Fulbright & Jaworski: Recent Changes at the National Labor Relations Board

by William Patrick Finegan and Lindsey Duran Sberna

In the past month, there has been a flurry of activity related to the National Labor Relations Board. Below is a summary of four of the most recent and important events.  

1. NLRB Majority Finalizes Union Election Rule; Sparking Controversy and a Court Challenge

On December 21, 2011, the National Labor Relations Board ("NLRB" or "Board") released a final rule amending its procedures in union representation cases to limit the issues considered in NLRB hearings, eliminate pre-election Board review of regional directors' decisions, and take other steps the agency stated will "reduce unnecessary litigation and delays." The final rule, which was published in the December 22 Federal Register, is a somewhat scaled-back version of the measures that a divided NLRB proposed in a June rulemaking notice, but business groups are still expressing strong disapproval of the final rule. NLRB Chairman Mark Gaston Pearce (D) and Member Craig Becker (D) approved the final rule without the agreement of Member Brian E. Hayes (R), who opposes the action. The rule is slated to take effect on April 30, 2012.  

1. Amendments to NLRB Procedures in Representation Cases

Opponents of the final rule believe that it unfairly curtails employers' ability to communicate with workers during the union election process and limits employers' opportunities to bring legal challenges. In other words, these "ambush" election rules shorten the time between the filing of an election petition and actual voting, making it easier for unions to win elections and more difficult for employers to effectively communicate with workers prior to votes.

Supporting Board members and union supporters, however, state that the procedural changes will reduce the number of piecemeal appeals in representation cases and simplify the processing of election petitions."This rule is about giving all employees who have petitioned for an election the right to vote in a timely manner and without the impediment of needless litigation," said Pearce.  

Specifically, the final rule makes seven changes to NLRB procedures in representation cases:    

1. Amending Board regulations to state that the purpose of pre-election hearings described in Section 9(c) of the National Labor Relations Act is to determine whether a question concerning union representation exists that should be resolved in a secret ballot election. 
2. Giving NLRB hearing officers authority to limit the presentation of evidence in such a hearing to genuine issues of fact material to the existence of a question concerning representation. This and the previous change will in many cases preclude litigation of important issues such as supervisory status. 
3. Providing for posthearing briefs with the permission of a hearing officer, rather than as a matter of right. This change alone will reduce the  amount of time before an election by at least seven days in many contested cases. 
4. Amending Section 102.67 and Section 102.69 of the Board's rules to eliminate parties' right to seek Board review of regional directors' pre-election rulings while allowing parties to seek post-election review of such rulings. 
5. Eliminating language in NLRB's current statement of procedure that recommends a regional director not schedule balloting within 25 days of directing an election.
6. Amending Section 102.65 of the Board's rules to provide that requests for special permission to appeal a regional director's pre-election ruling will be granted only in extraordinary circumstances.
7. Amending Board rules to make NLRB review of postelection disputes discretionary. 

1. Court and Congressional Challenges to the Final Rule

This controversial rule, and the method in which it was conceived, is facing strict scrutiny and challenges from multiple avenues. Anticipating the Board's decision, on December 20, 2011, the day before the Final Rule was announced, the U.S. Chamber of Commerce and the Coalition for a Democratic Workplace filed a lawsuit in U.S. District Court for the District of Columbia, seeking to enjoin the agency from enforcing the rule. The complaint asserted that the final rule violates the National Labor Relations Act (NLRA), exceeds the Board's statutory authority, and is contrary to the First and Fifth amendments to the U.S. Constitution, which guarantee the rights to free speech and due process. Additionally, the organizations allege that by issuing a final rule on the signature of just two members of the NLRB, the Board's actions are "arbitrary, capricious, and an abuse of discretion." 

Furthermore, on the same day the final rule was issued, Senator Mike Enzi (R-Wyo), the ranking member on the Senate Health, Education, Labor and Pensions ("HELP") Committee, announced that he intends to use the Congressional Review Act ("CRA") to challenge the rule. The CRA allows either the Senate or the House to introduce a joint resolution of disapproval with the full force of the law to stop a federal agency from implementing a recent rule or regulation. Such a resolution of disapproval needs only a simple majority in the Senate to pass if acted upon during a 60-day window, and cannot be filibustered. 

1. The National Labor Relations Board's Final Rule Requiring All Employers to Post Notice of Their NLRB Rights is Delayed a Second Time, Until April 30, 2012

Then, on Friday, December 23, 2011, the NLRB again announced that it had delayed the effective date of its new notice-posting rule to April 30, 2012. This marks the second time the Board has changed the date: the posting requirement originally was to have gone into effect in November, but the Board moved the effective date to January 31, 2012, stating that additional time was needed "in order to allow for enhanced education and outreach to employers."

