On May 7, 2013, the United States Court of Appeals for the District of Columbia Circuit struck down a rule issued by the National Labor Relations Board (NLRB or “the Board”) requiring employers to post a notice informing employees of their rights under the National Labor Relations Act (NLRA). In National Association of Manufacturers v. NLRB, – F.3d –, 2013 WL 1876234 (May 7, 2013), the Court relied primarily on Section 8(c) of the NLRA, a provision protecting employer free speech, to find that each of the enforcement mechanisms set forth in the rule was invalid. Because the NLRB had stated it would not have issued a posting rule dependent solely on voluntary compliance, the Court found that the entire rule could not stand. The decision represents another obstacle to the so-called “Obama Board’s” efforts to aggressively enforce the NLRA.

The rule at issue would have required all employers subject to the NLRA – both those with unionized workforces and those without – to post a notice in a prominent location explaining employees’ rights to unionize, to bargain collectively, to strike or picket, and to refrain from joining in collective action. Click here for a link to our previous alert, which discussed the notice-posting rule. The notice would have also explained that employers may not: (1) prohibit employees from talking about or soliciting for a union during non-work time, (2) take adverse action against employees because of their support or lack of support for a union, or (3) make promises or provide benefits to employees to encourage or discourage union support. The notice-posting rule provided that failure to post the notice constituted an unfair labor practice, and further provided that the knowing and willful failure to post the notice could be considered evidence of unlawful motive in any separate unfair labor practice matter where the employer’s motive is at issue. The rule’s third enforcement mechanism would have allowed the NLRB to toll the six-month statute of limitations for filing an unfair labor practice charge if the notice had not been posted.

Despite the fact that the parties devoted much of their briefs to the question of the NLRB’s authority to promulgate the rule in the first place, the Court focused its analysis on Section 8(c) of the NLRA instead. Under that provision, non-coercive employer speech cannot constitute an unfair labor practice or evidence of an unfair labor practice. The Court determined that Section 8(c) covers not only an employer’s “expression” of his own non-coercive views, but also an employer’s “dissemination” of another’s non-coercive views, and further that the “right to disseminate another’s speech necessarily includes the right to decide not to disseminate it.” Nat’l Ass’n of Mfrs., 2013 WL 1876234, at *7. Therefore, the Court concluded that the rule violates 8(c) because it treats the failure of an employer to post the Board’s notice – i.e., an employer’s exercise of its right not to disseminate a view – as an unfair labor practice or evidence of an unlawful motive, in contravention of the statutory protection of employer speech. The Court also found that the NLRB could not enforce the posting requirement through the provision that would toll the NLRA’s statute of limitations for filing unfair labor practice charges because it had failed to show Congress intended to allow such tolling to modify the six-month statute of limitations provided by the NLRA. The concurring opinion would also have found that the NLRB lacked authority to promulgate the rule.

In reaching its decision in National Association of Manufacturers, the D.C. Circuit addressed at the outset, but declined to reiterate, its recent controversial decision in NLRB v. Noel Canning Div. of Noel Corp., 705 F.3d 490, (D.C. Cir. 2013), in which the Court held that three of President Obama's recess appointments to the NLRB were unconstitutional. Click here for a link to our previous alert, which discussed the Noel Canning decision. It is well-established that the Board needs a quorum of three validly appointed members to act. When the posting rule at issue in National Association of Manufacturers was proposed by the NLRB in December 2010, the Board had a valid quorum – three of the NLRB’s members (Wilma Liebman, Mark Gaston Pearce, and Brian Hayes) had been confirmed by the Senate, although the fourth member, Craig Becker, was a recess appointee whose appointment would be considered invalid under Noel Canning. By the time the notice-posting rule was published on August 30, 2011, Chairman Liebman’s term had expired, leaving only two validly appointed members under the reasoning applied in Noel Canning. However, the Court in National Association of Manufacturers found that the posting rule was filed with the Office of the Register prior to the expiration of Chairman Liebman’s term, while the Board had a valid quorum, and the fact that there may not have been a quorum when the rule was finally published did not render it invalid.

The NLRB published the final notice posting rule in August 2011, and it was initially set to become effective in November 2011. The effective date was delayed until January 2012 and then April 2012, while the D.C. Circuit considered the matter, which was on appeal from the decision of Judge Amy Berman Jackson of the United States District Court for the District of Columbia. Judge Jackson had upheld the NLRB’s authority to issue the rule in March 2012, but invalidated the rule’s enforcement mechanisms. Click here for a link to our previous alert, which discussed the district court decision. In addition to National Association of Manufacturers, in a second lawsuit challenging the posting requirement, the United States District Court for the District of South Carolina held the NLRB exceeded its authority in issuing the rule. See Chamber of Commerce of the U.S. v. NLRB, 856 F. Supp. 2d 778 (D.S.C. 2012). That case, which was also appealed and was argued before the Fourth Circuit in March 2013, awaits decision.

The D.C. Circuit’s emphasis on employer free speech rights under Section 8(c) in its ruling in National Association of Manufacturers potentially has an importance beyond the question of whether the Board could lawfully post the notice at issue. By avoiding the question of whether the NLRB had authority to promulgate the rule and choosing instead to clarify and reinforce an employer’s right to speak – or not speak – about issues of unionization under Section 8(c), the Court has demonstrated an interest in protecting employers’ ability to express views on unionization. The decision could be viewed as a potential obstacle to any effort by the Board to more aggressively police and inhibit employer communications on the basis that those communications contain implied threats. Thus, employers faced with unfair labor practice allegations based upon alleged threats and coercion may be more likely to defend their right to speak out, even when that speech contains blunt but non-coercive statements about the impact of unionization.

As a result of the D.C. Circuit’s ruling in National Association of Manufacturers, employers need not comply with the notice-posting rule at this time. However, employers are well-advised to follow developments in this area, including the pending decision from the Fourth Circuit addressing the same rule, and the NLRB’s response to the D.C. Circuit’s decision.