On April 13, 2012, a federal district court in South Carolina held the National Labor Relations Board (“Board”) did not have statutory authority to promulgate a rule that would require most private sector companies to post a notice of employee rights under the National Labor Relations Act (“Act”). This decision conflicts with a previous decision from the federal district court of the District of Columbia that upheld the Board’s authority to require the posting.

In August 2011, a two-member Board majority adopted the posting rule to address a “knowledge gap” that the majority stated left most U.S. workers unaware of their rights under the Act. Although not discrediting the majority’s view and reasoning for adopting the rule, the South Carolina district court held that the plain text of the Act does not require the posting nor provide the necessary support for the Board’s action.

The court noted that nine other federal labor and employment statutes require postings of notices, but the Act does not contain such a requirement. The court found that the Act’s structure places the Board in a “reactive mode” in relation to employers (responding to unfair labor practice charges and representation petitions), and a rule that proactively imposed an obligation on companies was not consistent with the Act’s scheme. In addition, the court found that the Board’s action contradicted the plain meaning of the Board’s statutory rulemaking authority because the rule was not “necessary to carry out” other provisions of the Act.

The rule originally was to be effective in November 2011. The Board postponed the effective date to January 30, 2012, and then extended the date to April 30, 2012.

However, late yesterday afternoon, the Court of Appeals for the District of Columbia temporarily enjoined the NLRB rule. In light of the DC Circuit's order, the Board announced that regional offices will not implement the rule pending the resolution of the issues.

We will keep you posted of further developments in both cases.