CHANGES IN THE NLRB’S COMPOSITION
& CDW’S CHALLENGE TO THE UNLAWFUL RECESS APPOINTMENTS
The National Labor Relations Board (NLRB or Board) is comprised of five presidentially appointed members, who interpret the National Labor Relations Act (NLRA) by reviewing decisions of administrative law judges (ALJs) and by issuing regulations. The Board also has a presidentially appointed General Counsel, who investigates and prosecutes possible violations of the NLRA by bringing cases before ALJs and, if appealed, before the Board.
According to Supreme Court precedent, the Board needs a quorum of three members to issue decisions and promulgate rules (essentially, its policy making functions). The NLRB, however, may continue with most of its day-to-day operations without a quorum. For example, the Board does not need a quorum for the General Counsel to prosecute cases, ALJs to adjudicate those prosecutions, or for the agency to conduct representation elections.
In January 2012, the term of recess appointee Board Member Craig Becker (D) expired, leaving the NLRB with only two members, Chair Mark Pearce (D) and Member Brian Hayes (R). Thus, the Board was without a quorum.
Rather than working with Congress to find nominees that the Senate could confirm, on Jan. 4, 2012, President Obama ignored constitutionally established separation of powers and the rules of the US Senate by recess appointing three individuals, Sharon Block (D), Richard Griffin (D) and Terence Flynn (R), to the NLRB even though the Senate was not in recess, but in a pro forma session. Flynn has since resigned from the Board, but Block and Griffin continue to serve in this unlawful recess appointment, leaving the Board currently with four members, one Republican and three Democrats (Pearce and Hayes, who have been confirmed by the Senate, and Block and Griffin). The Administration claims the recess appointments lasts through the end of the next session of Congress, which likely will be in December 2013 or January 2014.
Earlier this year, CDW, along with the US Chamber of Commerce, intervened in Noel Canning v. NLRB, which is a lawsuit challenging these unlawful recess appointments. The case is pending at the US Court of Appeals for the DC Circuit. Oral arguments in the case are scheduled for December 5. The DC Circuit could issue a decision as soon as late January 2013.
Noel Canning is only one of many lawsuits in various federal courts challenging the recess appointees. We expect the issue will eventually make it before the Supreme Court. If the Supreme Court rules the appointments were not valid, any decisions or any regulations issued during the time the recess appointees served will be invalid (the recess appointees have not promulgated any regulations since they were appointed as both the ambush and notice posting rules were promulgated prior to the recess appointees taking office).
More information on the CDW challenge to the unlawful recess appointments is available here.
On December 16, 2012, Member Brian Hayes’ term on the Board will expire. Hayes is currently the sole Republican member. Hayes has vigorously dissented to the Board’s overreaching and economically damaging cases and rulemakings. In his absence, its unlikely there will be any dissenting voice opposing the Board’s outrageous actions.
Lastly, on August 27, 2013, Chair Mark Pearce’s term expires. At that point, only the two recess appointees will remain, so the Board will lose a quorum, even if the Supreme Court upholds the recess appointments, unless vacancies are filled via recess appointment or Senate confirmation.
NLRB POSTER RULE
CDW, along with co-plaintiff National Association of Manufacturers, filed a suit in federal court to prevent implementation of the NLRB’s unlawful effort to force approximately 6 million workplaces to post notices that amount to advertisements for joining a union.
The US Court of Appeals for the DC Circuit heard oral arguments in CDW’s challenge to the NLRB’s notice posting rule on September 11. We expect a decision from the DC Circuit as early as December.
CDW appealed the case to the DC Circuit following a decision by a DC federal district court judge, which found that the NLRB had the authority to require employers post the notice, but limited the Board’s ability to automatically sanction employers for noncompliance (the court said, however, the NLRB could impose sanctions if it found after an investigation that the employer’s failure interfered with employees’ NLRA rights). Last spring, the DC Circuit granted our request for an injunction preventing the NLRB from enforcing the rule while our appeal is pending.
