The Fourth Circuit joined the D.C. Circuit in striking down the National Labor Relations Board’s (“Board” or “NLRB”) noticeposting rule in Chamber of Commerce of the United States v. NLRB. The District of South Carolina granted summary judgment and held that the NLRB exceeded its own authority in violation of the Administrative Procedure Act. The Fourth Circuit affirmed in a unanimous opinion.

The Rule

The Notification of Employee Rights under the National Labor Relations Act was promulgated in 2011. During the public comment period after promulgation, the Board received 7000 submissions, many of which claimed that the Board lacked authority to promulgate the rule. In addition, Board Member Brian Hayes dissented because he also did not believe the Board had authority to promulgate the rule in the absence of a specific unfair labor practice charge.

The rule would have required employers to post notices to employees of their rights under the National Labor Relations Act (“NLRA” or “Act”) and failure to post would have been an unfair labor practice. 

If an employee filed an unfair labor practice charge based on the failure to post, the employee would have still been allowed to file another unfair labor practice charge in the next six months. If an employer knowingly and willfully refused to comply with the rule, this could have been used as evidence of an employer’s unlawful motive in another NLRB proceeding.

The NLRB stated that the rationale behind the rule was the fact that many employees, including immigrants, high school students, and those who are not represented by unions, are largely ignorant of their rights under the NLRA. In addition, the Board recognized that the NLRA is one of the few federal labor laws that does not require the posting of laws. The rule would have applied to any employer whether they had union employees or not. However, it would have been more important for employers who did not have union employees because the notice would have been advising employees on how to form a union.

Until this notice-posting rule, the Board rarely engaged in rulemaking and only enacted a notice-posting rule on a case by case basis for specific employers who had already committed an unfair labor practice. In this limited context, the Fourth Circuit accepts a notice-posting rule. The D.C. Circuit previously held that a rule that applies to all employers, even if they have not committed an unfair labor practice, violates Section 8(c) of the NLRA (which prohibits the Board from finding employer speech that is not coercive to be an unfair labor practice).

The Fourth Circuit’s Opinion

The Board argued that it had the power to promulgate a rule unless Congress explicitly denied that authority. The Chamber of Commerce (“Chamber”) argued that the rule should be invalidated unless Congress intended to give the Board this rulemaking authority. The Fourth Circuit, relying on its own precedent, supported the Chamber’s argument. The panel emphasized that, in this case, there was no power to limit since the NLRB did not have power outside its reactive roles of conducting representation elections and addressing unfair labor practice charges. The panel agreed with the district court that, even though the Board is empowered to prevent unfair labor practices, the rulemaking function in the NLRA only allows the Board to react after there has been a claim of an unfair labor practice in violation of the Act. The reactive mandate of the NLRB contrasts greatly with the proactive role of other labor agencies.

The panel then followed the process articulated by the Supreme Court in Chevron, U.S.A., Inc. v. Natural Resources Defense Council. The first step in that process is to determine if the intent of Congress is clear. The Fourth Circuit looked at both the text and legislative history of the statute and determined that Congress’ intent was quite clear so it was not necessary to proceed to the second step of the Chevron test. The National Labor Relations Act

The panel analyzed Section 1 (the purpose and aspirations behind the Act), Section 7 (rights protected under the Act) and Section 8 (definition of unfair labor practices), which do not give the Board authority to promulgate a notice-posting rule. Section 6 was the focus of the case because it gives the Board rulemaking power consistent with the Administrative Procedure Act to enact rules which are “necessary to carry out” the provisions in the NLRA. The appellate panel found the notice-posting rule was not “necessary to carry out” Sections 9 or 10, which concern the two reactive roles of the Board: adjudicating charges of unfair labor practices and conducting representation elections. Both of these roles are reactive because the Board does not act until a party files a charge or a petition.

The Fourth Circuit stated that, while it may be laudable that the Board wants to educate employees about their rights, nothing in the Act states that this task should be the burden of employers. Additionally, the court noted that there is “no indication in the plain language of the Act that Congress intended to grant the Board the authority to promulgate” a rule that requires employers, who have not committed labor violations, to inform employees about their rights under the NLRA. The panel also noted that the Board’s argument was circular because it could not “justify an expansion of its role to include proactive regulation of employers’ conduct by noting its reactive role under the Act.”

Legislative History

With regards to legislative history, the court acknowledged that other agencies such as the EEOC and OSHA, which also have notice-posting requirements, are proactive agencies, but that the legislative history of the NLRA indicated that the Board should be reactive and not proactive. The court noted that there was also no evidence that the Board should have the power to enact the notice-posting regulation. The court pointed to the fact that Congress had considered a notice provision in 1934, but a Senate committee had agreed unanimously to remove the section that contained the notice provision as evidencing the clear intent of Congress on the subject. The court further pointed to the fact that a notice provision added to the Railway Labor Act in the same year the notice posting provision was considered in the NLRA as evidencing Congressional intent that NLRA should not contain such a provision.

The court further noted that, from 1935 to 1974, other labor laws were amended to include notice provisions. One such statute, the Veterans’ Benefits Improvement Act of 2004, was a labor law that Congress amended to include a notice-posting requirement. During this time period, the NLRA was amended several times yet a notice provision was never included in any of those amendments. The court determined that the legislative history clearly showed that Congress did not grant the NLRB the authority to promulgate notice-posting rules despite giving other agencies this power at the same time Congress amended the NLRA. Accordingly, the Court held that if Congress wanted to include a notice provision in the NLRA it would have been included in the statute.

Conclusion

The Fourth Circuit’s decision to strike down the Board’s notice-posting rule and affirm the District of South Carolina’s grant of summary judgment is good news for employers, who now have one less NLRB posting requirement to concern themselves with.

Brandon Lee Wolff, Summer Associate