Legal Alert: Fourth Circuit Finds NLRB Lacked Authority to Issue Notice Posting Rule

Date   Jun 17, 2013
The Fourth Circuit has become the second federal appeals court to strike down the National Labor Relations Board's rule requiring employers to post a notice of employee rights. 

Executive Summary:  The Fourth Circuit has become the second federal appeals court to strike down the National Labor Relations Board's rule requiring employers to post a notice of employee rights.  In Chamber of Commerce v. NLRB (June 14, 2013), the court held that the Board exceeded the authority granted to it by the National Labor Relations Act when it promulgated the rule.

The Notice Posting Requirement

As discussed in our August 30, 2011 Legal Alert, NLRB to Require Posting of Notice of Employee Rights, the Board's rule requires employers to post a Notice of Employee Rights under the National Labor Relations Act (the Act).  The rule provides that an employer's failure to post the Notice may: (1) be considered an unfair labor practice (ULP); (2) toll the statute of limitations for filing a ULP charge; and (3) be used as evidence of anti-union animus in proceedings before the Board.

The rule was challenged in federal courts in both the Fourth Circuit and the D.C. Circuit.  In May 2013 the D.C. Circuit Court of Appeals vacated the rule, holding that it violates employers' free speech rights.  For more information on this decision, please see our May 8 Legal Alert.  On June 14, in Chamber of Commerce, the Fourth Circuit affirmed the federal trial court's decision that the Board lacked authority under the Act to enact the notice-posting rule.

The Fourth Circuit's Decision

In finding the rule invalid, the Fourth Circuit held that the Act only empowers the Board to carry out its statutorily defined "reactive roles" in addressing unfair labor practice charges and conducting union elections upon request.  The court held that the language of Section 6 of the Act, which grants the Board the authority to issue rules necessary to carry out the provisions of the Act, requires that some section of the Act give the Board either the explicit or implicit authority to issue a rule.  Because nothing in the Act charges the Board with informing employees of their rights under the Act, the court found "no indication in the plain language of the Act that Congress intended to grant the Board the authority to promulgate such a requirement." 

Further, the court found no provision of the Act that a notice-posting rule is necessary to carry out.  Specifically, the court held that Section 7, which lists rights protected by the Act, does not provide authority to issue the notice-posting rule because these rights are not functions or provisions to be carried out.  Additionally, although the court acknowledged that the Board has the authority to define what constitutes a ULP under Section 8(a)(1), it held that this provision does not give the Board authority to "enact the unprecedented rule at issue here." 

Finally, the court examined the legislative history of the Act and held that the Board's responsibilities for conducting representation elections and adjudicating ULP charges under Sections 9 and 10 of the Act are reactive roles that are not set in motion until a party files a representation petition or ULP charge.  According to the court, these provisions do not justify an expansion of the Board's role to include proactive regulation of employers' conduct. 

Employers' Bottom Line:  The Board has not indicated whether it will seek review of this decision with the Supreme Court.  Currently, however, employers are not required to post the Notice of Employee Rights. 

If you have any questions regarding this decision or other labor or employment law issues, please contact the FordHarrison attorney with whom you usually work.