NLRB Had No Authority to Issue Notice Posting Rule: Fourth Circuit

Practical Law Legal Update 9-532-2736 (Approx. 5 pages)

NLRB Had No Authority to Issue Notice Posting Rule: Fourth Circuit

by PLC Labor & Employment

Background

On August 30, 2011, the NLRB promulgated a challenged rule, titled "Notification of Employee Rights Under the National Labor Relations Act" following a standard notice and comment period (see Article, Post No Bills: Insights from the DC Circuit's Ruling on the NLRB's Notice Posting Rule: Background). On September 19, 2011, the Chamber of Commerce (Chamber) filed a complaint in the US District Court for the District of South Carolina for injunctive relief against the NLRB and motioned for summary judgment on November 9, 2011. On April 13, 2012, the district court 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 this 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.

(Chamber of Commerce v. NLRB, No. 2:11-cv-02516 (D.S.C. Apr. 13, 2012) and see Legal Update, NLRB Poster Rule Enjoined Indefinitely: DC Circuit).

The NLRB appealed the decision to the US Court of Appeals for the Fourth Circuit.

Outcome

The Fourth Circuit found that the NLRA provided no support for the NLRB to issue the notice-posting rule. The Fourth Circuit reached its decision after determining the NLRB's interpretation of their rule-making authority was not due administrative deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (Chevron). Chevron requires that courts defer to the administrative agency's interpretations of their enabling statute if:

The intent of Congress was ambiguous.
The interpretation of the agency is reasonable or permissible.

The Fourth Circuit rejected the NLRB's assertion that deference was required, finding that the language of the NLRA unambiguously limited the powers that Congress delegated to the NLRB. The Fourth Circuit specifically held that the NLRB exceeds its statutory authority because:

The plain language of the NLRA does not charge the NLRB with informing employees of their rights under the NLRA.
Language in Section 6 of the NLRA that provides the NLRB with authority to issue rules that are "necessary to carry out" the provisions of the NLRA does not authorize the NLRB's notice posting rule or create an ambiguity about to the NLRB's authority to issue this type of rule.
The NLRA does not imply that the NLRB has authority to issue a notice-posting rule sua sponte.
The NLRA does not suggest that any gap in employees' knowledge of their rights under the NLRA must be filled by employers.
The NLRA defines the NLRB's role in labor relations as purely reactive, in that it authorizes the NLRB solely to react to unfair labor practices (ULP) charges or petitions in representation matters.
The NLRA's legislative history reflects that Congress declined to include a notice provision in the NLRA.
The express authorization by Congress for other agencies to require notice postings suggested that Congress did not implicitly authorize the NLRB to require these postings.
Congress amended other labor statutes to include notice provisions but never similarly amended the NLRA.

The NLRB has not issued a statement about either the Fourth Circuit's decision in this case or the US Court of Appeals for the District of Columbia Circuit's similar decision in National Association of Manufacturers v. NLRB.

Practical Implications

It appeared that the NLRB was hoping for a favorable decision from the Fourth Circuit before it would publicly comment on whether it would pursue either:

En banc review of the DC Circuit's decision in National Association of Manufacturers.
A petition for certiorari at the US Supreme Court.

The Fourth Circuit's opinion will likely discourage the NLRB from pursuing further litigation to validate its posting rule because the only circuit courts that have considered challenges to the rule have found it invalid for separate harmonious reasons:

The DC Circuit's main opinion found the rule substantively invalid, without deciding whether the NLRB had authority to issue its rule.
The Fourth Circuit (and a concurring opinion from the DC Circuit) held that the NLRB exceeded its authority under the NLRA by issuing the notice postings rule without remarking on the substance of the rule.

The NLRB currently:

Would likely have a difficult time convincing the DC or Fourth Circuits to review their decisions en banc.
Would likely have a difficult time convincing the US 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.
Would effectively be foreclosed from enforcing its rule requiring employers to voluntarily post notices of employees' rights under the NLRA.

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