On Friday, April 13, 2012, the United States District Court for South Carolina held that the National Labor Relations Board (“NLRB”) exceeded its authority when promulgating a rule which requires that all employers subject to the jurisdiction of the National Labor Relations Act (“NLRA”) post a notice of employee rights. In Chamber of Commerce of the United States, et al. v. National Labor Relations Board, et al., Case No. 2:11-cv-02516-DCN, Federal Judge David Norton held that the NLRB violated the Administrative Procedures Act when promulgating the rule, and granted summary judgment to Plaintiffs on their claim that the rule was invalid.
As previously reported, on August 30, 2011, the NLRB published a Final Rule, which is currently set to take effect on April 30, 2012. The rule is divided into two main parts: (1) Subpart A contains the requirement that all employers subject to the NLRA post notices, in conspicuous places, that inform employees of their NLRA rights, NLRB contact information and NLRB enforcement procedures; and (2) Subpart B states that a failure to post the required notice is an unfair labor practice and that the NLRB may toll the statute of limitations for a violation of the rule and find a failure to comply with the rule as evidence of unlawful motive in unfair labor practice proceedings.
Last month, the D.C. District Court issued an order on a separate challenge to the rule and held that the Subpart A notice posting requirement was a valid exercise of the NLRB’s powers. However, the D.C. District Court found that the NLRB’s remedial measures in Subpart B of the rule were impermissible.
The South Carolina District Court disagreed with D.C. District Court and held that the rule was completely unlawful. Initially, Judge Norton focused on Section 6 of the NLRA, which grants the NLRB the power to make, “in the manner prescribed by the Administrative Procedures Act, such rules and regulations as may be necessary to carry out the provisions of” the NLRA. Judge Norton found that while the notice posting rule may be helpful in carrying out the NLRB’s functions, it was not necessary. Further, Judge Norton reasoned that there is no provision in the NLRA, unlike several other federal labor statutes, which requires employers to inform employees of their NLRA rights. Thus, the rule could not be said to be necessary to carry out an explicit Congressional directive. Judge Norton opined that the NLRA framework requires the NLRB to be reactive to election petitions or unfair labor practice charges and that the Board exceeded its powers by adopting a proactive notice posting rule.
The South Carolina District Court has not yet issued an injunction or other formal relief to Plaintiffs. Further, it is expected that the NLRB will seek to stay Judge Norton’s order pending appeal. Finally, the D.C. District Court’s decision is currently on appeal. Given judicial developments in this area, the NLRB may postpone the effective date of the rule again, or there may be some further judicial decision in advance of April 30, 2012. Employers are advised not to display the NLRA notice rights poster prior to April 30, 2012 and to consult with counsel to determine the current status of the rule as of the current enforcement date.