The Employer's Legal Resource: D.C. Circuit Declares Labor Board Decisions Invalid: How Should You Respond?

02.01.13

Because Congress has been unable to enact pro-labor legislation, the National Labor Relations Board has embarked on an aggressive campaign to broaden public awareness that it has power to reach non-unionized employers around the country.  To that end, the Board has issued landmark rulings in the past year affecting non-unionized employers and employees in significant new ways.  In Costco Wholesale Corp., the Board declared Costco’s electronic communication policy illegal because it prohibited employees from posting social media statements that “damage the company, defame any individual or damage any person’s reputation.” In Knauz BMW, the Board ruled that a policy encouraging “courtesy” in communications with customers and other employees violated the National Labor Relations Act ("NLRA").  In Bettie Page Clothing and Triple Play Sports Bar & Grille, the Board held that Facebook discussions about workplace issues may constitute concerted, protected activity under the NLRA, meaning employers cannot take action against employees for harmful online behavior when related to wages, hours, and working conditions (including bad-mouthing a manager).  Beyond that, the Board has also invalidated arbitration agreements with non-unionized employees (D.R. Horton and 24 Hour Fitness), prohibited employers from requiring confidentiality in internal investigations (Banner Estrella) and attacked the validity of universally recognized employment-at-will disclaimers (Hyatt Hotels Corp.).

All of that could change, however, with the D.C. Circuit’s January 25th decision in Noel Canning, which declared unconstitutional President Obama’s January 2012 appointment of three Board members.  The Noel Canning case could invalidate hundreds of decisions rendered by the Board since January 2012, including a barrage of cases like those above that target non-unionized employers.

In January 2012, President Obama appointed three members to the Board. This would have been permitted only if the Senate stood in “recess.”  In many Board cases thereafter, employers argued the Senate did not stand in recess such that the Board lacked a constitutionally sound quorum necessary to issue valid and lawful decisions that are binding on employers.   The D.C. Circuit Court (a 3 member panel) agreed, holding that the Senate was not “in Recess” such that the President could freely make the appointments.

It is likely the Board will now ask the entire D.C. Circuit panel of Judges to review the decision of the three who issued this ruling.  In another case, the Fourth Circuit Court of Appeals will also be addressing the validity of President Obama’s recess appointments.  If the Fourth Circuit declares the appointments valid, then the issue could end up before the U.S. Supreme Court.

Despite this initial victory for employers, you should still take great care to review your employment contracts, employee handbooks, manuals, and policies and procedures to ensure they are strategically worded to avoid running afoul of the National Labor Relations Act.  While the D.C. Circuit’s decision is definitely a setback for the Board’s expansionist policies, the writing is nonetheless on the wall:  non-unionized employers cannot ignore Board precedent and take the wording of contracts or policies for granted, but should review them with an eye toward how the law in this area is clearly trending.

For more information on this breaking subject and what you should do in response, be sure to attend the February 13 session of the Training for the Trenches series, which will be covering key handbook and policy issues.  For more information on the series, please email jjensen@dsda.com.

By Christopher S. Thrutchley, cthrutchley@dsda.com

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment
litigation and counsels clients regarding everyday employment matters. 

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