🗞️ No Pay for Delay: NLRB Declines to Penalize Employers Who Delay Union Bargaining

On March 23, 2026, the National Labor Relations Board (NLRB) issued a supplemental decision closing the final chapter of a long-running labor dispute between Oakrheem, Inc., operating as Hayward Convalescent Hospital in Hayward, California, and Service Employees International Union (SEIU) Local 2015.

The underlying dispute began when the hospital refused to bargain with SEIU Local 2015 after the union was certified as the employees' collective bargaining representative. In December 2022, the NLRB found this refusal violated Section 8(a)(5) and (1) of the National Labor Relations Act (NLRA) and ordered the hospital to bargain — a ruling later enforced by the Ninth Circuit Court of Appeals. At that time, the Board set aside a separate but significant question: should it overrule its own 1970 precedent, Ex-Cell-O Corp., 185 NLRB 107, which holds that the Board lacks authority to order compensatory "make-whole" damages in so-called "test-of-certification" cases?

The Ex-Cell-O doctrine arose from a structural quirk in labor law: because union certifications are not directly judicially reviewable, an employer's only avenue to challenge a certification in court is to first refuse to bargain, face an unfair labor practice charge, and then seek court review of the resulting order. In 1970, the Nixon-era NLRB concluded that imposing financial penalties on employers for exercising this procedural right would be impermissible — reasoning that damages would be too speculative, would effectively compel contract terms, and would chill a legitimate avenue of legal challenge.

Former NLRB General Counsel Jennifer Abruzzo had made overturning Ex-Cell-O a stated priority, arguing that the absence of any monetary consequence for prolonged bargaining delays removed a potential deterrent against employer delay, to the detriment of employees awaiting contract negotiations.

On February 26, 2026, the reconstituted Board issued its decision in Longmont United Hospital, 374 NLRB No. 52, declining to overrule Ex-Cell-O in a 2-1 ruling. The majority — Members Murphy and Mayer — held that imposing compensatory damages would unconstitutionally burden an employer's right to seek judicial review, exceed the Board's remedial authority under the NLRA, and introduce impermissibly speculative damage calculations into labor enforcement. Consistent with that decision, the Board applied the same outcome to the Hayward case.

Member Prouty dissented in both cases, arguing the Board has both the authority and the obligation under Section 10(c) of the NLRA to make affected employees whole for provable economic harm resulting from an employer's unlawful delay.

The Hayward ruling is one of several supplemental decisions the current Board has issued to resolve a backlog of Ex-Cell-O remedial questions that had accumulated across dozens of cases while the Board lacked a quorum.

Key Points

• The NLRB ordered Hayward Convalescent Hospital to bargain with SEIU Local 2015 (affirmed by the Ninth Circuit in 2023), but declined to impose financial penalties for years of bargaining delays.
• The central legal question was whether to overrule Ex-Cell-O Corp. (1970), which bars make-whole compensatory damages when an employer refuses to bargain in order to challenge a union certification in court.
• The Board's February 2026 decision in Longmont United Hospital settled the issue: Ex-Cell-O stands, at least under the current Board's composition.
• The majority reasoned that monetary damages would chill an employer's statutory right to judicial review of union certifications, exceed the NLRA's remedial scope, and require impermissibly speculative harm calculations.
• Member Prouty dissented, arguing employees should be compensated for quantifiable economic losses caused by an employer's unlawful delay.
• The ruling is part of a broader pattern: the current three-member Board — two Trump appointees and one Biden appointee — has resolved a large backlog of pending Ex-Cell-O remedial questions in the same direction since regaining quorum in January 2026.
• A future Board with a different composition could revisit the issue; the dissent provides a roadmap for that effort.

Primary Source Author: Members Prouty, Murphy, and Mayer — National Labor Relations Board

Primary Source: Oakrheem, Inc. d/b/a Hayward Convalescent Hospital and Service Employees International Union, Local 2015, 374 NLRB No. 65 (March 23, 2026)

Primary Source Link: 374 NLRB No. 65 — NLRB Decision (PDF)

Supplemental Sources

• Longmont United Hospital, 374 NLRB No. 52 — NLRB case page
• Faegre Drinker: Key NLRB Developments Since Start of 2026
• NLRB Edge: The Effort to Overturn Ex-Cell-O Has Failed (March 2, 2026)
• NLRB Edge: Board Disposes of Seven More Ex-Cell-O Cases (March 25, 2026)
• Ex-Cell-O Corp. v. NLRB, 449 F.2d 1058 (D.C. Cir. 1971) — Justia
• OnLabor: GC Abruzzo's Push to Overturn Ex-Cell-O — Background and Analysis
• Seyfarth Shaw: The End of Ex-Cell-O? NLRB Signals Remedial Review (April 2023)
• Bloomberg Law: Longmont United Hospital, 374 NLRB 52 — Case Report