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Last-Minute Reprieve? NLRB’s notice posting rule struck down and enjoined by two federal courts

Employer groups have contested the National Labor Relations Board’s controversial notice-posting rule since it was first published in December 2010. 

Since last Friday, they have scored major victories.  First, on April 13, the United States Chamber of Commerce and a local chamber of commerce persuaded a federal district court in South Carolina to strike down the rule, which would have required most private employers to post a notice that informed employees of their rights under federal labor law.  Subsequently, on April 17, the U.S. Court of Appeals for the District of Columbia enjoined the rule until it has had an opportunity to resolve an appeal of another lower court decision.  Finally, on April 17, the board conceded the Court of Appeals’ injunction, and agreed that it would not implement the rule until the appeal was resolved.  These decisions will prevent the rule from becoming effective as scheduled on April 30, and also could limit the board’s ability to issue additional rules in the future. 

Court holds that the board overstepped its authority

The district court that struck down the rule agreed with the employer groups that the board overstepped its authority.  Administrative agencies such as the board do not possess unlimited authority to issue rules, and may act only when Congress authorizes them to do so.  Accordingly, to resolve the case, the court had to determine whether Congress authorized the board to issue the rule, either explicitly or implicitly through the terms of the National Labor Relations Act.  The board first argued that the Act expressly authorized it to issue the rule because the Act authorizes the board to issue any rule that is “necessary to carry out” other provisions of the Act.  The court disagreed that the rule was “necessary to carry out” the Act because the Act itself does not require employers to post notices, thus the court reasoned that the rule cannot be necessary to carry out a provision that does not exist.  Rather, the court held that the board “confuse[d] a ‘necessary’ rule with one that is simply useful.”  The board then argued that Congress implicitly authorized it to issue the rule, but the court again disagreed.  It held that Congress authorized the board to perform essentially two functions, i.e., conduct representation proceedings and prevent and resolve unfair labor practice charges.  The court reasoned that the rule would not further either of these two objectives; thus, it regulated an area that Congress did not intend to regulate.  Finally, the court looked outside the scope of the Act to discern Congress’s intent.  It recognized that Congress had included language in other statutes (such as Title VII) that required employers to post notices, but had not included such language in the Act.  For this reason, the court reasoned that, if Congress intended to impose such a requirement on employers, it would have done so through the terms of the Act. 

Appellate court subsequently bars the rule  

Four days later, the U.S. Court of Appeals for the District of Columbia solidified the employers’ victory when it enjoined the rule, thus blocking it from becoming effective for the time being.  The rule was before the Court of Appeals because a separate employer group had appealed a lower court decision that upheld most of the rule.  (This decision was discussed in a previous Bingham Greenebaum Doll LLP Labor and Employment blog post.) The Court of Appeals held that it was appropriate to block the rule until it resolved the appeal and determined whether the rule was enforceable, thus implicitly recognizing that the rule could have significant legal problems.  Shortly thereafter, the board issued a statement agreeing that it will not implement the rule until the appellate issues are resolved.  The Court of Appeals has given the parties until June 29 to file appellate briefs, thus indicating that the injunction will last at least through the mid-summer.  

More updates to come  

Altogether, these decisions will significantly impact employers for two reasons.  First, the district court’s decision strongly limited the board’s authority to issue rules that control employers’ conduct.  Several commentators have expected the board to issue other rules in the near future; thus, if other courts follow this decision, it could curtail the board’s future agenda.  For example, this decision could make it difficult for the board to issue a “card-check” rule, because such a rule may not be “necessary” to carry out the Act.  (The decision likely would not impact the board’s recent representation election rules, however, because the court recognized that Congress authorized the board to control representation proceedings.)  Second, and perhaps more importantly, these decisions will prevent the rule from becoming effective as scheduled on April 30.  Employers are not required to post the notice for now; however, they should pay close attention because there likely will be additional court action later this year.  If you have any questions about this rule or your rights under federal labor law, please contact William J. Kishman or any other member of Bingham Greenebaum Doll LLP’s Labor and Employment practice group.

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