A January 25 decision by the U.S. Court of Appeals for the D.C. Circuit declared unconstitutional President Obama’s most recent recess appointments to the National Labor Relations Board. Under this decision, Noel Canning v. NLRB, No. 12-115 (D.C. Cir. Jan. 25, 2013), two of the three current board members lacked authority to issue decisions for the board and lacked that authority since January 2012. During that period, more than 300 board decisions were issued, including several noteworthy decisions that expanded the scope of the National Labor Relations Act (NLRA) and declared unlawful some significant workplace policies of both union and nonunion companies.
Although many people believe that the NLRA governs only strikes, unionization and collective bargaining, the truth is that labor board rulings can also affect the policies adopted by companies that do not employ any unionized workers and are not confronting a union organization campaign. Several NLRB decisions in 2012 continued its recent expansive definition of what are called "Section 7 rights" in ways that regulate workplace policies for virtually all nonsupervisory private-sector employment. The Noel Canning decision puts these expansive rulings into question, but they are still legally binding. And, if recent history is any guide, they will be effectively reinstated once the Obama administration finds a way to correct the technical defects identified by Noel Canning, even if that ruling is affirmed in an anticipated U.S. Supreme Court appeal.
DECISIONS IN QUESTION
Section 7 of the NLRA establishes that "employees shall have the right to…engage in…concerted activities for the purpose of…mutual aid or protection." Many recent NLRB decisions and notable enforcement actions have been predicated on the board’s goal of restricting employer policies that, in its view, have a "chilling" effect on Section 7 rights because employees might infer that they will face discipline for the NLRA-protected conduct of engaging in "concerted activities" with one another for common aims affecting their shared workplace.
For instance, in Sodexo America LLC, 358 NLRB No. 79 (2012), the board ordered a hospital to rescind its broad policy limiting access to hospital premises by off-duty employees. As the board saw it, a broad policy that disciplines employees who seek off-duty access to their workplace interferes with Section 7 rights because a purpose of that access might be to meet with co-workers to discuss common concerns about their working conditions. That the employer might have other legitimate reasons for a no-access policy is no defense if application of the policy interferes with Section 7 rights.
Another decision now "on hold" is Banner Health System d/b/a Banner Estrella Medical Center, 358 NLRB No. 93 (2012). In Banner, the board held that a hospital’s human resources consultant violated the NLRA by asking an employee to refrain from discussing with co-workers the subject of an ongoing investigation. The board concluded that imposing this confidentiality requirement was unlawful because it "had a reasonable tendency to coerce employees" to refrain from exercising their Section 7 rights, namely, the right to mutually assist one another to avoid the (presumably unfair) discipline that might follow from the company’s investigation.
The board has also recently ruled in Supply Technologies LLC, 359 NLRB No. 39 (2012), that it was unlawful to maintain a mandatory alternative dispute-resolution program that requires all employment-related claims to be resolved in binding arbitration, rather than through lawsuits. The board stated that because the program materials did not specifically identify the employees’ continuing ability to access NLRB processes, including by filing unfair labor-practice charges, employees might believe that the program restricted them from seeking such redress. Similarly, the board has also recently held that mandatory arbitration programs that prohibit class action lawsuits violate the NLRA because employment-law class actions are, in the board’s view, "concerted" action for "mutual aid and protection." D.R. Horton Inc., 357 NLRB No. 184 (2012), appeal argued, No. 12-60031 (5th Cir. Feb. 5, 2013).
Then, following years of reports on the subject issued by the board’s advice arm, in Hispanics United of Buffalo Inc., 359 NLRB No. 37 (2012), the board concluded that a nonprofit employer violated the NLRA by terminating five employees for what they had posted on Facebook. One worker had expressed her intention to complain to management about her colleagues’ poor work performance. Some of these co-workers responded with off-duty Facebook messages contesting the accusation and did so with profanity and sarcasm directed at the co-worker who had made the original post. Those other employees were fired for engaging in "bullying and harassment," which violated the agency’s zero-tolerance policy. The board found these discharges illegal. While the dissent viewed the offending Facebook posts as mere griping and venting by disgruntled workers, the two-member majority — both of whom were recess appointments — characterized the online comments as "a first step towards taking group action" in response to the perceived threat of being labeled as poor performers. Thus, to the current board, Section 7 protects not only "concerted" action, but also incipient steps toward it.
The Noel Canning case (or one like it) will likely be decided by the Supreme Court. Until then, according to NLRB Chairman Mark G. Pearce, the board "will continue to perform our statutory duties and issue decisions." NLRB press release (January 25, 2013). That leaves the current status of these once and future board decisions firmly in limbo. Only one of the current three board members is not a recess appointment and, if the Noel Canning rationale is followed by other circuits or is upheld by the Supreme Court, the board does not have a quorum and has been without one for more than a year.
‘NEW PROCESS STEEL’
In a sense, we have seen this movie before. The board consists of five members but can delegate its decision-making authority to panels of three members. Some years ago when, through term expirations, the board was about to fall below its three-member quorum, it delegated decision-making authority over pending cases to two-member panels, reasoning that if the two members were in agreement, that would constitute a majority (as if there had been a third member who dissented). In New Process Steel L.P. v. NLRB, 130 S. Ct. 2635 (2010), the Supreme Court held that two-member panels were not authorized by the statute. That effectively invalidated some 600 board decisions that had been issued from January 2008 to April 2010.
In response to New Process Steel, the board sought remand over the nearly 100 two-member decisions still pending on circuit court appeal. Using valid three-member panels, those decisions were, in essence, re-decided exactly as they had been decided before. Ironically, the final decision resolving a two-member panel was issued on December 14, 2012 — only one month before Noel Canning — and two of the three panel members were, under the logic of Noel Canning, not validly appointed under that decision.
Employers, including those with nonunion workplaces, would be wise to keep a watchful eye on the Noel Canning line of cases and to tread lightly in the areas of recent board decisions. At some time down the road, new members of the board will be appointed by proper procedures and, if those appointed are nominated by President Obama, it is likely that there will be a redux of New Process Steel. The properly appointed board will promptly reconsider and likely reissue the currently suspect decisions. In that event, the sense of relief that nonunion employers may now feel as a result of Noel Canning will be short-lived.
Michael Starr is a labor and employment law partner in the New York office of Holland & Knight. Katherine Healy Marques is a labor and employment associate in that office.