Keep in mind the US Chamber of Commerce has mounted a separate challenge to the notice posting rule. In that case, a South Carolina federal district court found the NLRB could not require the poster. The NLRB appealed the decision to the US Court of Appeals for the Fourth Circuit. We do not expect a ruling from the Fourth Circuit until late spring/summer 2013.
NLRB AMBUSH ELECTION RULE
CDW, along with co-plaintiff the US Chamber of Commerce, challenged in DC federal district court the NLRB’s “ambush” election rule, which would radically change the process for union representation elections. The rule would shorten election time frames and limit employees’ opportunity to hear from employers before making an crucial workplace decision—whether or not unionize.
On August 7, the NLRB appealed to the US Court of Appeals for the DC Circuit a May 15 DC federal district court decision striking down the “ambush” election rule, as well as the district court’s rejection of the Board’s motion requesting that the court reconsider its initial decision. The district court agreed with CDW that the rule was invalid because NLRB Member Hayes had not participated in the vote to issue the rule. Under Supreme Court precedent, the three Board members must cast a vote to issue decisions or promulgate rules and without Hayes’ participation, only two members cast a ballot.
Briefing before the DC Circuit will not be complete until the end of this year. The earliest we would expect a ruling is late spring/summer 2013.
We suspect the Board has not attempted to re-issue the rule with its current composition due to the pending challenges to the two January 4 recess appointees (see discussion above) would increase any new rule’s vulnerability to legal challenge. If the recess appointments are found to be legal, or the Senate confirms a Board majority that favors the rule, the Board would most likely re-issue the ambush rule—this time with far more onerous provisions. CDW intends to challenge any rule the Board issues that has the same or similar impact.
DOL’S “PERSUADER” PROPOSED RULE
On June 21, 2011, DOL issued a Notice of Proposed Rulemaking that would drastically change certain reporting requirements under the Labor Management Reporting and Disclosure Act (LMRDA) relating to the use of paid “persuaders” by employers. Since 1959, the LMRDA has contained a requirement that employers file certain reports with the DOL if they use outside labor consultants to “persuade” their employees with respect to union organizing and collective bargaining issues. The law contains an exemption for when a consultants and lawyers provide employers with advice as long as the consultant or attorney does not directly interact with employees. DOL has proposed greatly narrowing that exemption.
The net effect of the proposed rule changes would be to discourage employers, particularly smaller employers, from seeking legal representation in the course of a union campaign. Under the requirements, employers and their attorneys and consultants would need to report details of the agreement, information about the employees affected, and all related financial data. It would also severely penalize employers, consultants, and attorneys who inadvertently fail to report activities and agreements that for nearly five decades had fallen squarely within an “advice” exception. In fact, certain violations could result in criminal sanctions.
In short, the proposed changes would diminish employers’ access to legal advice and interfere with attorney-client privilege. The proposed rules are designed to silence any employer opposition to union organizing.
DOL stated in its last regulatory agenda it planned to issue the final regulation in August of 2012, but did not do so. We expect the agency will issue the final regulation sometime in the next 3 – 6 months.
CDW plans to challenge any final regulations in court that are substantially similar in impact to the proposed rule. CDW comments on the proposed regulation are available here. Information about the possible impact of the proposed rule is available here.
Below is a list of cases involving the micro-union issue where CDW has filed amicus briefs. Information about the impact of micro-unions is available here.
In Specialty Healthcare, the NLRB announced a new standard for determining which employees should be included in a bargaining unit represented by a union. Member Brian Hayes, who dissented in the case, stated that under the new standard, the Board agents “will have little option but to find almost any petitioned-for unit appropriate,” and that it will encourage unions to organize in smaller units. The decision allows union organizers to gerrymander the bargaining units by composing units of a subset of employees most likely to organize, with little regard for whether those employees on their own constitute a practical bargaining unit. The company in the case refused to bargain with the union and challenged the standard. The Board determined the company had committed an unfair labor practice by refusing to bargain. The company has appealed that decision to the US Court of Appeals for the Sixth Circuit – that case is Kindred Healthcare v. NLRB. CDW filed a brief in the case on April 23.
