The U.S Court of Appeals for the D.C. Circuit recently struck down the National Labor Relations Board’s August 2011 Notice Posting Rule, which would have required employers to conspicuously display a notice informing employees of their rights under the National Labor Relations Act (the “Act”). In National Association of Manufacturers, et al. v. NLRB, the court invalidated the rule because it found all three of the rule’s enforcement mechanisms unlawful. A majority of the court also found that the rule exceeded the Board’s rulemaking authority as delegated by Congress.

The Board’s challenged rule would have forced six million employers throughout the country to post the Board’s mandatory notice of employee rights to organize unions (and related topics), under threat of an unfair labor practice finding by the agency. Moreover, failure to post the required notice would have permitted the Board to extend the usual six-month statute of limitations period in unfair labor practice cases. The rule also permitted the Board to consider an employer’s refusal to post the notice as evidence of unlawful motive in unfair labor practice cases.

A broad coalition of business groups challenged the rule in the federal courts. After two conflicting district court decisions were issued in 2012, the coalition appealed to the D.C. Circuit Court of Appeals. Maury Baskin of Littler’s Washington, D.C. office argued the appeal on behalf of all the business groups.

The court began its analysis by focusing on Section 8(c) of the National Labor Relations Act, which states: “The expressing of any views, argument, or opinion, or the dissemination thereof . . . shall not constitute or be evidence of an unfair labor practice” (with the exceptions of prohibited threats or promises). The court reasoned that 8(c) equally protects employers’ rights to speak or to choose not to disseminate views about unions in the workplace.

The court further rejected the Board’s argument that the mandatory notice poster was “government speech,” rather than employer speech. The court explained that the Board was free to post the messages contained in the poster on its own website, but could not compel employers to disseminate the Board’s message. Consequently, the court concluded that the Board’s rule violated Section 8(c) because it made an employer’s failure or refusal to post the Board’s notice an unfair labor practice, and because it treated such a failure or refusal as evidence of anti-union animus.

The court also rejected the rule’s provisions that would have tolled the Act’s six-month limitations period for filing unfair labor practice charges based on a failure to post the notice, if the charging employees were unaware of the posting requirement. The Board presented no evidence that Congress intended to allow the sort of tolling that the Board included in the rule. Moreover, the court explained, courts do not generally recognize lack of knowledge of the law as a basis for equitable tolling. For these reasons, the court held that the rule’s tolling provision was also unlawful.

Having found that each of the enforcement provisions underlying the rule were unlawful, the court held that the remaining provisions of the rule could not be severed or otherwise allowed to stay in effect. Two of the three judges on the court panel also declared that the Board lacked the authority under its general rulemaking power to promulgate a rule of this type, because it could not be shown to be “necessary” to enforcement of the Act.

Practical Impact on Employers

The court of appeals decision means that the NLRB’s Notice Posting Rule has no force or effect on employers. The decision should have nationwide impact, and no employer can now be required to post the NLRB’s notice. 

It should be noted that federal government contractors have since 2010 been required to post a very similar notice published by the U.S. Department of Labor. That requirement, which is limited to such federal contractors, remains in effect. Covered government contractors must still post those notices to their employees as a condition of performing government work, notwithstanding the new court decision.

It remains to be seen whether the Board will petition the U.S. Supreme Court to try to overturn the D.C. Circuit’s decision. Another appeals court, the Fourth Circuit, is also considering an appeal on the same issue. In light of the nationwide impact of the D.C. Circuit’s decision, however, there is some question as to whether the second case is moot.

Finally, it is worth noting that this court decision will not be affected by the pending question of whether the current members of the Board were improperly appointed through “recess” appointments. The court determined for purposes of this decision that the NLRB had a sufficient quorum of lawfully appointed members to issue the rule, but the court found that the rule itself was unlawful.