Post No Bills: Insights from the DC Circuit's Ruling on the NLRB's Notice Posting Rule | Practical Law

Post No Bills: Insights from the DC Circuit's Ruling on the NLRB's Notice Posting Rule | Practical Law

This Article discusses the US Court of Appeals for the District of Columbia Circuit's holding in National Association of Manufacturers v. NLRB that invalidated the National Labor Relations Board's (NLRB) rule requiring private employers to post notices explaining employees' rights under the National Labor Relations Act (NLRA).

Post No Bills: Insights from the DC Circuit's Ruling on the NLRB's Notice Posting Rule

by Practical Law Labor & Employment
Law stated as of 13 Aug 2013 • USA (National/Federal)
This Article discusses the US Court of Appeals for the District of Columbia Circuit's holding in National Association of Manufacturers v. NLRB that invalidated the National Labor Relations Board's (NLRB) rule requiring private employers to post notices explaining employees' rights under the National Labor Relations Act (NLRA).
On May 7, 2013, the US Court of Appeals for the District of Columbia Circuit issued an opinion in National Association of Manufacturers v. NLRB, holding that the National Labor Relations Board's (NLRB) rule requiring employers to post a notice informing employees of their rights under the National Labor Relations Act (NLRA) is invalid because each of the three ways in which the NLRB would enforce its posting rule was invalid.
The DC Circuit's decision also includes analysis supporting:
  • A broad interpretation of employers' free speech rights under Section 8(c) of the NLRA.
  • Limits on the NLRB's authority to expand the statute of limitations period for filing unfair labor practice (ULP) charges.
  • Invalidating decisions by the NLRB that require Member Becker to count towards three-member quorum requirements for the panel (Board) heading the NLRB's judicial functions.
  • Arguments for challenging federal agency rulemaking affecting the workplace, generally.
Although the court's decision invalidates the entire final rule, employers should be aware this decision will not likely be the final judgment on the NLRB's notice rule because:
  • The US Court of Appeals for the Fourth Circuit still must rule on the NLRB's appeal of a South Carolina district court's decision finding the rule invalid.
  • The NLRB may seek review of the DC Circuit's decision by either or both:
    • the DC Circuit sitting en banc; or
    • the Supreme Court.

Background

No rulemaking about a workplace posting will likely engender as much controversy and procedural history as the NLRB's notice of employee rights under the NLRA. This article provides a procedural chronology as assistance for employers.

The NLRB's Rulemaking

On December 22, 2010, the NLRB published for public comment the proposed version of its rule requiring employers to post a notice of employees' rights under the NLRA. In an action rare in the context of federal agency rulemaking, Member Hayes dissented, questioning whether the Board had authority to issue or enforce the proposed rule.
On August 30, 2011, the NLRB published its final rule after receiving and reviewing extensive comments, including much employer opposition. The final rule required all employers subject to the NLRA (except the US Postal Service) to:
  • Physically post the notice in conspicuous places where they are readily seen by employees, including all places where notices to employees concerning personnel rules or policies are customarily posted.
  • Electronically post the notice on an internet or intranet site if personnel rules and policies are customarily posted there.
  • Post translated versions of the notice in cases where at least 20% of employees are not proficient in English and speak the same foreign language.
For more information about the NLRB's jurisdiction, see NLRB Jurisdictional Limits and Standards Chart.
In the final rule, the Board authorized itself to:
  • Treat an employer's failure to post the notice as a ULP under the NLRA.
  • Toll the six-month statute of limitations for filing ULP charges indefinitely for charges against any employer that fails to post the notice.
  • Consider an employer's failure to post the notice as evidence of an unlawful motive in any ULP case where the employer's motive was at issue.
The final rule included several changes from the proposed version. Most significantly, the final rule did not include a requirement that employers distribute the notice of rights via e-mail, voice mail, text messaging or related electronic communications if they customarily communicate with their employees in that manner.
Chairman Liebman and Members Pearce and Becker endorsed the final rule while Member Hayes again dissented.
The rule was to take effect on November 14, 2011, or 75 days after it was published in the Federal Register.

