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DC Circuit Blasts NLRB’s Employee Notice Rule

The United States Circuit Court of Appeals for the District of Columbia Circuit held yesterday that the National Labor Relations Board (“NLRB”) lacked authority to issue a rule requiring employers to post a notice to employees advising them of their rights under the National Labor Relations Act (“NLRA”) and imposing procedural and substantive remedies on employers who failed to post the notices. NAM v. NLRB, ____ F.3d _____, No. 12-5068 (DC Cir. May 7, 2013).

The Background

In 2011, the NLRB issued a Final Rule entitled “Notification of Employee Rights under the National Labor Relations Act.” The Final Rule was originally planned to be effective as of November 14, 2011, but the effective date was later postponed to April 30, 2012. Under the Final Rule, employers were required to post a large (11” x 17”) notice informing employees of their rights to organize under the National Labor Relations Act (“NLRA”). Federal contractors already have posting requirements for this notice.

The Final Rule

The Final Rule contains two major parts. As noted above, Part A requires all employers covered by the NLRA to post a notice informing employees of their rights to organize under the NLRA and outlining illegal conduct by employers. Part B provides that the failure to post the notice could lead to the NLRB expanding the statute of limitations for a violation by an employer. Normally six months, the statute of limitations could, at the NLRB’s discretion, be tolled (i.e., lengthened) potentially without limitation. In addition, the Final Rule provides that the failure to post the notice could be considered by the NLRB as “evidence of unlawful motive.” Thus, the NLRB could use the failure to post the notice as evidence that the employer planned to violate the NLRB on any complaint brought to the NLRB. Not surprisingly, employers did not look kindly on Part B.

The Litigation

Several employer and industry groups filed suit and argued that the NLRB did not have the authority to issue the Final Rule. The court faced two primary issues in the litigation: (i) whether the NLRB had the authority to issue the Final Rule; and (ii) whether the NLRB has the authority to put Part B – the enforcement provisions – in the Final Rule.

The District Court Decision

The District Court in March, 2012 held the NLRB had the authority to require the posting by employers, but lacked authority to make “a blanket advance determination that a failure to post will always constitute an unfair labor practice.” The NLRB was not precluded from considering an employer’s failure to post in a particular case. The court also found no authority for the NLRB to expand the statute of limitations by stopping the running of the six months limitation for employers who do not post the notice.

The Appellate Decision

On appeal, the DC Circuit initially stayed the rule pending appeal and now has struck the NLRB posting rule in its entirety. The Circuit relied on the First Amendment and on NLRA § 8(c) that states: “The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this [Act], if such expression contains no threat of reprisal or force or promise of benefits.” 29 U.S.C. § 158(c). The Circuit holds the employer who refuses to post the NLRB’s notice is exercising its free speech rights under the First Amendment and NLRA § 8(c). The NLRB’s requirement of employer posting therefore violates the First Amendment and NLRA § 8(c). Just as an employer cannot commit an unfair labor practice by posting a communication advising employees of their right not to join a union, it cannot be an unfair labor practice for an employer to refuse to post a government notice informing employees of their right to unionize (or not).

The DC Circuit then affirmed that part of the District Court decision that the Board had no authority to toll the six month statute of limitations for unfair labor practices based upon an employer’s failure to post the notice. The Circuit found no support that Congress had intended the NLRA statute of limitations to be subject to equitable tolling when the NLRA was enacted in 1947. It also found no support for equitable tolling based upon a potential complainant’s ignorance of the law.

Last, the Circuit held that all of the remedial or enforcement provisions of the posting requirement are unlawful and the posting requirement cannot be severed from the unlawful provisions. Therefore, the entire rule falls. Moreover, two of the panel judges also held the NLRB lacked any authority to enact the posting requirement.

We fully expect the NLRB to seek Supreme Court review. Employers who are federal contractors continue to be subject to a separate requirement that they post a very similar notice to employees concerning their rights under the NLRA. For non-federal contractor employers, the DC Circuit opinion means there is no requirement for posting the NLRB notice to employees.