By:  Joshua M. Henderson

In what may be the first of many judicial setbacks for the National Labor Relations Board, on March 2, 2012, the United States District Court for the District of Columbia, Judge Amy Berman Jackson, an Obama nominee, struck down a significant aspect of the Board’s 2011 rulemaking.  It is no secret that the Board has been pursuing an administrative agenda that heavily favors the interests of organized labor.  In pursuit of this agenda, the Board and its General Counsel, in many cases, have changed decades of established rules and policies.  Employers and other legal groups have challenged many of these changes in the courts, and these legal challenges are slowly wending their way through the litigation process.  

This particular case involved the Board’s promulgation of a new rule in August 2011, with one member dissenting, requiring employers to post a notice enumerating the rights of employees under section 7 of the National Labor Relations Act, including the right to organize and to engage in other concerted activity.  The Board prescribed the content, size, and typeface of the notice.  The rule contained an enforcement provision as well.  Failure to post the notice was deemed an unfair labor practice.  In addition, the rule effectively tolled the six-month statute of limitations for filing an unfair labor practice charge against an employer that failed to post the notice.

Employers quickly filed suit in the United States District Court for the District of Columbia to block implementation of the notice rule.  The employers argued primarily that the Board lacked the statutory authority to promulgate the rule.

In her decision, Judge Jackson issued a mixed ruling, granting the employers’ summary judgment motion in part and denying it in part.  The court ruled that the Board was within its authority to promulgate Part A of the rule – the notice requirement.  The court observed that the NLRA authorizes the Board to issue rules “to carry out the terms” of the NLRA itself.  And, it was reasonable, according to the court, for the Board to require posting of a notice to raise employees’ awareness of their rights.

Judge Jackson also held, however, that Part B of the rule — making the failure to post an unfair labor practice and tolling the statute of limitations for unfair labor practices when an employer fails to post — is invalid.  Under the NLRA, “Congress specifically defined and limited the conduct that could constitute an unfair labor practice.” (Opinion, p. 27)  In opposing the employers’ motions, the Board argued that failing to post “interfered” with the employees’ exercise of their section 7 rights.  The court rejected that argument, observing that the rule punished employers simply for not facilitating the employees’ exercise of their rights by failing to post information publicizing those rights.  The Board exceeded its authority in doing so, according to the court.  Similarly, the tolling provision was invalid because it “substantially amends the statute of limitations that Congress expressly set out in the statute.”  (Opinion, p. 37)  

The court did leave open the prospect that the Board could find an employer’s failure to post the notice was an unfair labor practice charge if it was intended to interfere with section 7 rights.  To do so, “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.”  (Opinion, p. 31)  Consequently, the Board may still make mischief with this rule in the future. 

The court also rejected the employers’ contention that posting the notice was “compelled speech” in violation of the First Amendment.  The Court contrasted recent Supreme Court decisions in which a violation was found because a speaker, such as a religious organization, had its own message materially affected by the government’s requirement.  (It remains to be seen whether some religious organizations may avoid the notice requirement.  As an example, the Seventh-day Adventists have an historic teaching that Church organizations cannot recognize unions.)  Here, the District Court held that the NLRA rights notice was not suggesting that employers favor collective bargaining, or restricts what they may say about the NLRA or unions: “[N]othing in the regulation restricts what an employer may say about the Board’s policies” (Opinion pp. 39-40)  It is possible, though not entirely clear from the ruling, that an employer might be able to post a written comment next to the poster.  Under the NLRA, however, an employer cannot engage in threatening or coercive conduct in this regard.

The District Court’s decision may be appealed.  Moreover, there is a separate lawsuit challenging the notice posting rule which is pending in the United States District Court for South Carolina.  Accordingly, employers can expect further developments in this area.  Nonetheless, this is the strongest indication yet that employers covered by the NLRA will need to post a required employee rights notice as of April 30, 2012.

The notice rule was seen by many to be a transparent attempt by the Obama Board to make itself more relevant, particularly in light of the demise in Congress of the Employee Free Choice Act.  Indeed, in its explanation of the enforcement provision of the notice rule, the Board made clear that the possible effect of this new rule would be to increase unionization efforts: “The Board has determined that employees must be aware of their NLRA rights in order to exercise those rights effectively.”  Although the notice rule was couched in terms of merely informing employees of their rights, Judge Jackson concluded that the notice rule was, in part, an invalid arrogation of power by the Board.  The requirement to post the notice stands for now, but with little teeth in terms of enforcement