Litigations and Postponements

Three employer associations filed lawsuits opposing the NLRB's final rule in the US District Courts for the District of Columbia and South Carolina. The two lawsuits in the District of Columbia District Court were consolidated.
The NLRB postponed the effective date of the rule three times (from November 14, 2011 to January 31, 2012, January 31, 2012 to April 30, 2012 and then without a date):
  • In light of the litigations.
  • To educate employers about the final rule's requirements.
  • To prepare materials for implementing the rule.
(See Legal Updates, NLRB Postpones Deadline to Post NLRA Rights Poster), NLRB Postpones Effective Date of Notice of NLRA Rights Posting Rule to April 30, 2012 and NLRB Indefinitely Postpones the Effective Date for the NLRA Poster Rule.)
In the meantime, the NLRB:
  • Made copies of the required notice available at:
    • its regional offices; and
    • on its website.
  • Published the posting text in:
    • two poster sizes; and
    • 26 languages.
  • Published a fact sheet about the final rule.

Both Federal District Courts Invalidated the Final Rule

On March 2, 2012, the US District Court for the District of Columbia held in National Association of Manufacturers v. NLRB that the NLRB:
  • Did not exceed its authority under the NLRA in promulgating a rule requiring employers to post a notice of employees' rights under the NLRA.
  • Exceeded its authority under the NLRA by:
    • deeming an employer's failure to post a ULP; and
    • tolling the statute of limitations for claims brought by employees against employers that failed to post the notice.
(No. 11-1629 Order (D.D.C. Mar. 2, 2012) and see Legal Update, NLRA Rights Poster Requirement is Lawful but NLRB's Sanctions for Failing to Post are Invalid: DC District Court.)
The court did not address the issue of whether the NLRB could view an employer's failure to post the notice as evidence of an unlawful motive under the NLRA.
On April 13, 2012, the US District Court for the District of South Carolina held in Chamber of Commerce of the United States v. NLRB that the Administrative Procedure Act does not give the NLRB authority to issue the notice-posting rule because:
  • Section 6 of the NLRA does not give the NLRB authority to do so (29 U.S.C. § 156).
  • The NLRA unlike other federal laws governing the workplace, does not require that employers post a notice of employees' rights under the law, which means that:
    • the notice-posting rule is not necessary to carry out the NLRB's essential functions;
    • Congress did not intend to impose a notice-posting requirement on employers under the NLRA;
    • Congress did not explicitly or implicitly give the NLRB authority to promulgate this rule; and
    • there is no "gap" in the NLRA that allows the NLRB to impose this rule.
(No. 2:11-cv-02516 Order (D.S.C. Apr. 13, 2012).)
On April 17, 2012, the DC Circuit enjoined the NLRB from requiring employers to comply with its posting rule while it was reviewing National Association of Manufacturers on appeal. The court's injunction order relied on, among other things, the Chamber of Commerce of the United States opinion. (See Legal Update, NLRB Poster Rule Enjoined Indefinitely: DC Circuit.)
The NLRB postponed the effective date of the final rule indefinitely, acknowledging that the DC Circuit enjoined further action on the rule while an appeal of the US District Court for the District of Columbia holding in National Association of Manufacturers was pending. Chairman Pearce issued a news release confirming that NLRB regional offices would not implement the rule pending the resolution of the issues before the DC Circuit.

The DC Circuit's Holding in National Association of Manufacturers v. NLRB

On May 7, 2013, the DC Circuit issued an opinion in National Association of Manufacturers v. NLRB, holding that the NLRB's rule requiring employers to post a notice informing employees of their rights under the NLRA is invalid because each of the three ways in which the NLRB would enforce the rule is invalid.
In particular, the court found that the NLRB could not lawfully:
  • Make a failure to post the notice a ULP.
  • Interpret a failure to post the notice as evidence of anti-union animus in NLRB proceedings.
  • Toll the six-month statute of limitations indefinitely for employees to file ULP charges against an employer that fails to post the notice.
(No. 12-5138 (D.C. Cir. May 7, 2013).)
While reaching these holdings, the court provided:
  • Useful arguments for employers in future litigation before or against the NLRB.
  • Further DC Circuit analysis that casts doubt on the validity of decisions by the NLRB that require Member Becker to count towards three-member quorum requirements for the Board.

