NLRB Rights Poster Requirement Temporarily Barred By Court - Posting No Longer Required On April 30

Posted by Mark Theodore on April 17, 2012

A federal appeals court has barred the NLRB's ability to require employers to post the employee rights poster while litigation over the legality of the rule continues.  

As we previously discussed, a Federal District Court in South Carolina ruled that the NLRB lacked authority to issue the rule.  This occurred after another Federal Court in the District of Columbia held that the rule was valid, but the enforcement mechanism was not.  The injunction came in the DC litigation.

Given all of the uncertainty, the DC Circuit Court of Appeals issued a Grant of Injunction Pending Appeal.pdf which effectively acts to stay the requirement pending resolution of the litigation.  The Court explained its reasoning as follows:

We note that the Board postponed operation of the rule during the pendency of the district court proceedings in order to give the district court an opportunity to consider the legal merits before the rule took effect.  That postponement is in some tension with the Board's current argument that the rule should take effect during the pendency of the court's proceedings before this court has an opportunity to similarly consider the legal merits.  We note also that the district court's severability analysis left the posting requirement in place but invalidated the primary enforcement mechanisms for violations of the requirement.  The Board has indicated that it may cross-appeal that aspect of the district court's decision.  The uncertainty about enforcement counsels further in favor of temporarily preserving the status quo while this court resolves all of the issues on the merits.

So, for the next several months at least, employers are not required to comply with the NLRB's posting requirement. We will keep monitoring the situation and will keep you informed here of new developments.

 

Handing Employers A Significant Victory, Federal District Court Strikes Down NLRB Rights Poster Requirement

Posted by Mark Theodore on April 13, 2012

Mid-April is normally a gloomy time as people prepare to file tax returns.  There is some cause for celebration, though, as a federal district judge in South Carolina today (Friday the 13th of all days), issued a ruling striking down in its entirety as unlawful the NLRB's requirement that employers post the so-called employee rights notice poster.  The case is  US Chamber of Commerce v NLRB (Civ Action No 211-cv-02516-DCN).pdf   This ruling comes after a Federal judge in DC ruled that the enforcement provisions of the rights posting rule were invalid.  The Board had set an April 30 deadline for compliance.

One of the principal arguments against the NLRB's promulgation of this particular rule is that it is not authorized by the Act, as similar notices are authorized in the other federal employment legislation.  Section 6 of the NLRA grants authority to the Board to promulgate rules that are "necessary" in carrying out its mission.  Judge David Norton noted that the Board's rulemaking authority in Section 6 of the Act is "terra incognita" and that courts have "rarely explored the parameters of Section 6, the reason being the Board has rarely exercised its rulemaking authority."  Concluding that Section 6 did not authorize the Board to issue the rights notice posting, the Judge ruled:

First, the plain language of Section 6 requires that rules promulgated by the Board be 'necessary to carry out' other provisions of the Act.  Defendants [NLRB] argue that the rule is 'necessary to carry out' Sections 1 and 7 of the Act, but confuse a 'necessary' rule with one that is simply useful.  It can be said that the notice-posting rule 'aids' or 'furthers' the aspirational goals of Section 1 by notifying employees of their rights under Section 7, but defendants have not shown that the rule is 'necessary.'

Of course, the Act has been in existence since 1935, and no such notice has ever been required.  In the intervening years, the ablity to share and research information has become, literally, as easy as pressing a button.  It does seem a stretch that after all these years such a poster is "necessary."

The main question that will be on everyone's minds in the immediate future:  what happens next?  The Board most certainly will appeal the ruling.  In the separate litigation in DC, the plaintiffs sought to stay the ruling, which was denied.  It seems likely a new attempt at staying the effective date of the rules will be made shortly. 

As always, we will keep you posted as developments occur.

Court Strikes Down Portions Of NLRB Notice Posting Rules

Posted by Mark Theodore on March 02, 2012

A federal judge in the District of Columbia handed employers a significant partial victory in the ongoing skirmish over the NLRB's attempts to require all employers under its jurisdiction to post a notice of employee rights.  As we have noted previously, the NLRB postponed the original November 14, 2011 compliance date, only to postpone it again after facing stiff resistance in the form of lawsuits challenging the new requirement.  A compliance date of April 30, 2012, was set in order to allow the courts to render decisions on the viability of the NLRB's regulations.  There are two significant pieces of litigation over the NLRB's rule.  The ruling discussed here concerns the challenge brought by the National Association of Manufacturers ("NAM").  The U.S. Chamber of Commerce also has a separate suit pending.

On March 2, 2012, Federal Judge Amy Berman Jackson handed down the split decision in the case of National Association of Manufacturers v. NLRB (Civ. Action No. 11-1629).pdf.  NAM, a trade association, challenged the NLRB's authority to require the rights poster, as well as the agency's contention that failure to post the notice could constitute an unfair labor practice. 

