On Friday, January 25, 2013, the D.C. Court of Appeals invalidated the recess appointments of two NLRB members made by President Obama on January 4, 2012.   The decision, Noel Canning v. NLRB, in addition to voiding the NLRB decision under consideration by the Court, calls into question the many rulings that have been issued by the appointees throughout 2012.  It also casts doubt on the Board’s ability to function, since the nullification of the ‘recess’ appointees brings the Board below the three member quorum that it needs to operate.  This decision likely will have significant implications for all employers.

The Decision

The basis for the ruling was twofold.  First, the appointments were not made during a recess.  According to the Court, the purported recess appointments were made during an active legislative session, which began on January 3 when the Senate convened the second session of the 112th Congress, instead of during an intersession recess, which is required under the Recess Appointments Clause of the Constitution.  The appointments were, thus, “invalid from their inception,” said the court. 

Second, the Board seats that the President attempted to fill did not become vacant during the intersession recess, which is also required by the Recess Appointments Clause.  The empty Board seats became vacant while the Senate was in intrasession recess (i.e. a short adjournment of a few days within an ongoing session), so the vacancies that arose during those periods did not qualify for recess appointment. 

What It Means

The fallout from Friday’s ruling is certain to be significant. 

First, the ruling may invalidate the decisions issued by the NLRB since January 4, 2012.  In New Process Steel v. NLRB, the Supreme Court invalidated almost 600 NLRB decisions, when it concluded that the Board was operating without a properly constituted quorum (2007-2010). 

Significant decisions that have been issued by the NLRB since January 4, 2012 include:

  • Micro unit decision allowing union to organize small unit of only “employees who perform primarily asphalt paving,” instead of larger unit of “employees who perform paving regardless of the materials used.”  Grace Industries, LLC, 358 NLRB No. 62 (June 18, 2012).
  • Prohibition of confidential investigatory interviews conducted by management.  Banner Health System, 358 NLRB No. 30 (July 30, 2012).
  • Prohibition on work rules that require “courtesy” from employees while at work, due to the potential chilling effect they could have on employee Section 7 rights.  Karl Knauz Motors, Inc., 358 NLRB No. 164 (September 28, 2012).
  • Requirement that dues checkoff continue after expiration of the labor contract.  WKYC-TV, Inc., 359 NLRB No. 30 (December 12, 2012).
  • Requirement that employers immediately begin bargaining over discretionary discipline issued to members of a newly certified bargaining unit, even though the parties have not yet agreed upon a labor contract.  Alan Ritchey, Inc., 359 NLRB No. 40 (December 14, 2012)
  • Requirement that employers provide unions with witness statements given by employees during a disciplinary investigation.  Hawaii Tribune-Herald, 359 NLRB No. 39 (December 14, 2012).
  • Prohibition of a mandatory arbitration clause in an employment application and handbook, due to concerns that it could chill employee Section 7 rights.  Supply Technologies, LLC, 359 NLRB No. 38 (December 14, 2012).

Second, it calls into question the numerous General Counsel Memos and Operations Management Memos issued by the NLRB’s Office of General Counsel.  These Memoranda are sent to the regional offices to give policy guidance, as well as direction in case handling matters.  While they were not issued by the Board members whose appointments were invalidated, the guidance in these Memoranda could be subject to change under a newly composed Board.

Some of the controversial Memoranda from the past year include: 

  • Decreased deferral of unfair labor practice cases to contractual grievance arbitration process.  Memorandum GC 12-01 (January 20, 2012).
  • Increased scrutiny for overbroad language in employer social media policies.  Memorandum OM 12-31.  (January 24, 2012).
  • Increased scrutiny for overbroad language in employer workplace policies, rules, and employee handbooks.  Memorandum OM 12-59 (May 30, 2012).

Third, it could bring to a halt the NLRB’s operations in their entirety.  The decision leaves the Board without the quorum that it needs to act, at least according to the D.C. Circuit Court of Appeals.  If this decision is followed by other courts, it will further erode the Board’s authority in other circuits.  But NLRB Chairman Mark Gaston Pearce, in a statement issued about the decision, has vowed that the Board will continue to operate.  He has also hinted at appeal, which would set the stage for a battle in the U.S. Supreme Court. 

What Should Employers Do Now?

It is unlikely that the NLRB will be conducting ‘business as usual’, despite what the NLRB Chairman may be saying about the matter.  Employers should evaluate their labor matters both through the lens of pre-2012 labor law, as well as ‘current’ Board precedent – in order to evaluate what actions are to be taken.  Serious thought should be given before entering into any settlement agreement, if there is a chance that a decision issued by the invalid appointees could influence the outcome of your case.  Employers should also carefully review decisions recently received.  There may be a basis for appeal if the decision was based on a potentially invalid NLRB decision.