Employers Have a Broad Free Speech Right under Section 8(c) of the NLRA

Section 8(c) of the NLRA recognizes employers' right to communicate their views on unionization in a non-coercive, non-threatening manner (29 U.S.C. § 158(c)).
The DC Circuit:
  • Analogized Section 8(c) to the First Amendment.
  • Acknowledged and applied precedent holding that individuals have rights both to express and refrain from expressing opinions under the First Amendment.
  • Held that requiring employers to post the NLRB's notice (under penalties of ULPs and inference of unlawful motives) infringed on employers' rights both to:
    • express their own opinions about unions or organizing unions in the workplace; and
    • refrain from expressing any view, including in this case, the NLRB's views about unions or organizing unions in the workplace.
(Nat'l Ass'n of Mfrs. v. NLRB, No. 12-5138 at *12-23 (D.C. Cir. May 7, 2013).)
Board precedent often glosses over employer's Section 8(c) rights to express negative opinions about unions. Unless employers specifically set out arguments that their speech or opinion was privileged under Section 8(c), NLRB administrative law judges, often with summary approval of the Board, analyze employer expressions of opinions:
  • As evidence of unlawful anti-union motives.
  • Independent ULPs remedied cumulatively with recognized ULPs.
Employers should consider citing to the court's analysis of Section 8(c) in National Association of Manufacturers to:
  • Frame Section 8(c) defenses for allegedly unlawful speech to the NLRB.
  • Challenge NLRB decisions where the NLRB failed to consider employers' 8(c) rights.

Congress Did not Authorize Equitable Tolling of the NLRA's Six-month Statute of Limitations for ULPs

Section 10(b) of the NLRA provides a six-month statute of limitations for filing ULP charges (29 U.S.C. § 160(b)).
The DC Circuit:
  • Found that any attempt to expand the 10(b) limitations period through "equitable tolling," as the NLRB asserted it could while defending its final rule, must be rooted in legislative intent.
  • Concluded that the NLRB could not toll the 10(b) limitations period indefinitely for ULP charges against an employer that fails to post the NLRB's notice, based on the employer's failure to post or employees' lack of knowledge about their rights under the NLRA, because:
    • Congress expressed no intent to make 10(b) limitations flexible or discretionary when enacting or amending the NLRA; and
    • the precedent on which the NLRB relied for its equitable tolling arguments came after the most recent amendments of the NLRA, concerned equitable tolling of other statutes and could not support retroactively changing congressional intent about the nature of Section 10(b).
(Nat'l Ass'n of Mfrs., No. 12-5138 at *23-30.)
The DC Circuit's opinion in National Association of Manufacturers addresses the NLRB's tolling of the Section 10(b) limitations period through rulemaking. However, the court's conclusions about the congressional intent behind Section 10(b) might be useful if employers ever attempt to challenge the Board's liberal interpretation of that section in ULP case precedent. For example, the Board regularly permits the NLRB General Counsel to incorporate facially untimely ULP charges into cases about timely, arguably related ULP charges, at times relying on equitable tolling principles (see, for example, Redd-I Inc., 290 N.L.R.B. 1115 (1988)).

The Final Rule Was Invalid Regardless of the NLRB's Authority to Require a Notice of Rights Poster

In National Association of Manufacturers, the DC Circuit's chief opinion did not address arguments that the NLRB lacked authority to implement a rule requiring employers to post a notice of employees' rights under the NLRA. Once the court held that the NLRB could not lawfully enforce the rule in the ways that the rule specified, it vacated the entire rule. The court found that it could not sever the notice posting requirement from the enforcement sections of the rule because there was substantial doubt that the NLRB would have adopted the severed portion of the final rule. The court cited to the final rule's preamble as evidence that the NLRB would not have issued the posting rule that relied entirely on voluntary compliance. (Nat'l Ass'n of Mfrs., No. 12-5138 at *30.)
Two of the three judges on the panel deciding this case noted in a concurring opinion that they would have held that the NLRB had no authority to issue any rule requiring a notice of rights posting.
The court's decision leaves open the possibility that, depending on the panel of judges assigned, the DC Circuit might permit the NLRB to issue a rule about a notice of rights under the NLRA posting that relies entirely on voluntary compliance.