This time, the NLRB postponed the date at the request of a federal court overseeing a legal challenge from business groups. The National Association of Manufacturers ("NAM") and the Coalition for a Democratic Workplace filed suit September 8, 2011 in federal district court in Washington, D.C., alleging that the NLRB acted outside of its jurisdiction and should suspend the rule. A second lawsuit was also filed in the nation's capital on September 16, 2011, by the National Federation of Independent Business ("NFIB"), the National Right to Work Legal Defense, and the Education Foundation, asking the court to set aside the rule and declare that the NLRB's action violates the National Labor Relations Act. These cases were consolidated in October. A third lawsuit was brought by the U.S. Chamber of Commerce and the South Carolina Chamber of Commerce in the U.S. District Court of South Carolina, alleging that the Final Rule violates federal labor and regulatory laws as well as the First Amendment.

At a December 19, 2011 hearing in the District of Columbia, U.S. District Judge Amy Berman Jackson told NLRB lawyers that the legal issues "deserve more time" than the January 31 effective date gave her. She told them that they would either need to extend the effective date again or she would enjoin the NLRB from implementing it because she needed more time to consider the briefs and oral arguments. In a statement announcing the new April 30 effective date, the NLRB said "postponing the effective date of the rule would facilitate the resolution of the legal challenges that have been filed with respect to the rule."

According to plaintiffs' counsel in the Washington, D.C. litigation, the notice posting rule, which was proposed in December 2010 and finalized in August, goes beyond the bounds of the NLRB's authority and encroaches on employers' First Amendment right. The NFIB's October 26 summary judgment bid said that the NLRB, over the course of its 76-year history, has never required a notice posting by employers who had not run afoul of the NLRA or had not been involved in a representation proceeding before the Board.

However, the NLRB's cross-motion for summary judgment, also filed on October 26, said the rule's opponents were failing to take into account the scope of the Board's broad rulemaking authority as described by the U.S. Supreme Court in its 1991 decision in American Hospital Association v. NLRB ("AHA"). That decision makes it clear that unless the NLRB has been expressly limited in some manner, Section 6 of the NLRA gives the Board authority to make such rules and regulations as may be necessary to carry out the provisions of the NLRA, the NLRB argued. "No such limitation was found in AHA, and there is no such limitation here. By attacking the Board's rule on the basis that the NLRA does not expressly authorize a notice-posting requirement, the opponents turn AHA completely on its head," the NLRB said.

While the NAM claimed that the posting requirement amounts to compelled speech which violates the First Amendment, the NLRB stated that the notice involves governmental speech, not employer speech. The posters say they are official government notices and don't contain anything that is attributed to the employer, the Board argued.

1. The Notice Requirements

The notice requirements' final rule requires all employers subject to the Board's jurisdiction to post a notice in the workplace informing employees of their right, among other things, to:  

• organize a union to negotiate with their employer about wages, hours and working conditions; 
• form, join or assist a union; 
• bargain collectively with their employer; 
• discuss wages and benefits and other terms of conditions of employment or union organizing with co-workers or a union; 
• strike and picket, depending on the purpose or means of the strike or the picketing; and 
• choose not to do any of these activities, including joining or remaining a member of a union.

The notice also provides examples of unlawful employer and union conduct and instructs employees how to contact the NLRB with questions or complaints.

"Employers subject to the Board's jurisdiction" encompass the vast majority of employers doing business in the United States.  This includes most private-sector employers, including labor unions, but excludes agricultural, railroad and airline employers, as well as very small employers that conduct an insufficient volume of business to have more than a slight effect on interstate commerce. In addition, the NLRB has agreed to exempt the U.S. Postal Service from the new posting requirement.

The poster must be placed in a conspicuous place readily seen by employees. If at least 20% of employees speak a language other than English, the notice must also be posted in the second language (the Board will provide translations of the Notice, and of the required link to the Board's website, in the appropriate languages). Additionally, employers who customarily post notices to employees regarding personnel rules or policies on an internet or intranet site will be required to post the Board's notice on those sites. 

There are several potentially adverse affects of failing to post the notice. First, it will be an unfair labor practice under Section 8(a)(1) of the NLRA. Second, failure to post the required notice could toll the six-month statute of limitations for filing unfair labor practices. Third, the Board could use the failure to post the notice as evidence of an employer's unlawful motive in unfair labor practice cases.

1. President Obama Announces Three Recess Appointments

On January 4, 2012, President Obama made three recess appointments to the NLRB, to fill vacant seats needed to keep the agency operational. The appointments include Board members Terrence R. Flynn (R), Sharon Block (D), and Richard Griffin (D).  The president had nominated Flynn to the Board January 4, 2011, and Block and Griffin on December 15, 2011, but the Senate Health, Education, Labor and Pensions ("HELP") Committee had not yet acted on the nominations. 

