuing a trend of stepped-up enforcement.

In the context of a highly litigious NLRB, the impact of settlement rates in unfair labor practice cases is significant.  Settling alleged violations rather than adjudicating them provides remedies to charging parties, and enhances the visibility of the agency, while conserving agency staff and budgetary resources.  The memorandum provides little guidance to the regions about how to achieve settlements, other than promoting training in settlement techniques, and encouraging the involvement of Regional Directors in settlement discussions.  The memorandum could be a promising sign, however, of the agency’s willingness to entertain reasonable resolutions of cases to avoid the costs of unfair labor practice litigation for the remainder of the fiscal year.