Earlier this month, the D.C. Circuit struck down the National Labor Relations Board’s (NLRB) controversial posting rule, which would have required virtually all private sector employers to post notices informing employees of their rights under the National Labor Relations Act (NLRA), even in the absence of unfair labor practices.

In 2010, the NLRB issued a notice of proposed rulemaking, after which it received more than 7000 comments. As acknowledged by the NLRB itself, the majority of those comments weighed heavily against the rule. On Aug. 30, 2011, the board published the final rule. In addition to reciting the language of Section 7 of the NLRA, the notice, believed by many to be slanted in favor of unionization, also included a list of more specific employee rights the board derived from judicial and NLRB interpretations.

The rule not only required the notice posting, but also contained three enforcement mechanisms. Pursuant to the rule, the NLRB declared that a failure to post the notice would be, in and of itself, an unfair labor practice. Next, a violation of the rule could suspend the running of the six-month limitations period, Section 10(b) of the NLRA, for the filing of other, unrelated unfair labor practice charges against an employer who fails to post the notice. And finally under the new rule, the board could consider a “knowing and willful” refusal to post the notice as evidence of unlawful motive in other cases where motive is an issue.

In National Association of Manufacturers v. NLRB, the three-judge panel invalidated the rule because it found these three enforcement mechanisms were separately invalid. Although the NLRB invoked Section 6 of the NLRA as authority for its implementation of the rule, the D.C. Circuit focused much of its analysis on Section 8(c), which gives employers the right to express views, arguments and opinions against unions and unionization as long as the speech is not coercive or threatening.

Prior to the enactment of Section 8(c) in 1947, the Supreme Court held employers had “free speech” rights under the First Amendment in the labor context. Indeed, Section 8(c) was enacted because Congress believed the NLRB was regulating employer speech too restrictively. In light of First Amendment analysis, the D.C. Circuit found the board’s creation of a new unfair labor practice for failing to post the new notice and a finding of an unlawful motive in other cases based on that failure was a an impermissible restriction on employer free speech.

Although Section 8(c) precludes the NLRB from finding non-coercive employer speech to be an unfair labor practice or evidence of an unfair labor practice, the D.C. Circuit found the board’s notice rule did both. But the court said the language of Section 8(c) explicitly covers more than just the expression of an employer’s own views; it also covers the employer’s dissemination of other views or opinions. As the 3rd Circuit  stated, while the notice rule does not prevent employers from disseminating messages from others, it forces employers to disseminate the board’s speech and then imposes a penalty for failing to do so. In finding the notice rule unlawful, the D.C. Circuit reaffirmed that the right to disseminate another’s speech necessarily includes the right to decide not to disseminate it.

In addition, the D.C. Circuit found the tolling of the Section 10(b) limitations period for a failure to post could not be enforced because there was no evidence the modification announced by the NLRB in the new rule was an exception generally recognized by Congress at the time Section 10(b) was enacted in 1947. Because the court held all three of the means for enforcing the NLRB’s posting requirement to be invalid, it deemed the entire rule invalid.

The decision to affirm the lower’s court’s stay of the posting notice was unanimous, but two of the three judges also found the NLRB lacked the authority to issue the rule under the rulemaking provision of the Act, Section 6.

Following a similar adverse decision in the South Carolina federal district court, the board voluntarily stayed enforcement of the rule. The 4th Circuit heard oral argument on the appeal this past March, but to date has issued no decision. It is likely the notice rule will end up in the Supreme Court, especially if there is a split in the circuits. But, at least until then, employers have no obligation to post the notice.