NLRB Interest Rate Will Increase to Five Percent
Board awards in unfair labor practice cases are usually premised in a make-whole remedy which, in the case of back-pay awards for example, include interest. Interest has been part of the remedy for decades. More recently, daily compound interest became the rule. The Board can reset the rate quarterly using the short-term federal rate plus three percent, which is the rate the IRS uses for underpayment of taxes. For several years, the rate was three or four percent, given the state of the economy. Interest awards can really add up, especially when a make-whole remedy impacts a large workforce and interest accrues over the many years it can take for final decision in a ULP case. As such, interest is normally a factor in litigation and settlement of these cases.
Effective April 1, 2018 to June 30, 2018, the Board reset the rate to five percent. This will incrementally increase the risk of an adverse award. If you believe the federal short term interest rate will increase further, you would expect the NLRB rate to increase further and interest will factor higher in strategic decisions about pending and future litigation before the Board.
Click here to view a copy of the Board’s Memorandum on the subject.