United States: Another Court Holds That The NLRB Lacked Authority To Require Employers To Post A Notice Informing Employees Of Their Rights Under The NLRA

On June 14, 2013, the Fourth Circuit Court of Appeals joined the D.C. Circuit Court of Appeals in invalidating the NLRB's rule requiring private sector employers to post a notice informing employees of their rights under the National Labor Relations Act (NLRA or the Act). In Chamber of Commerce of the United States v. National Labor Relations Board, the Fourth Circuit held that the National Labor Relations Board exceeded its authority by promulgating the posting rule. The three-judge panel's decision serves as a significant rebuke to the Board's attempt at proactive rulemaking.

On August 30, 2011, the NLRB promulgated a rule that would require all employers subject to the NLRA "to post notice to employees, in conspicuous places, informing them of their NLRA rights, together with Board contact information and information concerning basic enforcement procedures." Entitled "Notification of Employee Rights Under the National Labor Relations Act," the rule subjected a non-compliant employer to: (1) a finding that it committed an unfair labor practice; (2) a tolling of the statute of limitations for the filing of unfair labor practice charges; and (3) a finding of anti-union animus that could weigh against the employer in any subsequent Board proceedings. The text of the notice to employees stated:

The [NLRA] guarantees the right of employees to organize and bargain collectively with their employers, and to engage in other protected concerted activity or to refrain from engaging in any of the above activity. Employees covered by the NLRA are protected from certain types of employer and union misconduct. This Notice gives you general information about your rights, and about the obligations of employers and unions under the NLRA. Contact the [NLRB], the Federal agency that investigates and resolves complaints under the NLRA, using the contact information supplied below, if you have any questions about specific rights that may apply in your particular workplace.

The rule was unusual for several reasons. First, the NLRB has rarely engaged in rulemaking during its 77-year history. Second, although the Board requires employers found to have committed unfair labor practices to post remedial notices informing employees of their rights under the Act, this was the first time it promulgated a proactive notice-posting rule affecting all employers subject to the NLRA (whether unionized or not). The Board's rationale for implementing the notice-posting rule was that "American workers are largely ignorant of their rights under the NLRA, and this ignorance stands as an obstacle to the effective exercise of such rights." The Board offered several explanations for this lack of knowledge: "the overwhelming majority of private sector employees are not represented by unions;" "immigrants, who comprise an increasing proportion of the nation's work force (sic), are unlikely to be familiar with their workplace rights;" and "high school students, many of whom are about to enter the labor force, are uninformed about labor laws and labor relations." The Board attributed this lack of awareness of rights to the absence of any requirement that workers be informed of them.

During the public comment period that followed promulgation of the rule, the Board received over 7,000 submissions. The majority of the submissions opposed the rule in whole or in part. But before it went into effect, the U.S. Chamber of Commerce ("Chamber") filed a lawsuit in federal court in the District of South Carolina, seeking an injunction. The parties filed cross motions for summary judgment, and the district court ruled in the Chamber's favor. The district court held that the NLRB's rulemaking function, as expressly stated in the NLRA, only empowers the Board to carry out its statutorily defined remedial roles in addressing unfair labor practice charges and conducting representation elections. The NLRB appealed the district court's decision.

The Fourth Circuit's Decision

As an initial matter, the court was presented with the parties' competing statements of the legal question at hand. The Board and Chamber jockeyed to define the critical framework for the appellate court's analysis, with the Board contending that the relevant question was whether Congress intended to withhold authority to issue the challenged rule, and the Chamber arguing that the question was whether Congress intended to grant the authority. The court sided with the Chamber and turned its analysis to whether Section 6, which confers the general rulemaking power on the Board, requires that some other section of the NLRA provides explicit or implicit authority to issue the notice-posting rule.

Section 6 of the Act grants the Board authority to issue rules that are "necessary to carry out" the provisions of the Act. The Board contended that the term "necessary" is inherently ambiguous. But the court found that "the substantive provisions of the Act make clear that the Board is a reactive entity," and that the Act does not demonstrate congressional intent to allow "proactive rulemaking" under Section 6.

In reaching its decision, the court also considered the structure of the NLRA. The court found an absence of authority to promulgate a notice-posting rule in the statute and reasoned that such a rule was not "necessary to carry out" the Board's responsibilities (stated elsewhere in the Act) to conduct representation elections and adjudicate unfair labor practice charges. The court rejected the Board's circular argument that because its enforcement functions are reactive, the rule was necessary to proactively apprise employees of their rights. The court wrote: "regardless of how laudable the NLRB's goal of educating workers may be, 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."

Finally, the court reviewed both the NLRA's legislative history and "the history of evolving congressional regulation in the area (of labor legislation)." In considering the Act's history, the court noted that Congress reviewed and rejected a different proposed notice provision in the NLRA that would have required any employer that was a party to a contract that conflicted with the NLRA to notify its employees of the violation. This, the court found, reflected Congress's awareness of its option to authorize the Board to mandate that employers provide notices and its decision to not grant such authority. The court also contrasted the NLRA with other federal labor statutes, highlighting that other agencies that promulgated notice-posting requirements did so pursuant to proactive mandates, including the Equal Employment Opportunity Commission (EEOC), the Occupational Safety & Health Administration (OSHA), and the Department of Labor (DOL). As Judge Duncan wrote, "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 Fourth Circuit's decision follows a prior decision by the D.C. Circuit decision enjoining the NLRB's rule. Notably, the Fourth Circuit went even further than the D.C. Circuit, which ruled against the NLRB in a suit brought by the National Association of Manufacturers on the basis that the notice-posting rule violates section 8(c), which prohibits the NLRB from finding employer speech that is not coercive to be an unfair labor practice or evidence of such a practice. Indeed, the Fourth Circuit expressly held that the NLRA unambiguously does not grant authority to the NLRB to promulgate the challenged notice-posting rule.

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