Littler Shareholder Stefan Marculewicz was among the panelists testifying on Tuesday before the House Committee on Education and the Workforce about the legal and practical implications of the President’s decision to make recess appointments to the National Labor Relations Board (NLRB or Board) last month. On January 4, 2012, President Obama sat three new members to the NLRB, as well as a new director to lead the Consumer Financial Protection Bureau (CFPB), while the Senate was still holding periodic pro forma sessions. This move has provoked a pointed response from various sectors, inviting a lawsuit from a group of business advocacy groups, a resolution and bill condemning the appointments, and a series of congressional hearings to discuss the legitimacy of the President’s actions.

Tuesday’s hearing focused specifically on the effects the NLRB recess appointments will have on businesses and the operation of the Board. According to Committee Chairman John Kline (R-MN), because the legitimacy of the President’s ability to make the appointments is in question, every action taken by the Board “will be constitutionally suspect and legally challenged.” The hearing was therefore brought to examine “the fear and uncertainty that this action has unleashed” on employers. As a result of the Supreme Court’s 2010 decision in New Process Steel, hundreds of Board decisions were invalidated after it was determined that the agency could not issue decisions with only two acting members. If the Court similarly determines that the recess appointments in this instance are invalid – a process that witnesses testified could take two to three years – “the lasting effects could be substantial.” According to Marculewicz, “every decision issued by this Board will be accompanied by the very real possibility that it might not be sustained.”

Marculewicz explained (pdf) that the prospect of this outcome means that confusion and uncertainty in labor relations will follow. He stated that after the New Process Steel decision, the NLRB had to revisit and resolve more than 600 cases. While many of these decisions were initially decided by two members and were noncontroversial, the instant situation will have a much different result, as a five-member Board will be empowered to resolve substantive issues with far-reaching consequences. The impact of these substantive decisions “will be seen far and wide,” and have a “disparate impact on small businesses that lack the resources” to challenge the decisions. According to Marculewicz, NLRB regional offices will be forced to rely on “unstable” Board precedent, and employers will bear substantial and potentially unnecessary costs in complying with new Board orders that might not be upheld in the long-term.

Under questioning, Marculewicz explained that if the NLRB issues an order to bargain with a union representative, and the Board’s authority to do so may ultimately be reversed, one option for the employer would be to simply refuse to bargain with the union, an option he claimed is neither good for the employer nor the employee.

When asked by a member of Congress what the President should have done, Marculewicz noted that two current Board members were, in fact, confirmed by the Senate, and that there was nothing to prevent the President from nominating potential candidates that would have had a good chance of being confirmed by the Senate. He also noted that in anticipation of a possible loss of quorum in 2012, the Board had already put in place a rule revising its representation case certification process as well as special procedures governing the filing of certain motions and appeals in unfair labor practice cases. Marculewicz claimed that these rules would have ensured that the NLRB – especially regional offices where much of the agency’s workload is handled – would still have been able to operate, albeit in a more limited capacity.

Others called the decision to seat members to the NLRB bad public policy and a politically expedient move. Another witness claimed, however, that because the Board is the sole entity to administer labor law in this country, it must be permitted to function. According to the union attorney witness, had the President not made the appointments, the Board would have shut down, and that there would be no place for employees to judicially seek a remedy for unfair labor practices. This witness claimed that there should be a “balance of horribles” when examining the legitimacy of the recess appointments. If the move is ultimately deemed unlawful, she testified, the Board will be put in the same place it was after New Process Steel. If, on the other hand, no appointments were made and the Board left without a functioning quorum, the agency “would be rendered impotent.”

Constitutionality of the Recess Appointments

Although much of today’s hearing addressed the recess appointments’ practical considerations for employers, the constitutionality of the appointments was the subject of significant debate among some witnesses and Members. The constitutionality of the recess appointments was also discussed during a hearing held on February 1 by the House Committee on Oversight and Government Reform.

According to the White House, making the recess appointments when the Senate is holding pro forma sessions is a legitimate exercise of executive authority. A memorandum opinion (pdf) issued by the Department of Justice’s Office of Legal Counsel (OLC) concluded that:

. . . the text of the Constitution and precedent and practice thereunder support the conclusion that the convening of periodic pro forma sessions in which no business is to be conducted does not have the legal effect of interrupting an intrasession recess otherwise long enough to qualify as a “Recess of the Senate” under the Recess Appointments Clause. In this context, the President therefore has discretion to conclude that the Senate is unavailable to perform its advise-and-consent function and to exercise his power to make recess appointments.

Michael J. Gerhardt, a Constitutional law professor at the University of North Carolina School of Law, agreed with the DOJ’s assessment, and testified during the Feb. 1 hearing that the President took a functional and credible approach in deciding to make the appointments. He said that the President had competing considerations to take into account, including the fact that the Constitution requires him to “take care that the laws are faithfully executed.” Gerhardt explained that without a director, the CFPB could not carry out its duties under the Dodd-Frank Wall Street Reform and Consumer Protection Act, and without a quorum, the NLRB could not fully execute its duties under the National Labor Relations Act.

Other witnesses and lawmakers speaking at both hearings contended, however, that making recess appointments when the Senate was still in session – albeit pro forma – is a violation of article 1, section 5, clause 4 of the U.S. Constitution, negates the Senate’s Constitutional power “to determine the Rules of its Proceedings,” and runs contrary to long-standing practice.

According to the attorney witness during Tuesday’s hearing, the OLC’s memorandum supporting the President’s decision bases its view on the fact that the Senate was unavailable at the time, an “assertion that collapses” by the “single inconvenient truth” that the Senate passed a 2-month extension of a tax cut bill on December 23, when the Senate was holding a pro forma session. According to the witness, if the Senate can pass legislation by unanimous consent during a pro forma session, it is able to confirm an agency appointment. The witness testified that the “recess appointments had nothing to do with whether the Senate was able to act, and everything to do with its unwillingness to act.”

During last week’s Committee hearing, Senator Mike Lee (R-UT) similarly denounced the President’s decision to bypass Congress in making the appointments: “If we, as Congress, do nothing, January 4, 2012 may well live on in infamy as a day the Congress refused to enforce a provision of the Constitution and instead ceded one of its rightful powers to the executive.” Other witnesses emphasized the short two-week period between the time the NLRB appointees were nominated and when they were seated to the Board as evidence that Congress’s role in the confirmation process was unlawfully circumvented.

Ranking member George Miller (D-CA) concluded his remarks during Tuesday’s hearing by stating that he welcomes a Supreme Court resolution to this issue.

A complete list of panelists for Tuesday’s hearing and links to their testimony can be found here.

Photo credit:  webphotographeer