FEDERAL COURT RULING LEAVES EMPLOYERS IN LIMBO

A federal court recently declared that the practice used by many U.S. Presidents to get controversial appointees in and working for federal agencies without Senate approval is unconstitutional.  This ruling has particularly intriguing effects on employers, since the decision arose from President Obama’s recess appointments of three members to the National Labor Relations Board (NLRB).

The NLRB is a five-member quasi-judicial federal agency that has authority to resolve disputes arising under the National Labor Relations Act (the Act).  When functioning properly, each of the NLRB’s five members is appointed by the President with the advice and consent of the Senate.  Come January of 2012, the NLRB had only two seated members, leaving it powerless to render any binding decisions.  In an apparent attempt to avoid difficult Senate confirmation hearings, President Obama appointed three individuals to the empty seats on the Board while the Senate was on its winter break.  This political strategy for making appointments without the advice and consent of the Senate is generally known as “recess appointments.”

While those three recess appointees were serving, the NLRB issued a number of disturbing rulings aimed at expanding the reach of the Act and the NLRB to even non-unionized workplaces.  Section 7 of the Act states that employees have the right, “…to engage in other concerted activities for the purpose of collective bargaining or other mutual aid and protection.”  This “other mutual aid and protection” provision has historically been interpreted to mean that non-unionized employees have a job-protected right under the Act to engage in group advocacy for changes in terms and conditions of employment, but it has been limited in its application.

The 2012 NLRB seized this provision of the Act to impose new requirements on non-unionized employers.  For example, several decisions dissected employers’ social media policies to determine whether those policies unlawfully restrained employees’ right to communicate with one another through social media outlets on subjects such as hours of work, wages, benefits, and other terms and conditions of employment.  The result was a confounding enforcement policy that allowed employers to discipline employees who use social media to air “mere gripes” not made in relation to group activity among employees, but prohibited employers from implementing social media policies infringing on the kinds of activity protected by the Act.  Similar threats to non-unionized employers came in the form of determinations by the NLRB that standard at-will employment disclaimers contained in employee handbooks are a violation of the Act because they could be construed as an unlawful waiver by employees of their right to engage in concerted activity. 

In a ruling that focused on technical interpretation of the division of powers between the executive and legislative branches, the United States Court of Appeals for the District of Columbia Circuit held that the recess appointment of these three NLRB members was unconstitutional.  In doing so, that court may have spared employers throughout the country from these burdensome new NLRB decisions.  However, many questions remain unanswered.  A key unsettled issue is whether all of the decisions in which these three members participated are now invalid.  Additionally, it is also widely expected that the whole ruling will be appealed to the United States Supreme Court because it invalidates a political strategy that has been employed by the executive branch for decades. 

Meanwhile, the NLRB has issued a statement explaining that it considers this court ruling to apply only to the parties involved in that particular case.  Accordingly, it will continue hearing cases and rendering decisions with the remaining recess appointees participating. 

Both unionized and non-unionized employers should stay tuned for further developments on this issue.  One outcome will allow employers to breathe easier, while the other will require close examination of and potential revisions to multiple personnel policies and practices.