The 4th U.S. Circuit Court of Appeals became the second federal appellate court to strike down a new rule promulgated by the National Labor Relations Board mandating that companies post information for employees about their federal rights.

The “Notification of Employee Rights Under the National Labor Relations Act” rule required employers to “conspicuously display” the 11-by-17-inch poster, which would have included information about the right to form or join a union, as well as the right of employees to act together to improve wages and working conditions under the National Labor Relations Act. Failure to post the notice constituted an unfair labor practice.

Challenging the rule, the U.S. Chamber of Commerce and the South Carolina Chamber of Commerce argued that the Board exceeded its statutory authority pursuant to the Administrative Procedure Act. A federal district court agreed and in a decision similar to an opinion issued by the D.C. Circuit Court of Appeals in May, the 4th Circuit affirmed summary judgment for the plaintiffs.

“[T]he rulemaking function provided for in the NLRA, by its express terms, only empowers the Board to carry out its statutorily defined reactive roles in addressing unfair labor practice charges and conducting representation elections upon request,” the three-judge panel wrote. “Indeed, there is no function or responsibility of the Board not predicated upon the filing of an unfair labor practice charge or a representation petition.”

Beginning with the premise that the poster rule was invalid unless the court found that Congress intended to delegate the Board the power to issue such rules (as opposed to the Board’s argument that it should be considered to have such power unless Congress expressly withheld it), the 4th Circuit said the legislation simply did not grant such authority.

“[T]he substantive provisions of the [NLRA] make clear that the Board is a reactive entity, and thus do not imply that Congress intended to allow proactive rulemaking of the sort challenged here,” the court said.

The court reviewed the history, structure, and purpose of the NLRA, noting that the relevant provision on rulemaking – Section 6 – provides the Board with the power to make rules “as may be necessary to carry out the provisions” of the NLRA.

The Board had a laudable rationale behind the rule, the court acknowledged: to inform workers about their rights under the NLRA. But that purpose was not in furtherance of enumerated powers, despite the Board’s argument that it was fulfilling its requirements under Sections 1 (which details the purpose and aspirations of the Board) and 7 (which lists rights protected under the NLRA) by educating workers. There is “nothing in the text of the NLRA to suggest the burden of filling the ‘knowledge gap’ should fall on the employer’s shoulders,” the court concluded. “Put simply, we cannot accept the Board’s circular argument; the Board may not justify an expansion of its role to include proactive regulation of employers’ conduct by noting its reactive role under the [NLRA].”

The 4th Circuit also noted that Congress’s decision not to provide the Board with the ability to engage in proactive rulemaking stood in contrast to other labor agencies like the Equal Employment Opportunity Commission, the Occupational Health and Safety Administration, and the Department of Labor, to which lawmakers clearly granted such powers.

“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,” the panel concluded. “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.”

To read the decision in Chamber of Commerce v. NLRB, click here.

Why it matters: The NLRB’s poster rule faces an uphill battle to enforcement now that two federal appellate courts have overwhelmingly sided with employers in striking down the rule. As the 4th Circuit repeatedly emphasized, the “NLRB serves expressly reactive roles” to conduct representation elections and resolve charges of unfair labor practices. The Board’s “novel” attempt to step outside those boundaries could not stand, the court said.