In her 46 page decision, Judge Jackson upheld the right of the NLRB to require the notice posting, but struck down the rules making it an unfair labor practice for an employer's failure to post the notice.

There are two parts to the NLRB's regulations on the rights poster.  Subpart A is the requirement that employers post the notice, and Subpart B concerns the agency's intended enforcement for employers that fail to post the notice.. 

Subpart A - Judge Upholds NLRB Requirement That Employers Post Rights Notice

NAM challenged the NLRB's authority to require employers to post the rights notice.  The theory for this contention is that in every piece of federal employment legislation where a notice of some sort is required to be posted (e.g., FMLA, FLSA, OSHA, etc.), the statutes all expressly require the responsible agencies to develop a notice for posting.  The NLRA is silent on this issue, and so the argument goes, Congress did not authorize the NLRB to make such a notice posting a mandatory requirement. 

Judge Jackson seemed to have little problem disposing of this issue in favor of the NLRB.  After a lengthy discussion of the NLRB's rulemaking authority and relevant caselaw, the Judge ruled:

Therefore, the Court cannot find that in enacting the NLRA, Congress unambiguously intended to preclude the Board from promulgating a rule that requires employers to post a notice informing employees of their rights under the Act.  Neither the text of the statute nor any binding precedent supports plaintiffs' narrow reading of a broad, express grant of rulemaknig authority.

So, absent a stay of this ruling pursuant to an appeal, the notice poster will be required as of April 30, 2012.

Subpart B - Enforcement Consequences For Failing To Post The Notice

NAM also challenged the NLRB's enforcement aspects of the rules.  

NLRB Cannot Make Failure To Post The Notice An Unfair Labor Practice

The NLRB rule states the consequences of failing to post the notice: "Failure to post the employee notice may be found to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed by NLRA Section 7. . ."  This is the most controversial and troublesome aspect of the rulemaking from a legal and practical perspective.  Yes, employers dislike having to post the notice at all, particularly in a labor relations climate that is more contentious than it has been in 20 years.  In the age of social media and instanteous information sharing, why must an employer be required to inform employees of the rights when such information is available from myriad sources?

What the NLRB attempts to do by these regulations, however, is to go much farther than mere publication of information.  By making the failure to post an actual unfair labor practice, the potential consequences for employers are extremely serious.  First, the NLRB's designation of a failure to post information that has never been required in the 77 years of the NLRA as interference, restraint or coercion of employee choice is quite a stretch.  The agency appears to be suggesting that an employer's failure to, in the future, give this information to employees interferes with free choice, an assertion that requires several leaps of logic.

Second, and most important, if the failure to post this notice is an unfair labor practice, then it could be grounds to overturn an otherwise properly held secret ballot election.  Yes, that's right.  As we have previously pointed out, the mere existence of an unlawful handbook policy could overturn a representation election, even where there is no evidence the policy played any part in an employee's choice on the secret ballot.  Indeed, the NLRB has ruled that the mere existence of the policy can overturn the election, even when employees are already represented by a uniion and seek to end such representation.  

Judge Jackson struck down this portion of the rule, stating "Plaintiffs maintain, and the Court agrees, that the agency lacked the authority to deem a failure to post to be an unfair labor practice under the Act."  In discussing the statutory framework and caselaw, the Judge concluded:

In other words, section [8(a)(1)](the provision of the NLRA making it an unfair labor practice to interfere with employee choice) prohibits employers from getting in the way - from doing something that impedes or hampers an employee's exercise of the rights guaranteed by [Section 7] of the statute.  It does not prohibit a mere failure to facilitate the exercise of those rights.

Judge Jackson went on to state that "nothing in this decision prevents the Board from finding that a failure to post constitutes an unfair labor practice...."  The Judge made clear, however, the Court's expectation of the agency if it was to assert that an emploiyer's failure to post is an unfair labor practice:

But the ruling does mean that the Board must make a specific finding based on the facts and circumstances in the individual case before it that the failure to post interfered with the employee's exercise of his or her rights.  The Court is not making an absolute statement that inaction can never be interference; rather this memorandum opinion simply holds that the Board cannot make a blanket advance determination that a failure to post will always constitute an unfair labor practice.

In other words, and it seems incredible we are having such a discussion, the NLRB actually must prove in an unfair labor hearing that the mere failure to provide information that is readily available from any number of sources, interfered with an employee's Section 7 rights.  This is exactly the kind of analysis that should take place when it is asserted an employer's handbook provision is unlawful, but doesn't; there should be a requirement that the existence of the so-called overbroad language actually interferes with an employee's rights. Unfortunately, what really happens in handbook cases is the NLRB merely says certain language in an of itself interferes with Section 7 rights without any proof that anyone read it, was aware of it or that the policy otherwise held any significance.

