In ‘Unheard of’ Move, Two Small-Business Owners Arrested for Defying Labor Board Ruling, Court Order

In a “warning shot” to employers who might defy the National Labor Relations Board, the two owners of a Wisconsin spa were arrested for contempt of court, signaling that courts are taking the National Labor Relations Act seriously.The owners of Haven Salon and Spa at Muskego, Wisconsin, Carley and Timothy Dillett, were taken into custody Tuesday at the order of the Seventh Circuit Court of Appeals for repeatedly refusing to obey the court’s order to comply with a ruling from the NLRB. They were released after a court hearing in which they agreed to comply with the ruling.The case arose during the Covid pandemic when the Dilletts were found to have illegally fired an employee who had voiced concerns over the company’s Covid protocols.The employee, Katherine Rehm, was in 2020 “worried that Haven was not doing enough to protect her and other employees from Covid,” according to a February ruling from a panel of judges on the Seventh Circuit. “Over the next few months, she discussed her concerns with Timothy Dillett,” the ruling continues, but Mr. Dillett “did not react well to Rehm’s suggestions.” The judges noted that “tensions further mounted after Rehm sent a staff-wideemail criticizing Dillett’s handling of Covid health risks,” and Mr. Dillett “responded by firing her.” When Mr. Dillett found out that Ms. Rehm “complained” to the labor board about the termination, the judges added, “he threatened legal action against her and her family.”The NLRB ordered the spa to reinstate the employee, expunge references to the firing from the employee’s record, provide the board with needed information for calculating back pay, post a notice of rights at the company’s facility, and file a certificate of compliance with the board at Minneapolis.While the owners apparently rehired Ms. Rehm, they did not comply with other orders from the labor board. The appeals court affirmed the board’s ruling in February, ordering spa officials to comply with the ruling and imposing fines that could be forgiven if it complied with the ruling and court order. The court warned the Dilletts that the parties in a legal dispute “ignore court orders at their peril.”The salon owners, though, again defied the board and the court, and in an August motion, the board asked the court to hold the Dilletts in contempt, arguing that they were responsible for the company’s noncompliance.The court ordered the company to pay more than $30,000 in fines and fees to the board and took the Dilletts into custody for a hearing on Tuesday, at which point the two agreed to promptly comply with the court’s order.In a statement Wednesday, the general counsel for the NLRB, Jennifer Abruzzo, said, “This case demonstrates the Agency’s vigorous pursuit of justice.”“Employers should be on notice that they can face steep consequences if they continue to skirt the law, including being taken into custody until they comply,” Ms. Abruzzo said. “Violators of the Act should promptly comply with Board orders in order to quickly remedy their unlawful activities.”The case was a rare instance of company officials being taken into custody for a failure to comply with labor laws and, in the opinion of a partner at Julien, Mirer, Singla and Goldstein, Seth Goldstein, it’s “unheard of.”“I’ve never heard of anyone being threatened with jail from a federal court,” Mr. Goldstein says, adding that jail time is rarely invoked over labor violations.A labor board representative told the Waukesha County Freeman that “instances where people are held for court until complying with orders” are “extremely rare,” happening “only a handful of times in the past several decades.”“It is contempt, but it’s also failure to abide by the board’s order,” Mr. Goldstein tells the Sun. “It may not be a penalty that the board can levy against an employer, but when the employers had to go before a court, the court decided that they had to abide by the board’s order.”Mr. Goldstein attributes the new “teeth” behind the enforcement of the National Labor Relations Act to be as much a product of the labor movement as it is of appointments made to the board and the federal courts.“It’s not just the courts and the regulatory agency, it’s the activists of the labor movement — the new labor movement that is pushing for change,” Mr. Goldstein says. “They’ve always had those tools, they just didn’t use them … I don’t think it’s a flash in the pan.”The behavior of the owners at Haven Salon and Spa was not atypical of employers, Mr. Goldstein says, who are advised by attorneys that there are minimal consequences for defying an NLRB ruling. For this reason, he characterized the arrests as a “warning shot.”“Warning shots create good behavior, and that’s how you change how employers relate to employees’ rights and the rights to collective bargaining,” Mr. Goldstein says.The director of the New York University Center on Labor and Employment Law, Samuel Estreicher, tells the Sun that such an enforcement action is fairly rare but could benefit law-abiding employers.“There’s a substantial span of employers that do believe that bad apples are creating an impetus for later restrictive regulation,” Mr. Estreicher tells the Sun.Strong enforcement of the NLRA is both good for employees and employers in the long term, Mr. Estreicher says, adding that in the Haven Salon and Spa case, the enforcement action was overdue.“Otherwise it’s too easy to just manipulate the system and take advantage of delay,” Mr. Estreicher says. “In this case there have been two courts of appeals decisions enforcing the court’s order. It’s about time now to be a law-abiding employer.”The arrests come during a period when Americans have a near historically positive opinion of unions. An August Gallup poll found that 67 percent of Americans have a positive view of unions, down slightly from 70 percent last year.It also comes as labor advocacy dominates headlines, from the writers’ strike to the United Auto Workers strike.Representatives for Haven Salon and Spa did not respond to a request for comment.The salon’s website notes that in 2013, “Carley and Tim Dillett established Haven Salon + Spa to provide guests with a quaint sanctuary of Aveda salon and spa services.” They add that its services are offered “exclusively for your beauty, pleasure and well-being,” and that they “embody excellence and are tailored with your every need in mind.” The salon is described as a “haven of tranquility and transcendent beauty, where our skilled team of professionals will create for you, a unique, personal experience.”

In ‘Unheard of’ Move, Two Small-Business Owners Arrested for Defying Labor Board Ruling, Court Order

In ‘Unheard of’ Move, Two Small-Business Owners Arrested for Defying Labor Board Ruling, Court Order

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