The U.S. Court of Appeals for the D.C. Circuit has struck down a National Labor Relations Board ("NLRB" or "Board") regulation requiring businesses to post notices of workers’ rights under the National Labor Relations Act ("NLRA" or "Act"), holding that such a rule violates the free speech rights of employers under federal labor law. Nat’l Assoc. of Manufacturers v. NLRB, D.C. Cir., No. 12-5068 (May 7, 2013).

In August 2011, the NLRB published a final rule requiring covered employers to post, either physically or electronically, a notice informing employees of their NLRA rights. Under the rule, which would apply to nearly six million employers, those that failed or refused to post the required notice would violate Section 8(a)(1) of the Act, which proscribes employer action "to interfere with, restrain or coerce employees" in their exercise of rights guaranteed by the Act. Further, the rule stated that the NLRB could consider a "knowing and willful refusal to comply" with the posting requirement as "evidence of unlawful motive in a case in which motive is an issue." Finally, the rule provided that although Section 10(b) of the Act generally precludes the issuance of an unfair labor practice complaint based on conduct occurring more than six months before the filing and service of an administrative charge with the Board, tolling the statute of limitations would be appropriate "if the employer has failed to post the required employee notice unless the employee has received actual or constructive notice that the conduct complained of is unlawful." Click here to see a Winston & Strawn LLP client briefing regarding the NLRB’s final rule.

In publishing this rule, the Board departed from its historic practice of setting down principles through adjudication rather than rulemaking, and instead invoked Section 6 of the NLRA, which gives the agency authority to adopt such rules and regulations as may be "necessary" to carry out the provisions of the Act. The rule’s effective date, originally set in November 2011, was repeatedly postponed first to January 31, 2012, and then to April 30, 2012.

The National Association of Manufacturers, the National Right to Work Legal Defense and Education Fund Inc., the Coalition for a Democratic Workplace, the National Federation of Independent Business, and several small businesses challenged the rule in U.S. district court. On cross-motions for summary judgment, the district court generally upheld the rule, finding that the notice-posting requirement was within the Board’s "broad, express grant of rulemaking authority." However, the district court found that the Board exceeded its statutory authority in promulgating a provision that would treat any failure to post the required notice as an unfair labor practice. It also held that the provision tolling the statute of limitations was inconsistent with the language of the statute.

Both parties appealed the district court’s decision, and the D.C. Circuit found as a preliminary matter that the date the NLRB regulation was filed with the Office of the Federal Register was the appropriate date for determining whether the Board had a valid quorum; that the Board had a valid quorum on that date; and the fact that the Board may have lost its quorum in the intervening five days before the rule was published did not render the rule invalid. Yet, on the merits of the legal challenge, the D.C. Circuit found that Section 8(c) of the Act "precludes the Board from finding noncoercive employer speech to be [1] an unfair labor practice or [2] evidence of an unfair labor practice." The court found that requiring employers to post an NLRB statement of employee rights – which the business groups argued was a one-sided document promoting unionization – "does both." Observing that the First Amendment protects the dissemination of messages, as well as their creation, the D.C. Circuit held the rule to be invalid.

The appellate court also found that the Board could not enforce the notice-posting requirement through a provision that would toll the NLRA’s statute of limitations in some cases where an employer failed to display the required notice, because the NLRB failed to show that Congress intended to allow such tolling when in 1947 it enacted the six-month limitation on the filing of unfair labor practice charges. Finally, although the court did not address the Board’s authority to promulgate rules under Section 6 of the NLRA, it held that the Board’s requirement for the posting of notices was not severable from its enforcement provisions (all of which the court found to be invalid). As a result, the court vacated the rule in its entirety.

In concurrence, Judges Karen LeCraft Henderson and Janice Rogers Brown added that they would also hold that the NLRB lacked authority under Section 6 to promulgate the notice-posting rule, because Congress did not intend "to authorize a regulation so aggressively prophylactic" as that particular rule.

Separate from this litigation, the U.S. Chamber of Commerce brought a similar challenge, which is currently pending in the Fourth Circuit on appeal from the district court decisions that the Board lacked authority to promulgate the rule. See Chamber of Commerce of the U.S. v. NLRB, 856 F. Supp. 2d 778 (D.S.C. 2012).

In addition to the labor law implications of this decision, the D.C. Circuit’s rationale could also be applied to challenge other workplace notices mandated by the EEOC and OSHA.