Fourth Circuit Joins D.C. Circuit in Striking Down NLRB’s Employee Rights Notice Posting Rule

Fourth Circuit Joins D.C. Circuit in Striking Down NLRB’s Employee Rights Notice Posting Rule

Jul 1, 2013

In June 2013, the Fourth Circuit joined the United States Court of Appeals for the District of Columbia Circuit in vacating the National Labor Relations Board’s “notice posting rule” (the “rule”). The controversial rule would have impacted nearly six million employers, the majority of which are small businesses. The rule issued by the National Labor Relations Board (“NLRB”) declared that employers would be guilty of unfair labor practices if they failed to post at their office and on their websites a “Notification of Employee Rights under the National Labor Relations Act.” 76 Fed. Reg. 54,006 (Aug. 30, 2011). According to the NLRB website, the rule would have required most private sector employers to post the notice in a “conspicuous place” and publish a link to the notice on a website if other personnel notices are posted there.

What is the Notice Posting Rule?

The National Labor Relations Act (“NLRA”) oversees relations between private employers, labor unions and employees. The NLRB issued the rule on August 30, 2011 after a notice and comment period. The rule is comprised of 3 parts. Subpart A requires employers to post the notices. Subpart B makes the failure to post an unfair labor practice and enables the NLRB to toll the statute of limitations for any unfair labor practice claim made by an employee. Subpart C allows for the NLRB to consider a failure to post as evidence of unlawful motive that would weigh against it in any proceedings before the Board. 76 Fed. Reg. 54,006 (Aug. 30, 2011).

The NLRB issued the rule on the premise that the majority of American workers are ignorant of their rights under the NLRA while pointing to the changing nature of the workforce, that the majority of private sector employees are not represented by unions, and the growing influx of immigrant and high school workers entering the workforce. The rule was the first notice-posting rule of any kind in the 77 year history of the NLRB.

During the comment period of the rule, the NLRB received over 7,000 submissions, the majority of which opposed the rule entirely or partially. The rule was challenged in both the Fourth Circuit and the D.C. Circuit. In the D.C. matter, the National Association of Manufacturers filed suit against the NLRB and the District Court granted summary judgment to the NLRB. On appeal, the D.C. Circuit reversed the decision and held that the rule violated Section 8(c) of the NLRA which prohibits the finding that employer free speech which is not coercive to be an unfair labor practice. Nat’l Ass’n of Mfrs. V. NLRB, (D.C. Cir. May 7, 2013). The D.C. Circuit held that the violation of Section 8(c) constituted an unlawful infringement on an employer’s right to free speech.

In the Fourth Circuit matter, before the rule went into effect, the Chamber of Commerce for the United States and the South Carolina Chamber of Commerce filed a complaint in the District Court for South Carolina seeking injunctive relief against the NLRB. The District Court granted summary judgment to the Chamber of Commerce. Subsequently on June 14, 2013, the Fourth Circuit three-judge panel unanimously affirmed the District of South Carolina’s opinion that the NLRB lacked authority to promulgate the rule, finding that the NLRB is largely a “reactive entity,” and therefore, Congress did not intend to allow for proactive rulemaking. Chamber of Commerce v. NLRB (June 14, 2013). The Fourth Circuit avoided the constitutional issues raised in the D.C. matter by focusing on the authority of the NLRB and contrasting it with other agencies that have notice-posting requirements and proactive mandates such as the EEOC which can proactively file suits and initiate investigations.

The NLRB has not yet indicated whether it intends to appeal either decision to the U.S. Supreme Court. Currently, employers are not required to post the Notice of Employee Rights as it will not take effect until the foregoing legal issues are resolved. However, federal contractors and subcontractors should note that these decisions do not impact their duty to post a similar notice informing employees of their rights under the NLRA required under the Federal Acquisition Regulations (FAR), 48 C.F.R. 52.222-40. For more information regarding these requirements the Department of Labor maintains a compliance page for noticing posting requirements for federal contractors available online. We will continue to provide updates on this issue.