Of the many actions by the NLRB during the last few years, one of the most contentious has been its attempt to require all private employers falling under its jurisdiction to post a notice informing employees of their rights to unionize.  The notion of posting such a notice was considered bad enough, but when the NLRB significantly expanded on the regulation to actually make failure to post an unfair labor practice but also make a violation of the rule grounds for tolling the statute of limitations on other unfair labor practices, the agency stirred up a firestorm of opposition.  The NLRB delayed implementation twice as it faced resistance.  Then, of course, it got sued.  Twice.  Once in the District of Columbia and once in South Carolina.  Now the federal appeals court in each jurisdiction has weighed in and the rule has been invalidated in each case. 

Last month we reported the DC Circuit’s invalidation of the rule, largely on the grounds that it violated the free speech provisions of the Act.  This month, in a separate case filed by the United States Chamber of Commerce in South Carolina, the Fourth Circuit Court of Appeals also invalidated the rule.  It is a significant decision because it details the role Congress intended for the NLRB to play, something that appears to have been lost these last several months.

The case is U.S. Chamber of Commerce v. NLRB, No. 12-1757 (4th Cir. June 14, 2013).  The unanimous three judge panel of the Court first analyzed the NLRA and determined that the core role of the agency, as set forth by Congress, was to be reactive:  “(1) to conduct representation elections, and (2) to prevent and resolve [unfair labor practices].”  Thus, the Court concluded the agency’s role is to handle things properly instigated before it, not to seek new things to do unrelated to these core missions.

The Court then went through the NLRB’s statement of the need for the rule as resulting from its conclusion that, “American workers are largely ignorant of their rights under the NLRA….” and that this “knowledge gap” was created because the “overwhelming majority of private sector employees are not represented by unions, and thus lack an important source of information about NLRA rights….”  Against this thin, and largely disputed, backdrop the Court noted:

The challenged rule is unusual in several respects.  The Board has only rarely engaged in rulemaking during its seventy-seven year history.  And it has never promulgated a notice-posting rule of any kind.

In light of its conclusion of the NLRB’s core responsibilities, the Court reviewed the Section 6 of the NLRA, which provides, simply, “The Board shall have authority from time to time to make, amend, and rescind, in the manner described by the Administrative Procedure Act, such rules and regulations as may be necessary to carry out the provisions of this Act.”  The question then became whether the rights poster rule was “necessary” to carry out any provision of the Act.  The answer to the question, the Court concluded, was the “substantive provisions of the Act make clear that the Board is a reactive entity, and thus do not imply that Congress intended to allow proactive rule-making of the sort challenged here through the general rule-making provision of Section 6.”

The Court rejected the NLRB’s argument that several sections of the Act supported the need for the poster rule:

The Board points to a number of sections in the Act, arguing that the rule is necessary to carry them out.  The Chamber responds that no provision in the Act requires employers who have not committed labor violations to be subject to a duty  to post employee notices.  We agree.  The NLRB serves expressly reactive roles:  conducting representation elections and resolving ULP charges.  As an examination of the Act as a whole makes evident, none of its sections imply that Congress intended to grant the Board authority to issue the notice-posting rule sua sponte.

The Court then, just to make sure, analyzed each section of the Act.  It found no provision supported making a rule that required notification of rights.  In particular, the Court noted that Sections 9 and 10 of the Act, which set forth the Board’s representation and ULP adjudication functions, do not support a blanket rule for all employers, regardless of whether they have matters pending before the agency.  The Court disposed of the Board’s argument with model efficiency:

Essentially, the Board argues that because the enforcement functions provided for by Sections 9 and 10 are reactive, it was necessary to proactively create the challenged rule in order for employees to undertake their role in instigating those processes.  With this reasoning, the Board attempts to derive from provisions governing the functions and operation of the agency the authority to do something entirely distinct from those functions, with the rationale that doing so would make them more effective.  However, regardless of how laudable the NLRB’s goal of educating workers may be, ‘there is nothing in the text of the NLRA to suggest the burden of filling the ‘knowledge gap’ should fall on the employer’s shoulders.’ [citing National Association of Manufacturers, et al. v. NLRB, (DC Circ. May 7, 2013) , Henderson, J., Concurring] Put simply, we cannot accept the Board’s circular argument; the Board may not justify an expansion of its role to include proactive regulation of employer’s conduct by noting its reactive role under the Act.

 The legislative history of the Act also was analyzed by the Court and found wanting.   Finally, the Court noted that several labor statutes had been enacted during the period 1935 and 1974 (during which the NLRA had been amended three times), many of which expressly provide for the posting of notices.

 What will be the agency’s next move?  It’s anyone’s guess but one would hope that facing unprecedented turmoil that the agency would let this one go instead of expending resources it might very well use to simply educate the American worker on its own instead of using those same resources to require employers to do it.