The Neiman Marcus Group d/b/a Bergdorf Goodman
One of the Board’s regional directors applied the standard set forth in Specialty Healthcare to issue a decision finding a unit consisting only of sales people in the women’s shoe department was an appropriate bargaining unit. The company appealed and the Board invited amicus briefs. On June 13, CDW filed a brief.
Nestle Dreyer’s Ice Cream Company
On Dec. 28, 2011, a majority of the Board relied on the standard in Specialty Healthcare to uphold a regional director’s determination that maintenance employees at a Nestle Dreyer plant were an appropriate unit. The union had failed three times previously to organize a larger unit consisting of both production and maintenance employees, which was the most common unit in similar settings prior to Specialty Healthcare. The union won the election and the company refused to bargain. On May 18, the Board issued a decision finding the company committed an unfair labor practice. Nestle Dreyer appealed the decision to the U.S. Court of Appeals for the Fourth Circuit. CDW filed a brief on July 10.
Huntington Ingalls Inc. v. NLRB
The Huntington Ingalls case is on appeal from the Board to the US Court of Appeals for the Fourth Circuit. The Board applied the bargaining unit determination standard announced in Specialty Healthcare to find that an appropriate unit consists solely of a small subset of technical employees working in the Radiological Control department of the employer’s Newport News Shipbuilding facility. Member Hayes dissented, finding the unit “excludes thousands of other technical employees working at the same facility. In spite of departmental homogeneity, this fragmented technical employee unit is clearly inappropriate, particularly in light of the high degree of functional integration of their duties with those of other technical employees in this defense contractor Employer’s workforce.” CDW filed a brief in the case on October 17.
ACCESS TO PRIVATE PROPERTY
We expect the Board may issue its decision in Roundy’s in the near future. The decision could set new standards for physical and electronic access to employer property (such as access to employer email systems) by non-employee union organizers. The case involves a grocery store that contracted with a nonunion construction company to make renovations. The union argued that the store must allow union agents access to the store’s private property for union-run boycotts because the store had allowed charitable organizations, such as the Salvation Army and the Girl Scouts access the property (i.e., the union argued it would be unlawful discrimination for the store to bar the union access where it had granted access to other organizations). CDW filed a brief in Roundy’s on Jan. 7, 2011, arguing there is a fundamental difference between consumer boycotts intended to harm the business and the presence of organizations that benefit the business. Furthermore, CDW contended that the Board should not require employers to allow non-employee union agents to trespass on private property for the purpose of harming the employer’s business, under any circumstances.
On November 13, CDW filed an amicus brief in support of a petition to the US Supreme Court requesting review of the decision of the US Court of Appeals for the Second Circuit, in NewYork NewYork Hotel and Casino v. NLRB. In the NYNY case, the Board established a new standard requiring employers to grant access to private property to non-employees, if those individuals work for contractors or lessees. Prior to this decision, the subcontractor/tenant’s employees had no greater rights to trespass on a property owner’s private premises than any other non-employees. Under this new standard, employers in the hotel industry and in many other industries will no longer be able to control access to their own property, to their considerable detriment.
In D.R. Horton, the Board ruled that the NLRA prohibits waivers for class and collective action lawsuits in arbitration agreements that are a condition of employment. The Board reasoned the collective/class action suits are protected by the NLRA because employees are acting collectively when suing. D.R. Horton appealed the case to the US Court of Appeals for the Fifth Circuit. CDW filed a brief in the case on June 6 arguing, among other things, that the decision conflicts with the Federal Arbitration Act.
- CDW Amicus Brief in D.R. Horton at the Fifth Circuit (June 2012)
- CDW Amicus Brief in D.R. Horton at the Board (July 2011)