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NLRB notice-posting rule upheld in part, but enforcement-related provision struck down

March 3rd, 2012  |  Lisa Milam-Perez

A federal district court yesterday upheld the NLRB’s rule requiring employers to post a notice informing employees of their rights under the NLRA. The court also upheld a specific provision stating that an employer’s failure to post the required notice can be evidence of antiunion animus when an employer’s motive is at issue in an unfair labor practice proceeding. However, the court struck down the rule’s enforcement provisions making the failure to post the required notice itself an unfair labor practice under the Act, and providing for equitable tolling that would extend the time in which an employee could bring an unfair labor practice charge against an employer that failed to post the notice.

The controversial NLRB rule was first published in August 2011. The notice-posting provision requires all employers subject to the NLRA to “post notices to employees, in conspicuous places, informing them of their NLRA rights, together with Board contact information and information concerning basic enforcement procedures.” Under Subpart B of the rule, employers that fail to post the notice could suffer repercussions during Board proceedings: the Board may toll the standard six-month statute of limitations for filing an unfair labor practice action; also, the Board may consider an employer’s “knowing and willful refusal to comply” with the notice-posting requirement as evidence of anti-union animus during an unfair labor practice proceeding where the employer’s motive is at issue.

Business groups mounted a challenge to the NLRB rule, and the court consolidated several lawsuits filed by The National Association of Manufacturers and the National Right to Work Legal Defense Foundation, in conjunction with the National Federation of Independent Business. The organizations alleged that, in promulgating the rule, the Board exceeded its authority and violated employers’ free-speech rights — namely, the right to refrain from speaking.

Notice provision upheld. The Board did not exceed its statutory authority in implementing the actual notice-posting provision, the district court held. Although Congress did not speak directly to the Board’s authority to promulgate such a rule, the Board reasonably interpreted its charge under the Administrative Procedure Act to authorize the rulemaking here.

Congress, in deliberately omitting a penal notice-posting requirement anywhere in the NLRA, intended to prohibit the Board from attempting to impose such an obligation, the plaintiffs argued. “But plaintiffs read too much into Congress’s silence on the subject,” the court wrote, “and their vehemence alone is not enough” to win the argument. In issuing the notice-posting rule, the Board was only attempting to regulate entities that it was expressly authorized by Congress to regulate, and only those activities that fall within the ambit of the NLRA. The stated purpose of the rule was “directly related to the policy behind the NLRA,” the court observed, and the notice-posting requirement was hardly a “poor fit” with the language of the Act.

The court contrasted the NLRB rulemaking here with an “attempted turf expansion” by the FTC that had been struck down by the D.C. Circuit in a ruling relied on by the plaintiffs. “The NLRA places the Board squarely at the heart of labor-management relations, and the Board did not have to engage in the tortured reading of the law and mental gymnastics condemned by the court in [the case cited by plaintiffs] to find that the dissemination of information about employee rights is well within its bailiwick.”

The plaintiffs also tried to no avail to distinguish the challenged rule from the NLRB’s regulation defining appropriate bargaining units in acute-care hospitals, which was upheld by the Supreme Court in American Hospital Ass’n v NLRB. The rule in American Hospital was promulgated in furtherance of the Board’s express Sec. 9(b) duty to determine appropriate bargaining units, they urged, while the notice-posting rule did not further such an express duty. “Yet the Court finds no grounds to conclude that a rule aimed at carrying out section 157 of the Act is any less valid than a rule aimed at carrying out section 159.” Nor was the court persuaded by the plaintiffs’ argument that the very fact that the Board had never before invoked its rulemaking authority outside the realm of its adjudication and election powers was evidence that the agency lacked such authority.

The court further rejected the plaintiffs’ contention that the Board’s promulgation of the rule was arbitrary and capricious because its justifications were not supported by “‘substantial, or in this case any, empirical evidence.’” Rather, in determining that many employees are unaware of their NLRA rights and therefore cannot effectively exercise those rights, the Board considered evidence in the form of studies, law review articles, and comments submitted during the notice and comment period. The plaintiffs offered no evidence contradicting the Board’s findings. Furthermore, the notice-posting rule was a reasonable means of advancing the goal of promoting employees’ awareness of their rights under the Act.

Unfair labor practice provision stricken. On the other hand, the NLRB lacked authority to deem an employer’s failure to post the notice to be an unfair labor practice. This provision violated the NLRA and was invalid as a matter of law, the court held.

Congress specifically defined the conduct that could constitute an unfair labor practice under Secs. 8(a) and 10(a) of the Act. While Congress did not enumerate every conceivable practice that the Board could find to be an unfair labor practice, “it did establish bounds,” the court noted. Although the Board argued that failure to post the notice qualified as an unfair labor practice under Sec. 8(a)(1)’s proscription against interference with employees’ protected rights, that statutory provision “prohibits employers from getting in the way — from doing something that impedes or hampers an employee’s exercise of the rights,” the court pointed out. “It does not prohibit a mere failure to facilitate the exercise of those rights.”

