News & Updates

Federal Court Rules NLRB Lacked Authority to Require Employers to Post Employee Rights April 16, 2012

In a decision (available here) issued Friday, April 13, 2012, by United States District Court Judge David C. Norton, the District Court for South Carolina ruled that the National Labor Relations Board (NLRB) lacks the authority to promulgate the notice-posting rule, and as such, the regulation is unlawful. This decision is only effective in the Federal Judicial District of South Carolina, but it is likely to have a national impact.

This defeat is the second ruling on this new NLRB rule in just over a month. On March 2, 2012, in National Association of Manufacturers v. NLRB, the D.C. District Court upheld the Board’s right to require employers to post the notice, but struck down the two principal remedy provisions of the rule: tolling of the six-month statute of limitations and an automatic Section 8 (a) (1) unfair labor practice violation for failing to post the notice. Our alert on that ruling is available here.

The notice-posting requirement is currently scheduled to take effect on April 30, 2012; however, in light of these decisions, it would not be unusual for the Board to extend the compliance deadline for a third time.

On September 19, 2011, the Chamber of Commerce of the United States and the South Carolina Chamber of Commerce commenced this action seeking injunctive relief against the NLRB, contending that the Board exceeded its authority in promulgating the final rule titled “Notification of Employee Rights Under the National Labor Relations Act.”   After considering written and oral argument on the issues, the court decided the case on summary judgment.

The court concluded that the plain language of the National Labor Relations Act does not authorize the Board to mandate the posting of employee rights, in sharp contrast to at least nine other federal employment statutes, such as Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the Family and Medical Leave Act.

The court also found that the structure of the NLRA places the Board in a reactive role in relation to employers covered by the Act: e.g., making decisions related to unit certifications and investigating allegations of unfair labor practices. Since the NLRB’s statutory role is reactive, the court found that the challenged rule is not “necessary” for the Board to carry out its mission.

Judge Norton was also influenced by the fact that the board went 75 years without requiring such a notice "but it has now decided to flex its newly discovered rulemaking muscles."

While NRLB spokeswoman Nancy Cleeland said: “Our attorneys are studying the decision and deciding what our response will be” on Friday, it is anticipated that the NLRB will appeal this decision. If the Board declines to postpone the April 30 compliance date, it invites a flurry of legal challenges to the rule based upon this Chamber of Commerce decision over the next two weeks.

Rule History

This decision marks the latest development in the short, but eventful, history of this rule. We originally alerted clients to the NLRB’s new posting requirement on September 2, 2011. That alert, accessible here, contained a thorough discussion of the required poster and which employers are required to post it. At that time, employers were required to begin compliance by November 14, 2011. In our September 15, 2011 alert, accessible here, we provided access to the form notice issued by the NLRB. On November 11, 2011, we sent an update (accessible here) that due to a pending legal challenge (one of which was the case decided today) to the posting requirement, the NLRB had delayed the requirement to January 31, 2012. The NLRB has again delayed the compliance date, to April 30, 2012. We sent another alert (available here) on March 2, 2012 when the D.C. District Court struck down the two principal remedy provisions.

Conclusion

This decision creates even more uncertainty for employers just two weeks before the rule is set to take effect. It is another reminder that employers must remain vigilant to the ever-changing aspects of this rule. Even though the NLRB may delay the compliance deadline for this rule again, employers must remember that the amended NLRB election procedures will take effect April 30, 2012. Therefore, if they have not done so, employers must make preparations for union organizing efforts that are sure to increase on May 1, 2012.

We will continue to monitor the progress of these legal challenges along with all other developments associated with this NLRB rule.

If you have questions about this new rule or about implementing preventative measures in your business to avoid unfair labor practice charges, please contact Sean P. Beiter (716.566.5409; sbeiter@goldbergsegalla.com), Julie P. Apter (716.566.5458; japter@goldbergsegalla.com),  Richard A. Braden (716.566.5436; rbraden@goldbergsegalla.com); Seth L. Laver (267.519.6877; slaver@goldbergsegalla.com), Philip H. McIntyre (716.844.3422; pmcintyre@goldbergsegalla.comMatthew C. Van Vessem (716.566.5476; mvanvessem@goldbergsegalla.com), or another member of the Goldberg Segalla Labor and Employment Practice Group