NLRB Cannot Toll Statute of Limitations By Rule

The Judge also ruled that the NLRB cannot use the failure to post the notice to toll the NLRA's six month statute of limitations.  Judge Jackson noted, "the NLRA does not authorize the Board to enact a rule which permits it to toll the statute of limitations in any future unfair labor practice action involving a job site where the notice was not posted."  In reaching this conclusion, the Judge noted there exists extensive legislative history on the six month statute of limitations contained in the NLRA, and that in certain circumstances it is appropriate to toll the statute.  Such tolling is not automatic and must be supported by proof.  The Judge's opinon notes, "The Final Rule strips away the case-specific nature of the equitable tolling doctrine by imposing it as the rule rather than the exception. The Court found it particularly troubling that the NLRB's conception for the rule stated that the employer must prove that the tolling did not apply:

This turns the burden of proof on its head.  The plaintiff [the NLRB in unfair labor practice cases] generally bears the burden of proving that equitable tolling should apply in the individual case, but the rule demands that the employer prove that across the board, unlimited extension should not apply. 

In other words, the NLRB cannot use an employer's failure to post a notice to automatically toll the statute of limitations for other unfair labor practices alleged at the workplace. 

Free Speech Callenge Rejected

NAM also challenged the rule on free speech grounds, that the NLRB was compelling employers to make certain speech.  The Court rejected this argument ruling that "the Board's notice posting requirement does not compel employers to say anything" and that the poster falls into the category of "government speech."

The Judge concluded Subpart A (the notice posting requirement) could be severed from Subpart B, meaning absent some court intervention, the posting requirement will go into effect as planned.

It seems likely both sides will appeal the ruling.   Also, it is highly likely another Court soon will rule on these issues in the U.S. Chamber's litigation. We will keep an eye out for further developments.

 

NLRB Postpones Rights Poster Rule Until April 30, 2012

Posted by Mark Theodore on December 23, 2011

The NLRB announced today that it was again postponing the requirement that all employers falling under its jurisdiction post notices in the workplace of employee rights under the National Labor Relations Act.  The rule, originally slated to go into effect in November 2011, was first postponed due to litigation until January 30, 2012.  The new implementation date is now April 30, 2012.

The controversial rule has been the subject of intense litigation since it was adopted during the Summer.

You can read the entire history of the rule here and here.

April 2012 is shaping up to be another super active month.  That month is the date the new election rules are set to go into effect.  

 


NLRB To "Vote" On Quickie Election Rules November 30

Posted by Mark Theodore on November 18, 2011

The NLRB announced today that it was going to hold a vote on its proposed regulations to upend the well established and longstanding representation case procedures.  According to the NLRB's announcement today, the vote is over "whether to adopt a small number of amendments" proposed earlier this year. This may well be the understatement of the year as very few people, if any, believe that the NLRB will do anything short of adopting all of the proposed changes, not just a few unidentified amendments.

In fact, Member Hayes, in a scathing letter to Congress, also dated today, asserts his two colleagues are determined to issue a final rule before the expiration of Member Becker's term at the end of the year. In this letter, Member Hayes levels pointed criticism of the agency's rulemaking process as contrary to precedent and practice:

In my dissent to the Notice of Proposed Rulemaking, I criticized the majority's use of 'a rulemaking process that is opaque, exclusionary, and adversarial,' in contravention with the Administrative Procedure Act, the Government in Sunshine Act, and President Obama's January 21, 2009, Memorandum of Transparency and Open Government, and in sharp contrast to the Board's procedural practice during the 1987-1989 rulemaking for appropriate bargaining units in the healthcare industry.  That criticism apparently made no impression on my colleagues, who have continued this process in the same manner, and without my participation; and who now have made it unequivocally clear that they intend to publish a final rule before the expiration of Member Becker's without regard to Board tradition or rule.

One wonders what the environment must be on the 11th floor of the NLRB where all the Members have their offices.  

Of course, this latest news, while hardly surprising, makes one wonder the thought process of the NLRB. As noted earlier here, the NLRB postponed the requirement that all employers under its jurisdiction post rights notices after a public firestorm, accompanied by several lawsuits challenging the rule.  That outcry was over a notice posting; what will the public's response be to this seemingly predetermined outcome?   Litigation is certain to be filed.  The NLRB's own public divisions are unlikely to calm the debate.

The NLRB's vote will be made at a public meeting and streamed live on the internet.  More to come. . .

