The National Labor Relations Board exceeded its authority by issuing a rule requiring all employers subject to the National Labor Relations Act to post a notice informing employees of their rights under the NLRA, the U.S. Court of Appeals for the Fourth Circuit has ruled. Chamber of Commerce of the U.S., et al. v. NLRB, No. 12-1757 (4th Cir. Jun. 14, 2013). Affirming summary judgment in favor of the Chamber of Commerce of the United States and South Carolina Chamber of Commerce (collectively, “the Chamber”), the Court held the NLRA only authorizes the NLRB to “carry out its statutorily defined reactive roles in addressing unfair labor practice charges and conducting representation elections upon request” and not engage in proactive rulemaking. The Fourth Circuit joined the D.C. Circuit in rejecting the rule. The U.S. Court of Appeals for the D.C. Circuit struck down the rule in May of 2013.

Background

In 2011, the NLRB promulgated a rule requiring employers to post a notice informing employees of their rights under the NLRA. Employers that failed to post the notice would be subject to: (1) a finding that they committed an unfair labor practice; (2) a tolling of the statute of limitation for other unfair labor practice charges filed against them; and (3) a finding of anti-union animus that would weigh against them in any proceedings before the NLRB. 

The Chamber sought final review of the rule. The district court determined the NLRB exceeded its authority in promulgating the rule, in violation of the Administrative Procedure Act (“APA”), based on the plain language of the NLRA, its structure, its legislative history, and the notice provisions in other statutes. The NLRB appealed.

Appeal Rejected

The Court first addressed the standard of review applicable to the NLRB’s rulemaking. The NLRB argued it maintains the power to promulgate the rule unless Congress expressly withheld that authority. By contrast, the Chamber argued NLRB rulemaking authority exists only if Congress expressly delegated such power to the NLRB. 

The Court sided with the Chamber. The Court emphasized there was “no general grant of power to the NLRB outside the roles of addressing ULP charges and conducting representation elections.” It also pointed out “the fact that none of the Act’s provisions contain language specifically limiting the NLRB’s authority to enact a notice-posting requirement reflects the absence of statutory authority for actions outside those defined responsibilities as a threshold matter.”

Having rejected the NLRB’s argument that the Court should assume it could issue the rule unless that power was expressly withheld, the Court next assessed the validity of the notice rule under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). The Court began by reviewing the NLRA’s express language. Under Section 6 of the NLRA, the NLRB has the authority to issue rules that are “necessary to carry out” the provisions of the Act. 29 U.S.C. § 156. The NLRB argued that “necessary” was ambiguous and should be construed to allow it to promulgate any regulation that was reasonably related to the statute’s purpose. The Court disagreed. Even if “necessary” were ambiguous, the Court was not required to defer to the NLRB’s interpretation. Further, even where Congress has stated that an agency may do what is “necessary,” that grant of authority does not allow the NLRB to disregard specific statutory restrictions imposed by Congress. In other words, the NLRB could not bootstrap authority to issue the notice rule solely “by relying on Section 6 in isolation.” 

The Court next examined the overall structure of the NLRA to ascertain whether Congress intended to grant the NLRB the power to issue the notice rule. After examining the NLRA’s language and structure, the Court found no support for the NLRB’s notice rule. To the contrary, the Court noted the “NLRB serves expressly reactive roles: conducting representation elections and resolving ULP charges.” Nothing in the NLRA implied that “Congress intended to grant the NLRB authority to issue the notice-posting rule sua sponte.”

The Court also reviewed the NLRA’s legislative history and determined that it, too, did not support the NLRB’s notice rule. Since the NLRA’s enactment in 1935, Congress has passed numerous employment laws containing notice-posting requirements and amended the NLRA three times. Yet, each time it amended the NLRA, Congress did not include a requirement that employers must post notices regarding employees’ rights. “Congress’s continued exclusion of a notice-posting requirement from the NLRA, concomitant with its granting of such authority to other agencies, can fairly be considered deliberate …. Had Congress intended to grant the NLRB the power to require the posting of employee rights notices, it could have amended the NLRA to do so.” Accordingly, the Court concluded the NLRB exceeded its authority in issuing the notice rule and affirmed summary judgment in favor of the Chamber.

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This decision is welcome news to employers faced with yet another posting requirement. It remains to be seen whether, in light of the decision, the NLRB will withdraw the regulation or whether further litigation regarding the regulation will occur.