The Board Had a Quorum When it Issued its Final Rule

In National Association of Manufacturers, the DC Circuit sua sponte concluded that its analysis of recess appointments to the NLRB in Noel Canning had no bearing on the validity of the final rule (see Legal Update, DC Circuit Rules NLRB Recess Appointments Were Unconstitutional; Enforceability of All Recess Appointees' Decisions in Doubt).
The DC Circuit:
  • Found that Chairman Leibman and Members Pearce and Hayes were all confirmed by the Senate and members of the Board when the Board signed the final rule (with Member Hayes dissenting).
  • Assuming, without deciding, that Member Becker's recess appointment was invalid, found that the Board did not need to count him as a member to have a quorum for the rulemaking.
(Nat'l Ass'n of Mfrs., No. 12-5138 at *8-12.)
The DC Circuit's analysis further suggests that it might vacate decisions by the Board issued at times when a quorum would not be reached without counting intra-session recess appointees (see Legal Update, DC Circuit Puts NLRB Election Rules On Hold Indefinitely; Validity of Board Actions Involving Member Becker More in Doubt).

What to Take Away from National Association of Manufacturers

Employers are Currently Safe Disregarding the NLRB's Final Rule

The NLRB's final rule is vacated in its entirety by the DC Circuit's decision in National Association of Manufacturers. If a circuit other than the DC Circuit vacated the rule, the NLRB might have considered imposing the sanctions of the final rule outside of the jurisdiction of that circuit. However, it is very unlikely that the NLRB would disregard the DC Circuit's holding in National Association of Manufacturers because:
  • It is the only circuit court decision about the NLRB's posting rule.
  • Any employer, regardless of its location, harmed by a final order of the Board may appeal that order to the DC Circuit (29 U.S.C. § 160(f)).
Employers should therefore be confident that they can refrain from posting the NLRA rights notice without penalty unless the decision is reversed en banc or by the Supreme Court.
Employers that are federal contractors should not misconstrue the DC Circuit's decision in National Association of Manufacturers as legal authority to remove a similarly worded, mandated poster that was issued in 2010 by the Department of Labor (DOL) to implement Executive Order 13496. Information about that executive order and poster are available at the DOL's website.

Employers Should be Encouraged to Express Non-coercive Opinions about Unions

The DC Circuit's opinion in National Association of Manufacturers should give employers optimism that the court will:
  • Support employers' Section 8(c) rights in its decisions.
  • Vacate Board decisions where the Board disregards employers' Section 8(c) rights.
Employers may consider expressing opinions about unions and reminding employees of the generous terms and conditions of employment and opportunities for direct communication and feedback with management that they provide without unions (see Standard Document, Employer Statement on Employee Relations and Unions (Noah's Bagels Statement)).

Litigation about the NLRB's Final Rule will Continue

The NLRB's silence about the DC Circuit's decision in National Association of Manufacturers is intriguing given its history of publishing news releases immediately after earlier adverse federal court decisions about the final rule and the Noel Canning case (see NLRB: Press Release (Jan. 25, 2013)).
However, it is likely that the Board is holding off commenting on whether and how it might respond to the DC Circuit's decision until the Fourth Circuit rules on the NLRB's appeal in Chamber of Commerce of the United States. If the Fourth Circuit affirms the South Carolina District Court's opinion in Chamber of Commerce of the United States, it will effectively close the narrow gap in the DC Circuit's opinion, affirming that the NLRB has no authority to issue a rule requiring notice of rights posting. Then, the NLRB:
  • Would likely have a difficult time convincing the Supreme Court that it should:
    • grant certiorari to consider the final rule's validity; and
    • reverse the decisions of the only circuit courts to consider the validity of the NLRB's final rule.
  • Without a successful appeal to the Supreme Court, would be foreclosed from issuing a rule encouraging employers to voluntarily post notices of employees' rights under the NLRA.
With a favorable decision from the Fourth Circuit, the NLRB would be more likely to take further action to respond to the DC Circuit's decision. It might petition for:
  • En banc review in the DC Circuit, if the NLRB believes that the 13 judges of the DC Circuit would reach different conclusions than the three-judge panel reached.
  • Certiorari from the Supreme Court.

National Association of Manufacturers will Likely Support Employers Making Other Legal Arguments

The DC Circuit's decision in National Association of Manufacturers should provide citations and analysis for employer arguments supporting:
Update: The Fourth Circuit held the NLRB's poster rule invalid for different reasons (see Legal Update, NLRB Had No Authority to Issue Notice Posting Rule: Fourth Circuit).
The NLRB General Counsel's office petitioned for rehearing in the DC Circuit and Fourth Circuit. The Fourth Circuit denied the NLRB's petition on August 12, 2013. On September 4, 2013 the DC Circuit denied the NLRB's petitions for panel rehearing and rehearing en banc.