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NLRB Posting Rule Blocked

By Allen Smith  4/16/2012
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A rule slated to take effect April 30, 2012, that would force most U.S. employers to post a notice of employees' rights under labor law has been blocked by a federal circuit court on the heels of a federal district court's determination that the issuing agency lacked authority to approve the rule.

The National Labor Relations Board (NLRB) lacked the authority to issue a notice-posting rule, the U.S. District Court for the District of South Carolina ruled on April 13, 2012. That decision was followed on April 17, 2012, by the U.S. Circuit Court for the District of Columbia granting an emergency injunction pending the appeal of a prior D.C. district court ruling that the NLRB had the authority to issue the rule.

In the D.C. Circuit court's two-page decision it noted that “the board postponed operation of the rule during the pendency of the district court proceedings in order to give the district court an opportunity to consider the legal merits before the rule took effect. That postponement is in some tension with the board's current argument that the rule should take effect during the pendency of this court's proceedings before this court has an opportunity to similarly consider the legal merits.”

South Carolina Decision
The lengthier court decision by the South Carolina district court noted that on Dec. 22, 2010, the board issued a notice of proposed rulemaking requiring employers subject to the National Labor Relations Act to put up posters in the workplace informing employees of their Section 7 rights under the act. The board estimated that nearly 6 million small businesses would be affected but determined that the compliance costs would be de minimis.

On Aug. 30, 2011, following analysis of the 7,000 public comments, the board issued a final rule, which was originally set to take effect Nov. 14, 2011, but the effective date was extended to Jan. 31, 2012, and again to April 30, 2012.

The poster notifies employees of their Section 7 rights to form, join or assist a union; to negotiate with an employer through a union; to bargain collectively through representatives of employees’ choosing; to discuss wages, benefits and other terms and conditions of employment with co-workers or a union; to take action to improve working conditions; to strike and picket; and to choose not to do any of these activities, including joining and remaining a member of a unit.

The rule did not stop with the posting requirement. It provided that an employer’s failure to post the notice might be found to interfere with employees in the exercise of their National Labor Relations Act Section 7 rights.

The court agreed with the plaintiff, the Chamber of Commerce, that the final rule violates the Administrative Procedure Act because the board lacks the authority to issue the rule under Section 6 of the act or the gap left by the absence of a notice-posting provision in the act.

‘Terra Incognita’

“Interpretation of Section 6 is terra incognita,” the South Carolina district court noted. “Courts have rarely explored the parameters of Section 6, the reason being that the board has rarely exercised its rulemaking authority.”

Congress authorized the board to regulate employers’ conduct in preventing and resolving unfair labor practice charges and conducting representation elections, the court noted. “It is clear from the structure of the act that Congress intended the board’s authority over employers to be triggered by an outside party’s filing of a representation petition or unfair labor practice charge,” it stated. “The notice-posting rule proactively dictates employer conduct prior to the filing of any petition or charge, and such a rule is inconsistent with the board’s reactive role under the act.”

The court also disagreed with the argument that any rule under Section 6 is lawful as long as some other provision of the act does not limit the board’s rulemaking authority. “This reading is mistaken,” the court stated. “The board cannot simply hang its hat on Congress’ silence, especially when the authority asserted here conflicts with the board’s historic ‘quasi-judicial’ role in relation to employers under the act.”

The court noted that Congress often has inserted notice requirements in labor laws since 1934, but the National Labor Relations Act was silent about notice. “Congress clearly knows how to include a notice-posting requirement in a federal labor statute when it so desires,” the court stated. “Here, there is no statutory language in the National Labor Relations Act that requires employers to inform employees of their Section 7 rights. Only then, if some related language was ambiguous or lacking, could there be a gap for the board to fill. Yet there is not a single trace of statutory text that indicates Congress intended for the board to proactively regulate employers in this manner” (Chamber of Commerce of the United States v. NLRB, No. 2:11-cv-02516-DCN (D. S.C. 2012)).

‘Lopsided Rule’

Randel Johnson, senior vice president with the U.S. Chamber of Commerce, said that the court struck down a rule that “required businesses to post biased notices ‘explaining’ employees’ rights to unionize. Conveniently (for organized labor), the lopsided rule did not include balanced information such as employees’ rights to decertify unwanted unions, or to refuse to pay union dues used for political purposes, nor did the posting provide information about employees’ rights in ‘right to work’ states—like South Carolina.”

“For 76 years the NLRB never required a notice, the statute does not require a notice,” noted John Raudabaugh, a former board member. “Because the labor movement has seen unionization rates drop from 35 percent in the 1950s to under 7 percent today, because the board has become so politicized and dominated by pro-union members, and, perhaps, because the NLRB is concerned that it has far less to do and is concerned about its own relevance, they probably hope that a notice will turn things around.”

David Barron in the Houston office of Cozen O’Connor said that “although most of the ‘rights’ listed in the poster are well established, there are some that are controversial. For example, the poster states that it is against the law for an employer to prohibit employees from wearing union hats, buttons, t-shirts and pins in the workplace ‘except under special circumstances.’ This is a hotly contested area of the law as employers often argue that such items violate company dress codes, create safety or sanitation concerns (e.g., for food handlers), or otherwise should be limited in the workplace. The poster could encourage more conflict in this area as employees may incorrectly interpret the poster as allowing them to wear pro-union paraphernalia in the workplace without limitation.”

Jonathan Segal, an attorney with Duane Morris in Philadelphia, noted that a District of Columbia district court has decided that the board did not exceed its statutory authority in requiring the posting of a union rights notice, so the district courts are in conflict. He said the issue eventually might go to the Supreme Court.

Oral argument before the D.C. Circuit is slated for September 2012.

Allen Smith, J.D., is manager, workplace law content, for SHRM.

Related Article:

Court Rules on Controversial NLRB Poster Requirement, SHRM Online, March 12, 2012

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