DC Circuit Strikes Down NLRB’s Controversial Notice Posting Rule

Less than four months after invalidating President Obama’s recess appointments of three members of the National Labor Relations Board (NLRB or Board), the US Court of Appeals for the DC Circuit has struck down the NLRB’s controversial notice posting rule requiring employers to advise employees of their rights to join a union. Nat’l Ass’n of Mfrs. v. NLRB, Case No. 12-5068 (DC Cir. May 7, 2013).

The Final Rule

On August 30, 2011, the NLRB promulgated a Final Rule entitled “Notification of Employee Rights under the National Labor Relations Act,” (76 Fed. Reg. 54,006) (Aug. 30, 2011) (the Final Rule).

Subpart A of the Final Rule required all employers subject to the National Labor Relations Act (NLRA) to “post notices to employees, in conspicuous places, informing them of their NLRA rights, together with Board contact information and information concerning basic enforcement procedures.” 29 CFR § 104.202(a). The notice requirements were very specific and called for an 11x17-inch poster with the NLRB seal prominently displayed on the top left corner of the poster, and the phrase, “This is an official Government Notice…” printed in bold typeface along the bottom margin. The Notice required that each employer describe the NLRA in detail and inform employees of their right to join or organize a union and to strike, among other things.

Subpart B laid out the methods by which the NLRB would enforce the notice posting provisions of the Final Rule. Enforcement would begin when an individual files an unfair labor practice charge alleging that the employer failed to post the notice. After an investigation and an attempt to persuade the employer to comply, a formal complaint could be issued, triggering a hearing before an administrative law judge and an adjudication process governed by the Board’s customary procedures. If the Board found that the employer failed to post the notice, the employer would be ordered to cease and desist from the unlawful conduct and to post the required notice, as well as a remedial notice.

Subpart B also set forth two additional ways in which other Board proceedings might be affected by an employer’s failure to post the notice. First, the Board could find it appropriate to toll the statutory six-month statute of limitations for an employee to file an unfair labor practice charge. Second, the Board could consider an employer’s “knowing and willful refusal to comply with the requirement to post the employee notice as evidence of unlawful motive in a case in which motive is an issue,” even if the case was unrelated to the posting of the notice.

The Lawsuit

The National Association of Manufacturers (NAM) and National Right to Work Legal Defense and Education Foundation (NRTW) and others (collectively, Plaintiffs) each brought separate actions against the NLRB, alleging that the Final Rule exceeded the Board’s authority and that the Notice provision violated the Plaintiffs’ First Amendment Rights and other portions of the NLRA. The US District Court for the District of Columbia held that the Board lawfully promulgated Subpart A of the Final Rule, which requires employers to post a notice of employee rights, but exceeded the authority granted to it by Congress under the NLRA by promulgating the two provisions under Subpart B that permit the Board to deem failure to post an unfair labor practice and to toll the statute of limitations for claims brought by employees against employers who failed to post the notice. Nat’l Ass’n of Mfrs. v. NLRB, 846 F. Supp. 2d 34, 63 (DDC 2012).

The Appeal

Both the NLRB and the Plaintiffs appealed the District Court’s decision to the US Court of Appeals for the DC Circuit. The NLRB argued that the District Court erred in concluding that the Board did not have the authority to promulgate the enforcement mechanism and penalties under Subpart B. The Plaintiffs argued that the District Court erred in concluding the Board had the authority to promulgate Subpart A in its entirety.

The Court of Appeals affirmed the District Court’s conclusion that the enforcement mechanisms of Subpart B were contrary to the NLRA. The Court primarily relied upon § 8(c) of the NLRA, which essentially provides that both employers and labor unions have the right to express their views about labor unions, and about the benefits and drawbacks of union membership. The Court held the Final Rule violates § 8(c) because it makes an employer’s failure to post the Board’s notice an unfair labor practice, and because it treats such a failure as evidence of anti-union animus. The Court reasoned that requiring an employer to post the notice violated § 8(c) because it required speech that may contradict an employer’s views on labor unions.

Importantly, the Court reversed the District Court in upholding the validity of Subpart A. The Court concluded that because the Final Rule’s enforcement mechanisms violated the NLRA, the Final Rule itself must be invalid as well. The Court held that Subpart A could not be severed from Subpart B. As such, it vacated the Final Rule.

Conclusion

This case is a significant victory for employers. Significantly, the Court did not comment on whether the Board had the authority to promulgate such a rule in the first place; rather, the Court struck down the Final Rule because of the way in which it was to be enforced. Therefore, another version of the rule and a new proposed notice may very well be in the future for employers. Arent Fox’s Labor & Employment practice will continue to monitor any developments in this area.