Federal Court Rejects NLRB Authority to Force Posting of Employee Rights Notice

April 16, 2012

In Chamber of Commerce of the U.S., et al. v. NLRB (Dist. S.C., April 13, 2012), a South Carolina federal district court held that the National Labor Relations Board (NLRB or the Board) does not have statutory authority to force employers to post notices that the NLRB claims are designed to inform employees of their rights under the National Labor Relations Act (the Act). The Court’s decision directly conflicts with a recent decision from a separate federal court in the District of Columbia. These developments place all employers covered by the Act in a very difficult position. The posting regulations are scheduled to become effective on April 30, 2012. The conflicting court cases make it unclear whether employers will be required to post the NLRB notices on the current April 30, 2012 deadline. (Click here for more).

The South Carolina Court based its conclusion on, among other things, two principles.

  1. The Court observed that Congress created the NLRB as a reactive quasi-judicial agency with two functions ─ to prevent and resolve unfair labor practices and to conduct representation elections. The Board’s jurisdiction over these matters can be invoked only by the third-party actions of filing a complaint or petition.
  1. The Court pointed outm that Congress authorized the Board to issue rules only to the extent that they were necessary to carry out the provisions of the Act.

The Court observed that nothing in the Act placed an affirmative obligation on employers to notify employees of their rights under the Act. Therefore, the posting rule cannot be necessary to carry out the purposes of the Act. To the contrary, the Court concluded that the Board appeared to confuse what was necessary with what was merely useful.

Additionally, the Court held that “[b]y promulgating a rule that proactively imposes an obligation on employers prior to the filing of an [unfair labor practice] charge or a representation petition, in the absence of express statutory authority, the Board has contravened the statutory scheme established by Congress.” Thus, the Court rejected the notion that the Board was free to become a proactive (rather than reactive) agency or act in any other area as long as Congress did not expressly prohibit it from doing so.

The bottom line for employers covered by the Act is that it is now unclear whether the Board can force them to post the notices that are scheduled to go up across the country on April 30, 2012. The District of Columbia case is on appeal. Further, the federal Appeals Court has not ruled on a request to stay the lower court’s ruling pending a decision on the appeal.

We expect that the NLRB or one of the courts involved will issue some kind of guidance within the next few days. We will, of course, inform you of any further developments as soon as they occur. In the interim, please contact the authors or other members of the Labor & Employment team for further information and guidance.