On June 14, 2013, the United States Court of Appeals for the Fourth Circuit struck down the National Labor Relations Board's (NLRB or Board) requirement that employers subject to its jurisdiction post on their properties and websites a notice advising employees of their rights under the National Labor Relations Act (NLRA). The decision, Chamber of Commerce of the United States v. N.L.R.B. -- F.3d --, 2013 WL 2678592 (4th Cir. June 14, 2013), specifically ruled that the NLRA lacked the authority under the National Labor Relations Act (NLRA) to issue the rule requiring businesses to post the notice. This decision comes on the heels of the United States Court of Appeals for the D.C. Circuit's May 7, 2013, decision in which that court found the NLRB's poster rule unenforceable. This is another significant victory for employers because it explicitly recognizes the limits on the NLRB's proactive rulemaking authority.
As BakerHostetler has explained in a previous (Executive Alert 8/30/2011), the NLRB's rule, originally slated to go into effect in November 2011, required a significant majority of businesses to "post notices to employees, in conspicuous places, informing them of their NLRA rights, together with Board contact information and information concerning basic enforcement procedures, in the language set forth in the Appendix to Subpart A of this part." 29 C.F.R. § 104.202(a). Generally, the poster informed employees of their right to form, join or assist a union; to bargain collectively through representatives of their choosing; to discuss wages, benefits and other terms and conditions of employment with fellow employees or a union; to take action to improve working conditions; to strike and picket; or to choose not to engage in any of those activities. See 29 C.F.R. § pt. 104, subpt. A, app.
Given the requirement's broad and severe implications to employers, it is no surprise that the rule's validity was challenged in two federal court actions -- one filed in South Carolina and the other filed in the District of Columbia.
As to the case filed in D.C., the trial court found that although the NLRB had authority to issue the rule and that, generally, it was lawful, the Board did not have the authority to include in the rule a tolling of the statute of limitations on unfair labor practices (ULP) for failure to post a notice or a blanket determination that a failure to post always constituted a ULP. Both sides appealed the lower court's decision to the D.C. Circuit Court of Appeals. On appeal, the D.C. Circuit determined that the posting requirement and the NLRB's stated enforcement mechanisms were in violation of the NLRA and, therefore, invalid. Specifically, the court held that the notice-posting rule violated Section 8(c) of the NLRA, which prohibits the NLRB from finding employer speech that is not coercive to be an unfair labor practice or evidence of an unfair labor practice. (Executive Alert 5/14/2013).
Although the majority opinion did not rule based on the NLRB's general authority under the NLRA to issue the notice-posting rule, two judges on the panel held in a concurring opinion that the NLRB did not have the authority under the NLRA to promulgate the rule in the first place because it was not "necessary" to carry out the express provisions of the NLRA.
THE FOURTH CIRCUIT DECISION
With respect to the South Carolina case, the lower court concluded on summary judgment that the NLRB did not have the authority to promulgate the rule and that the rule was, in its entirety, unlawful (Executive Alert 4/16/2012). That decision was appealed to the Fourth Circuit Court of Appeals.
On appeal, the Fourth Circuit upheld the lower court's decision. Unlike the D.C. Circuit's decision, however, the Fourth Circuit went further, holding that the NLRB exceeded its authority in promulgating the notice posting rule.
Focusing on the NLRB's rulemaking power under the NLRA, the three-judge panel stated that they "agree[d] with the district court that the rulemaking function provided for in the NLRA, by its express terms, only empowers the Board to carry out its statutorily defined reactive roles in addressing unfair labor practice charges and conducting representation elections upon request." The court noted that Congress never granted the NLRB the statutory authority to promulgate notice requirements and that there was "no function or responsibility of the Board not predicated upon the filing of an unfair labor practice charge or a representation petition." In its analysis, the Court combed the various applicable sections of the NLRA for the NLRB's authority to issue the notice-posting rule, but found none. The court stated explicitly that the NLRB does not have authority to issue this type of notice-posting rule and explained, in a thoughtful opinion, the limits on the NLRB's proactive rulemaking power.
HOW THIS DECISION AFFECTS EMPLOYERS
This decision is important for employers because it is the second circuit court decision to significantly check the NLRB's rulemaking authority and enforcement powers under the NLRA. In the Fourth Circuit's case, the court was not bashful about explaining the limits on the NLRB's proactive rulemaking authority, which should serve to caution the NLRB in challenging or attempting to extend its rulemaking authority in the future.
Going forward, the impact and full effect of this decision is not quite settled, as it is unclear whether the NLRB will seek review of the decision by the U.S. Supreme Court. For now, the NLRB has stated it is reviewing the decision and will, at a later time, make a decision as to how to respond. While the Fourth and D.C. Circuits appear to have halted the NLRB's notice-posting rule, this issue illustrates the Board's attempt to extend its reach into non-unionized workplaces in a variety of different areas (e.g., social media, employee confidentiality, waiver of class claims). In such a climate, employers should make sure to consult with their labor counsel as to their rights and obligations vis-à-vis recent Board pronouncements.