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.