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D.C. Circuit Vacates NLRB Posting Rule – Enforcement Provisions Violated NLRA and Posting Requirement Could Not Be Severed

Posted in Judicial Review & Remedies, Regulatory Process

The United States Court of Appeals for the District of Columbia today vacated – in National Association of Manufacturers v. NLRB – the National Labor Relations Board (NLRB) Notification of Employee Rights under the National Labor Relations Act {NLRA), or “Posting Rule.”  The court’s decision clarified the starting point for judicial review of final agency rulemaking – filing of a rule on the Federal Register public inspections list, not actual publication – and found each of the enforcement provisions of the posting rule violated provisions of the NLRA.

Rule Background:  The NRLB rule began with a 1993 petition for rulemaking, but the NLRB only proposed a responsive rule in 2010.  The succinctly describes the rule (omitting citations for the sake of readability):

The final rule provides that “[a]ll employers subject to the NLRA must post notices to employees, in conspicuous places, informing them of their NLRA rights, together with Board contact information and information concerning basic enforcement procedures, in [specific prescribed] language ….  In addition, employers who customarily communicate with their employees electronically must publish the Board’s notice on their intranet or internet sites.  ….  The required poster … must be at least 11 inches by 17 inches and in a type size and format the Board prescribes.  ….  The poster informs employees of their right to form, join, or assist a union; to bargain collectively through representatives of their choosing; to discuss wages, benefits, and other terms and conditions of employment with fellow employees or a union; to take action to improve working conditions; to strike and picket; or to choose not to engage in any of these activities.  ….  The poster also recites more specific employee rights the Board derived from judicial and Board interpretations of the Act.  The poster states, for example, that it is “illegal” for an employer to prohibit employees “from wearing union hats, buttons, t-shirts, and pins in the workplace” or to “[s]py on or videotape peaceful union activities and gatherings or pretend to do so.”  The poster also states that it is “illegal” for a union to “[t]hreaten or coerce [an employee] in order to gain …. support for the union” or to “[r]efuse to process a grievance because [the employee] ha[s] criticized union officials or . . . [is] not a member of the union.”

The NLRB would enforce the rule by providing that failure to post the notice was an unfair labor practice.  Additionally, the rule provided that the NLRB may suspend the running of the six-month limitations period for filing any unfair-labor-practice charge “unless the employee has received actual or constructive notice that the conduct complained of is unlawful.”  Finally, the NLRB would consider an employer’s “knowing and willful refusal to comply with the requirement to post the employee notice as evidence of unlawful motive in a case in which motive is an issue.”

Procedural Background:  The plaintiffs sued in the United States District Court for the District of Columbia.  On cross-motions for summary judgment, the district court ruled that the Board had no authority to make a “blanket advance determination that a failure to post will always constitute an unfair labor practice.”  The district court also invalidated the tolling of limitations period if the employer failed to post the notice because tolling depended on equitable considerations that had to be determined on a case-by-case basis.  The district court, however, held that the NLRB would have promulgated the posting requirement even if two of the three means of enforcing that rule were invalid.  Everyone appealed.

A month later, the United States District Court for the District of South Carolina held that the NLRB lacked authority to promulgate the rule.  An appeal in that case is now pending before the Fourth Circuit.

During briefing in the D.C. Circuit, the issue of enforcement arose and the Court of Appeals enjoined enforcement of the rule pending its ruling.

Public Inspection & Noel Canning:  The court provided guidance on a point of administrative law as it dispatched the issue of whether its decision in Noel Canning v. NLRB that the NLRB’s recess appointments were unconstitutional controlled this case.  The court noted that the critical sequence of events:

  • August 22, 2011 – NLRB Chairman signed final rule, effecting adoption.
  • August 25, 2011 – Final rule filed for public inspection by the Office of the Federal Register.
  • August 27, 2011 – last constitutional Board member’s term expired (assumed without deciding).
  • August 30, 2011 – Final rule published in the Federal Register.

The general rule is that promulgation takes place when the final regulations are filed with the Office of the Federal Register – the technical term for release on public inspection when the world is presumed by statute to know its contents – regardless of when the regulations are published in the Federal Register.  The court also pointed out the ambiguity of the term “promulgated” in the Federal Register Act’s multiple usages.  Thus,

“Our judgment is that the time of filing with the Office of the Federal Register is the appropriate time for determining whether the Board had a valid quorum.  That the Board may have lost a quorum before its rule was published did not render its rule invalid.

NLRA Violations:  The Court of Appeals proceeded to find that all three enforcement provisions of the posting rule violated provisions of the NLRA.  The court first dispatched the posting requirement on the statutory basis that it violated enforcement provisions:

We … conclude that the Board’s rule violates [NLRA] § 8(c) because it makes an employer’s failure to post the Board’s notice an unfair labor practice, and because it treats such a failure as evidence of anti-union animus in cases involving, for example, unlawfully motivated firings or refusals to hire — in other words, because it treats such a failure as evidence of an unfair labor practice.

Equitable Tolling:  Moreover, the court agreed with the district court that the tolling of the NRLA’s filing limitation for unfair labor practice charges violated the statute.  The district court noted that the tolling rule “substantially amends the statute of limitations that Congress expressly set out in the statute” and therefore “exceeds [the NLRB’s] statutory authority” under a plain meaning / no ambiguity standard, and without any deference to the agency’s interpretation.  In considering an agency’s “equitable tolling” of a statutory limitation,

The key to interpreting a limitations statute and to determining the intent of Congress is whether the particular exception to a particular statute of limitations was generally recognized when Congress enacted the statute.  It is not enough that courts engaged in some sort of “equitable tolling” at the time Congress passed the limitations statute.  “[D]ifferent types of equitable tolling . . . have been recognized at different times ….”  ….  What matters is whether a particular basis for suspending the running of the statute of limitations had received judicial recognition when the statute became law.  ….  After all, “Congress cannot intend to incorporate, by silence, various forms of equitable tolling that were not generally-recognized in the common law at the time of enactment.”

Thus, if a particular exception was generally recognized when Congress enacted the statute of limitations, a court may presume that Congress intended the same equitable exception to apply to the statute.  If, on the other hand, the exception was not generally recognized at that time, a court could not presume that Congress intended it to suspend the running of the statutory period.

The court is applying a highly specific way of getting to the principles that Congress is presumed to know the law when it acts and acts on that law – courts will not lightly engraft new agency interpretations to old statutes.  “The short of the matter is that the Board has not invoked any authority suggesting that the 1947 Congress intended to allow [the filing statute of limitations in NLRA] § 10(b) to be modified in the manner of the Board’s tolling rule.”

Severability:  With all three enforcement mechanisms unusable, the court considered the viability of the entirety of the rule.  Applying familiar tests was not difficult:

“Severance and affirmance of a portion of an administrative regulation is improper if there is ‘substantial doubt’ that the agency would have adopted the severed portion on its own.”  ….  If a reviewing court severed the regulation in that situation, it would be performing a function left to the agency.  …. Here we know that the Board would not have issued a posting rule that depended solely on voluntary compliance. We know this because the Board rejected that regulatory option in the preamble to its final rule.  ….  Subpart A [the actual posting rule\ must therefore fall along with the rest of the Board’s posting rule.

Application:  Much of the court’s decision is the application of common rules to the specific regulations, but lawyers routinely debate which rules apply.  While the NLRA poses very specific rules to the substance of labor law and collective bargaining, the general provisions of administrative law continue to govern.  This may be near the last gasp for the NLRB’s posting rule, but it is not yet the rule’s agonal breach.