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🗞️ Satellite Healthcare Company Labor Law Violation - Freezing Union Workers' Raises

An NLRB judge ruled Satellite Healthcare violated federal labor law by withholding 2024 merit raises from 11 unionized Bay Area clinics while paying them to non-union staff—and blaming the union for the freeze.

onthelaborfront

onthelaborfront

— 6 min read
🗞️ Satellite Healthcare Company Labor Law Violation - Freezing Union Workers' Raises

A federal administrative law judge has ruled that Satellite Healthcare, Inc., a California nonprofit operating more than 90 hemodialysis centers, committed multiple violations of the National Labor Relations Act (NLRA) when it withheld annual merit wage increases from union-represented employees at 11 Northern California clinics in 2024 while continuing to pay those same increases to non-unionized employees at the same and other facilities.

The decision, JD(SF)–04–26, was issued on February 23, 2026 by Administrative Law Judge Brian D. Gee of the NLRB's San Francisco Branch Office. It is the second in a series of unfair labor practice (ULP) rulings against Satellite arising from its response to an organizing wave by the Service Employees International Union, United Healthcare Workers—West (SEIU-UHW), which won representation elections at 11 Bay Area clinics between December 2022 and March 2024, covering mixed units of registered nurses, hemodialysis technicians, dietitians, social workers, and other clinic staff.

The elections were part of a broader wave of dialysis worker organizing in California that began in late 2022. Satellite had been receiving administrative services from U.S. Renal Care since 2023, and a U.S. Renal Care division president—stipulated as an agent of Respondent under Section 2(13) of the Act—was among those found to have made unlawful statements in this case.

At the heart of the dispute was Satellite's two-decade-long practice of granting annual merit increases every spring—a process involving self-evaluations, manager reviews, and one-on-one discussions, consistently resulting in increases landing in employees' April paychecks. The NLRB's established standard requires employers to maintain such established terms and conditions of employment after unionization and to bargain before changing them. Even employees with performance problems had always received at least a minimum increase under Satellite's own policy.

First-contract bargaining began in September 2023. The union's chief negotiator, Jason Capell, explicitly waived the union's right to bargain over the amounts of individual merit raises on multiple occasions—asking only that Satellite continue the program as an established past practice. Satellite, through outside counsel, took the position that "maintaining the status quo" meant a freeze on all merit increases until a comprehensive economic agreement was reached. The ALJ characterized this as a false conception of the status quo obligation. Satellite had not yet submitted its own economic proposals at the time the April 2024 merit raises were due; those proposals did not come until early 2025.

ALJ Gee found three categories of NLRA violations. First, under Section 8(a)(1), four separate management statements were found to have unlawfully coerced employees by attributing the loss of merit raises to their selection of the union. These included a statement by Gilroy Center Manager Lucille Nowakowski, who told a technician he would receive no raise "because the Gilroy Clinic is a location that is unionized," and a statement by U.S. Renal Care Division President Ana Silveira, who told more than 30 assembled employees at a company town hall dinner that there would be no raises "because you are in bargaining. We told you that that was going to happen." The ALJ found these statements chilled not only represented employees but also unrepresented employees at the same facilities who witnessed the contrast in treatment.

Second, under Section 8(a)(3), the ALJ found discriminatory withholding applying the Wright Line burden-shifting framework. Evidence supporting anti-union animus included: managers directly linking unionization to the withheld raises; non-represented employees receiving increases while represented employees did not; a pattern of ULPs established in the predecessor Satellite I decision; Satellite's departure from a longstanding practice of granting increases to all eligible employees; and one manager's pretextual claim that a technician was denied a raise partly for failing to submit a self-evaluation—when the record established that self-evaluations were voluntary and had no bearing on merit decisions. Respondent presented no witnesses at the hearing. The ALJ found Satellite's brief-only defenses unpersuasive, noting the burden had shifted to Respondent under Wright Line and was not met.

Third, under Section 8(a)(5), the ALJ found Satellite had unilaterally changed a condition of employment without providing notice and an opportunity to bargain. The merit program qualified as an established practice under the standard set in Mission Foods, 350 NLRB 336 (2007)—more than 20 years of consistent spring raises using fixed criteria. Satellite's "Hobson's choice" defense—that it faced a ULP whether it granted or withheld increases—was rejected, as the Board had squarely addressed and dismissed that argument in Hyatt Regency Memphis, 296 NLRB 259 (1989). Because the union had already waived its right to bargain over individual raise amounts, nothing legally prevented Satellite from continuing the program.

This decision is the second adverse ALJ ruling against Satellite in related litigation. The first, Satellite I (JD(SF)–08–25, April 2, 2025), addressed the 2023 merit raise withholding, the discharge of a union leader, and other unilateral changes to working conditions. The Board adopted those findings on February 9, 2026, after Satellite filed no timely exceptions. Separately, in December 2024, a federal district court granted a Section 10(j) injunction requiring Satellite to restore its merit pay practice and bargain with the union, covering all 11 facilities.

The remedy ordered in this decision requires Satellite to make whole all affected bargaining unit employees for lost 2024 merit increases, with interest compounded daily, compensation for adverse tax consequences of lump-sum backpay awards, and W-2 filings with the Regional Director. Satellite must also post notices at all 11 facilities for 60 consecutive days, distributed both physically and electronically. The ALJ declined to order enhanced remedies—such as notice readings aloud or extension of bargaining certifications—finding standard make-whole relief sufficient, as no bad-faith refusal to bargain had been alleged or established.

The case sits within a shifting legal landscape. The NLRB reinstated the "clear and unmistakable waiver" standard for unilateral change defenses in Endurance Environmental Solutions, LLC, 373 NLRB No. 141 (December 2024), reversing the "contract coverage" standard that had been in place since 2019 and restoring an earlier framework that requires specific waiver language before an employer may act unilaterally. Separately, the Board's first published decision after regaining a quorum in January 2026—also involving Satellite Healthcare—confirmed that NLRB Regional Directors retain delegated authority to certify elections and rule in representation cases even when the Board lacks a quorum.

Key Points

  • Satellite Healthcare withheld 2024 annual merit wage increases from employees at 11 unionized Northern California clinics while continuing to pay those increases to non-union employees at the same and other facilities.
  • The ALJ determined that managers and agents at multiple facilities made statements attributing the withheld raises to employees' union membership and ongoing contract bargaining, in violation of Section 8(a)(1).
  • The ruling found violations of NLRA Sections 8(a)(1), 8(a)(3), and 8(a)(5)—covering coercive statements, discriminatory withholding, and unilateral change of an established term and condition of employment.
  • The union had waived its right to bargain over individual raise amounts; the ALJ found no legal barrier preventing Satellite from continuing its more than two-decade-old merit pay practice.
  • Satellite presented no witnesses at the hearing; the ALJ found Respondent's brief-only defenses unpersuasive and credited all General Counsel witnesses.
  • This is the second consecutive adverse ALJ ruling against Satellite in related litigation; the Board adopted the first decision (Satellite I) without exception on February 9, 2026.
  • A federal district court had issued a Section 10(j) injunction in December 2024 requiring Satellite to restore its merit pay practice while the administrative proceedings continued.
  • The remedy includes full backpay with compounded daily interest, tax consequence compensation, and 60-day notice posting at all 11 facilities.

Primary Source Author: Brian D. Gee, Administrative Law Judge, NLRB Division of Judges, San Francisco Branch Office

Primary Source: Satellite Healthcare, Inc., JD(SF)–04–26, Case 20-CA-340738 (February 23, 2026)

Primary Source Link: https://apps.nlrb.gov/link/document.aspx/09031d45841dc1bb

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