Government Tightens Squeeze On Contractors, Publishes Final Persuader Rule For DoD, NASA and GSA Contracts

Posted by Mark Theodore on November 02, 2011

Contracting with the Department of Defense ("DoD"), National Aeronautics and Space Administration ("NASA") and General Services Administration ("GSA") will become more burdensome after December 2, 2011, according to final regulations published today.  The regulations, which were proposed on April 14, 2010, and were adopted without any changes (no surprise there), deem certain labor relations costs unreimbursable by the federal government.  The new regulations, set forth in bold, adds to the existing regulation:

(a) Costs incurred in maintaining satisfactory relations between the contractor and its employees (other than those made unallowable in paragraph (b) of this section), including costs of shop stewards, labor management committees, employee publications, and other related activities, are allowable.

(b) As required by Executive Order 13494, Economy in Government Contracting, costs of any activities undertaken to persuade employees, of any entity, to exercise or not to exercise, or concerning the manner of exercising, the right to organize and bargain collectively through representatives of the employees' own choosing are unallowable.  Examples of unallowable costs under this paragraph include, but are not limited to, the costs of-

(1) Preparing and distributing materials;

(2) Hiring or consulting legal counsel or consultants;

(3) Meetings (including paying the salaries of the attendees at meetings held for this purpose); and

(4) Planning or conducting activities by managers, supervisors, or union representatives during work hours.

In theory, the rule purports to simply say the contractor cannot charge the government for certain expenses, which sounds good, especially in these trying economic times.  Practically speaking, however, this rule will do nothing but cause problems for non-union employers while rewarding unionized contractors.  Here are a few examples:

  • The rule says it is neutral and applies to statements for or against a union, but let's be honest:  how many unions are federal contractors that would fall under this rule? 
  • The rule on its face allows charges for "union stewards" to work on government paid time, but disallows a supervisor expressing his or her view about unionization.  And union stewards always act in a manner that is efficient for the business, right?  What if the supervisor's view is personally held and not one of employer policy, would the employer have to deduct the estimated amount of the conversation from any billing to the government? If so, how would it estimate the time? 
  • If an employee asks a question of his or her supervisor about unions, must the supervisor account for the time spent answering the question?
  • If an employee asserts that he or she had a conversation with a supervisor about the union, what is considered persuader activity?  What if the supervisor's answer is completely factual?  Who decides what is persuader activity and what is not? Will the government put the contract in jeopardy based on the allegation?
  • A union can use whatever resources it gets, often indirectly from the government through public sector dues payments, to use lawyers and hire organizers, but these expenditures are not affected by the rule.  The private sector employer, however, must segregate such costs.

In sum, this change while facially neutral does not even withstand the slightest scrutiny.   Like many other regulations popping out of the government like so many gumballs from a machine, this one too may be challenged in the courts.

The changes the administration forces onto federal contractors foreshadow what it intends for all private sector employers.  For example, the federal government required contractors to post the NLRB rights poster months before the NLRB issued the broader rule covering all employers under its jurisdiction.  Likewise, this final rule is similar to the Department of Labor's attempt to narrow the LMRDA's advice exemption, about which we reported here.

 

Facing Stiff Resistance, NLRB Delays Notice Posting Requirement

Posted by Mark Theodore on October 07, 2011

On October 5, the NLRB announced its decision to postpone the requirement that all employers under its jurisdiction post a notice for employees detailing the rights under the NLRA to January 31, 2012.  As previously reported here, the NLRB regulations provided that posting was to occur by November 14, 2011. 

The NLRB's stated reason:  "to allow for enhanced education and outreach to employers, particularly those who operate small and medium sized businesses."  This detail-anemic rationale really signifies a sop to the overwhelming opposition to new requirement, which has been challenged in court as exceeding the NLRB's authority.  After all, the NLRB's regulations don't require a mere posting of employee rights.  Through these new regulations, the NLRB envisions a broader jurisdiction for itself based on its conclusion that a failure to post the notice is, in and of itself, an unfair labor practice, and one that can toll the statute of limitations on other alleged violations of the NLRA.  Thus, the failure to post could lay dormant for years, like an anti-personnel mine, until tripped by any number of circumstances, including surprise government inspection or a union's mere attempt to organize the workforce.  The latter event it would seem would make a failure to post the notice unnecessary, but not according to the NLRB.  

It will be interesting to see what further "outreach and education" actually occurs, especially when one gets the sense this NLRB is hard at work trying to issue yet more regulations on quickie elections before December when Member Becker's term expires.  Member Becker's departure will bring the NLRB down to two members, not enough for the agency to continue to conduct business.

Consider this:  the NLRB received about 7,000 comments on the rights poster regulations in December of 2010.  It issued the regulations in August, 2011, after eight months of deliberation.  For the quickie election proposed rules, the NLRB received over 60,000 comments, which were filed in August.  It will be quite a feat in the use of governmental resources if the NLRB decides to rush out regulations on elections by December of this year, a mere three months after receiving comments, the overwhelming majority of which seem to oppose the proposed changes.

As always, we will keep you posted on further developments as they occur.