President Obama's announcement regarding the recess appointments came one day after Member Craig Becker's (D) recess term ended. Becker's departure left the Board with only two members, leaving it unable to function without new appointments.   

1. Opposition to Recess Appointments

The president's actions meant bypassing Congress, a move Republicans have vowed to protest. The Constitution gives the president the authority to make temporary recess appointments to fill vacant positions when the Senate is in recess. Obama claims that Congress was in recess until January 23, because it had not conducted any legislative business since it adjourned for holiday break December 17. Republicans, however, countered that the U.S. Senate had avoided entering into a formal recess by holding pro forma sessions, in which a local member of Congress reports to Capitol Hill to quickly gavel in and out of session every three days to keep the legislative session active.

The crux of the matter is whether Congress was actually in recess, as President Obama and his attorneys believe that the Senate could not use these "sham pro forma sessions" to prevent him from exercising this constitutional power. On January 12, The Department of Justice released a memorandum opinion on the lawfulness of recess appointments made during a recess of the Senate where pro forma sessions are held, finding that the president is allowed to make such appointments. Despite the support of White House attorneys, with the history and the intent of the president's recess appointment power in question, the fight over this issue is likely to make its way through the lower courts quickly and land before the nation's highest court before anything can ultimately be resolved.   

1. The New Members' Backgrounds

While outrage and protests will likely continue, at this time the recess appointees plan to take up their posts. All have significant background in traditional labor work. 

Flynn is currently chief counsel to NLRB member Hayes, and, prior to that, was chief counsel to former NLRB member Peter Schaumber. From 1996 to 2003, he was counsel in the labor and employment group of Cromwell & Moring LLP, and previously worked at the firms of David Hagner Juney & Krupin and Reid & Priest. Flynn holds an undergraduate degree from the University of Maryland, College Park, and a law degree from Washington & Lee University School of Law.

At the time of her appointment, Block was working as the deputy assistant secretary for congressional affairs at the U.S. Department of Labor ("DOL"). Prior to her DOL position, Block worked as senior labor and employment counsel for the Senate HELP Committee, and was a senior attorney to NLRB Chair Robert Battista from 2003 to 2006. She was also an assistant general counsel at the National Endowment for the Humanities and an associate at Steptoe & Johnson LLP. She holds a bachelor's degree from Columbia University and a law degree from Georgetown University Law Center.

Currently, Griffin is the general counsel for the International Union of Operating Engineers. He has also served on the board of directors for the AFL-CIO Lawyers Coordinating Committee, and from 1981 to 1983, he served as an attorney for NLRB Board members. He has a bachelor's degree from Yale University and a law degree from Northeastern School of Law.   

1. NLRB Withdraws Controversial Complaint Against Boeing

Throughout much of last year, the NLRB and the International Association of Machinists ("IAM") had argued that Boeing Co. had decided to locate a new plant to build its new 787 Dreamliner jets in South Carolina, a right-to-work state, in retaliation for strikes by unionized workers at its existing facilities in Washington state. Facing the prospect of losing up to 3,000 IAM jobs  assembling the 787s to the new, non-union plant in Charleston, IAM formally accused Boeing of unfair labor practices. A charge was filed on March 28, 2010, and an NLRB complaint was issued April 20, 2011. A hearing before a National Labor Relations Board administrative law judge had been locked since June in pre-evidentiary maneuvering, and NLRB Acting General Counsel Lafe Solomon's decision to pursue the case against Boeing provoked considerable backlash from Republicans and business groups.

Then, in early December of this past year, IAM members voted to ratify a four-year collective bargaining agreement ("CBA") with Boeing, that, among other things, guarantees that Boeing will build its updated 737 MAX in the union facilities in Washington.  With the new CBA in place, the NLRB dropped its case, stating that "the charge was always about the loss of jobs in the Seattle area," and, with the new deal, "jobs are secure in the Washington area, and also jobs are secure in South Carolina."

Conservative critics, however, are still angry that the case was brought in the first place. South Carolina Senator Jim DeMint (R), a vocal GOP critic, said in a statement: "The NLRB's dismissal of charges against Boeing only after union approval of their new contract only confirms the charges were a politically motivated negotiation tactic, not a serious complaint based on merit.  Unfortunately, the real and serious damage to America's competitiveness has already been done. A precedent has been set by the NLRB that they will attack businesses in forced-unionism states that try to create jobs in right-to-work states."

This article was prepared by William P. Finegan (wfinegan@fulbright.com or 214 855 7455) and Lindsey D. Sberna (lsberna@fulbright.com or 214 855 7441) from Fulbright's Labor and Employment Law Practice Group. If you have any questions, please contact any of our labor and employment attorneys.

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