The Board rule deemed an employer’s failure to post the notice to be an unfair labor practice in every situation; it did not distinguish between a situation where an employer’s failure to post was intended to interfere with an employee’s organizational efforts and an instance where the employer had simply failed to post the information. Yet, “a mere unwillingness to help” is not the same as “an act of obstruction,” the court observed.

The court stressed, however, that it was “not making an absolute statement that inaction can never be interference,” adding that its decision should not be construed as preventing the NLRB from finding in any given case that the failure to post constitutes an unfair labor practice — after making a specific finding based on the facts and circumstances of the individual case. Rather, the court simply restrained the Board from making “a blanket advance determination that a failure to post will always constitute an unfair labor practice.”

Equitable tolling provision falls. Similarly, the Board was not authorized to enact a rule that empowers it to toll the statute of limitations in any future unfair labor practice action involving a job site where the notice was not posted. This provision not only extended the statute of limitations for unfair labor practice proceedings arising out of the failure to post, it applied to all unfair labor practice actions against employers where the notice was not posted.

“Congress did not leave a gap for the agency to fill with respect to the statute of limitations,” the court pointed out. In fact, “Congress plainly mandated a short time period during which an aggrieved person must file a charge.” Looking to the history of the NLRA’s enactment, the court noted that the limitations period in Sec. 10(b) was the focus of significant attention when it was introduced as part of the Taft-Hartley Amendments in 1947. Opponents of the amendment called it “‘the shortest statute of limitations known to the law.’” Despite criticism that the provision gave “‘unjust assistance to employers or unions which commit those types of practices which are easily concealed and difficult to detect,’” the amendment was adopted.

Although the Board attempted to justify the equitable tolling provision with references to Title VII and ADEA cases in which courts equitably tolled statutes of limitations in employee causes of action where employers failed to post mandatory notices of employee rights, these precedents were inapposite for a number of reasons—not the least of which that Congress expressly mandated the notice posting under the discrimination statutes, “whereas here, it was the Board that crafted the notice-posting rule.” More importantly, the court observed, tolling in the Title VII context is applied on a case by case basis. Yet the Board’s rule “strips away the case-specific nature of the equitable tolling doctrine by imposing it as the rule rather than the exception.”

While the Board tried to “brush off this consequence” by arguing that the use of the discretionary “may” in its equitable tolling provision emphasized that its tolling doctrine was similarly “flexible, discretionary, and grounded in equitable practice,” the court wouldn’t have it. Importantly, it noted, the Board rule established tolling as the standard practice unless the employer could prove that it should not be applied. “This turns the burden of proof on its head.”

Constitutional challenge. Finally, the court rejected the plaintiffs’ assertion that the Board rule violated the First Amendment because it compelled employers to speak against their will. The notice-posting requirement “does not compel employers to say anything,” the court found. The required poster fit squarely into the requirements for government speech because its content was entirely a message from a government agency. As such, the poster was not subject to First Amendment scrutiny. “[N]othing in the notice posting suggests that employers favor collective bargaining activities, and nothing in the regulation restricts what the employers may say about the Board’s policies,” wrote the court. The notice simply recites what the law is, so “employers could not possibly have an alternative message that posting the notice could affect.”

This was not the first court to reach the conclusion that regulations requiring employers to post legal notices did not violate the First Amendment, the court added. An employer’s right to silence “may be sharply constrained in the labor context,” the D.C. Circuit has observed, and the Fifth Circuit has upheld an employer’s obligation to post OSHA notices. Likewise, the district court here refused to overturn the notice-posting rule on constitutional free-speech grounds.

Severable, salvageable. Concluding that the rule’s stricken enforcement provisions were severable, the court held the notice-posting requirement itself remained valid. The final rule expressly provided that the Board expected the notice-posting provision in Subpart A to be able to stand alone, but that the enforcement provisions under Subpart B were promulgated for the rare cases in which Subpart A alone would not suffice. “This acknowledgment that the various provisions under Subpart B were intended only to provide some teeth to the otherwise standalone provisions of Subpart A is sufficient evidence of the Board’s intent for Subpart A to stand on its own,” and the agency’s belief that the notice provision could function without the additional remedial provisions, the court concluded.

“Indeed, the fact that the Board promulgated Subpart B at all suggests that the Board considered the notice-posting provision to be so crucial that it decided to develop means to support and strengthen it. This leads to the conclusion that the Board would have wanted Subpart A to remain standing if the remedies under Subpart B were overturned—not that it would have shrugged and walked away from the entire exercise.”

Recess appointments dodged. In a separate ruling, the district court declined to consider the propriety of President Obama’s December 2011 recess appointments to the NLRB, rejecting the employer groups’ attempt to “shoehorn” their challenge to the appointments into a case about the validity of the NLRB’s rulemaking. “The Court declines this invitation to take up a political dispute that is not before it.”