By Brendan O'Brien

Jan 11 (Reuters) - The National Labor Relations Board said it will begin including front pay in settlement agreements rather than in side letters, effective immediately.

Acting NLRB general counsel Lafe Solomon announced the policy change to front pay -- compensation in lieu of reinstatement -- in a memo dated Jan. 9.

"It remains agency policy that reinstatement is generally the best means to remedy the harm to employee statutory rights caused by an unlawful discharge or layoff," he wrote. "However, it is ultimately the discriminatee who chooses whether to insist on reinstatement, or waive it in return for compensation," Solomon said.

Because front pay has been typically written into a side letter between parties, the board has not had the power to police it.

Solomon also announced that the board now requires that waivers of reinstatement be in writing, except in special cases.

The modifications to board policy are based on a recommendation made by the NLRB quality committee, which regularly reviews board policies.

Settlements that result in front pay rather than reinstatement have tended to increase over time, based on a reading of NLRB data that shows a growing percentage of reinstatement offers being declined.

For example, the NLRB sought reinstatement offers in 1,644 cases where workers were illegally fired in 2011, but only 910 were accepted, or 55 percent. By comparison, 2,426 of 2,929 offers in 2006, or 83 percent, were accepted.

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