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Supreme Court Decision Calls Hundreds of NLRB Decisions Into Question

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By Tyler Tarney

July 28, 2014

In the United States Supreme Court's much-awaited NLRB v. Noel Canning decision, the Court ruled in a unanimous decision that President Obama lacked executive authority to make three NLRB appointments in January 2012. This calls into question several hundred quorum-less federal labor law administrative decisions issued from January 2012 to August 2013. This case is certain to cause short-term disorder for many employers. But the Court's narrow holding avoided more significant implications, and the long-term effects of the case will neutralize as the NLRB's pro-labor majority honors its commitment to steadily re-affirm and rehabilitate affected decisions. 

Congress enacted the National Labor Relations Act to protect employees and employers, to encourage collective bargaining, and to curtail harmful private-sector labor practices. Contrary to popular belief, the Act applies to almost all private employers—regardless of whether a union is in place. The Act created the NLRB to decide labor disputes among employers, unions, and employees. The NLRB is an administrative agency charged with enforcing federal labor laws through unfair labor practice complaints, investigations, petitions, and hearings. Employees can file suit to enforce decisions under the Act in the federal district courts. Courts generally give deference to the NLRB’s interpretations of the Act, but don’t always. The NLRB is powerless to act without a quorum of at least three of five members. The members are appointed by the President and serve five-year terms. Naturally, the mix of pro-labor Democrats and pro-business Republicans within the NLRB tends to shift depending on the party controlling the White House.

In NLRB v. Noel Canning, the United States Supreme Court recently ruled in a unanimous decision that President Obama lacked executive authority to make three NLRB appointments in January 2012. The case started as a labor dispute at Noel Canning, a soft-drink bottling company. The NLRB ruled that the company engaged in an unfair labor practice by refusing to enter into a collective bargaining agreement. The company appealed. It argued that the NLRB lacked authority to act and that the decision was void because three of the five members were improper and unconstitutional “recess appointments.” The Recess Appointments Clause allows the President to fill vacancies that occur while Congress is in recess. The case thus turned on whether the Senate—who was meeting every three days in pro forma sessions without conducting business—was in “recess” at the time of the appointments or if the Senate was merely on an intra-session break. The company prevailed on appeal before the D.C. Circuit with a decision ruling that the Senate was not in recess at the time. Although the Supreme Court unanimously ruled that the appointments were unconstitutional, it did so narrowly—holding that three days is too short to be a “recess”—and rejected the broader argument adopted by the D.C. Circuit that would have considerably tightened the President’s recess appointment power.

For some employers, the fall-out after Noel Canning will be significant. It calls into question the validity of several hundred NLRB decisions issued after the unconstitutional appointments, and it will shape the path of over 100 pending cases that are challenging the validity of them in the federal courts. Some of the decisions now called into question were controversial rulings on social media policies, at-will disclaimers, restrictions on non-work related communications, employment contract waivers, and protected concerted activity. But this short-term disorder will neutralize over time as the NLRB—with a Democratic and pro-labor majority that has already expressed a commitment to resolving issues affected by the ruling—begins to re-affirm and rehabilitate affected decisions. Ultimately, the case embodies the rapidly evolving state of federal labor law, reminds us of the broad application of federal law to union and non-union employers, and illustrates why employers should regularly review and evaluate existing policies and practices.

Do not hesitate to contact a member of Reminger’s Employment Practices Group if you have questions about the decision, would like a copy of it, have a question about federal labor law, or have a general employment law question. 

This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel. 

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