Under the National Labor Relations Act, an employer is not permitted to bypass a union and deal directly with employees in connection with their terms and conditions of employment. This direct dealing concept can become complicated, however, when an individual employee asserts a legal proceeding against the employer in which the employee’s union is not a participant and is not involved in settlement negotiations.

Recently, the National Labor Relations Board’s Office of the General Counsel, Division of Advice, encountered this factual scenario in American Water Service Co., 15-CA-086838 (Div. of Advice, Apr. 30, 2013). In this case, an employee suffered a workplace injury and retained an attorney to seek worker’s compensation benefits. Over three years later, with the worker’s compensation action still pending, the employer discharged the employee. The employee’s union grieved the employee’s discharge. A month later, the employee settled the worker’s compensation claim with the employer, and as a term of the settlement, the employee signed a general release which forfeited her right to assert a claim against the employer in connection with her separation. The employer’s representative who typically handled union grievances was unaware of the worker’s compensation settlement and the employer’s worker’s compensation agent was unaware of the union’s grievance.

The Division of Advice preliminarily noted that the Act “requires an employer to attempt to afford the union notice and an opportunity to be present for settlement discussions regarding individual employee claims…, where the employer’s proposed settlement would effectively resolve the union’s grievance over the employee’s discharge.” Based on this standard, the Division of Advice found that the employer engaged in direct dealing, because, although the employer inadvertently failed to apprise the union of the settlement agreement, “the agreement on its face effectively settled the [employee’s] discharge allegation by precluding her from pursuing [sic] any claim arising from her employment.”

Ultimately, however, the Division of Advice recommended the Region dismiss the charge because the employer assured it would permit the union to arbitrate the employee’s grievance provided the union did not seek reinstatement or monetary considerations. Alternatively, the employer agreed to permit the employee to rescind the agreement so the union could seek a reinstatement and/or monetary remedy in arbitration.

This case demonstrates that employers must be mindful of their obligations to provide an employee’s union the chance to be present for settlement negotiations in connection with an individual employee’s lawsuit or administrative proceeding or else risk an unfair labor practice charge asserting unlawful direct dealing. In addition, this guidance highlights the importance of ensuring there is open communication between an employer’s various attorneys/agents who may be representing the employer in more than one forum with respect to the same employee.