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Chamber of Commerce of the United States v. National Labor Relations Board, No. 12-1757

Date Decided: June 14, 2013

The Fourth Circuit affirmed the district court’s ruling that a rule promulgated by the National Labor Relations Board (the “NLRB”) requiring employers to notify employees of their rights under the National Labor Relations Act (the “NLRA”) exceeded the statutory authority granted by the NLRA. The Fourth Circuit held that the powers granted to the NLRB by the NRLA are primarily reactive and thus, because Congress did not explicitly grant the NLRB authority to promulgate notice-posting rules, the NLRB did not have the authority to promulgate the challenged rule.

On August 30, 2011, the NLRB promulgated a rule comprised of three subparts. Subpart A provides that “all employers subject to the NLRA must post notices to employees, in conspicuous places, informing them of their NLRA rights, together with the [NLRB] contact information and information concerning basic enforcement procedures.” Subpart B makes the failure to post the employee notice an “Unfair Labor Practice” (“ULP”) under the NLRA. Furthermore, under the rule, if the NLRB found that the employer failed to post the required notice, the NLRB could require the employer to post notice and toll of the statute of limitations for any employee ULP complaints. Subpart C allowed the board to “consider a knowing and willful refusal to comply with the requirement to post the employee notice as evidence of unlawful motive” in other proceedings. The NLRB passed the rule primarily based on the finding that “American workers are largely ignorant of their rights under the NLRA,” citing the “changing nature of the American Workforce” and “the overwhelming majority of private sector employees…not represented by unions” as the reasons for the employees’ ignorance of their rights under the NLRA. Before the rule went into effect, the Chamber of Commerce for the United States and for South Carolina (collectively, “Chamber”) filed a complaint in the District Court for the District of South Carolina for injunctive relief against the rule. The district court granted summary judgment to the Chamber.

On appeal, the NLRB first argues that the notice-posting rule should be analyzed under the deferential standard set forth in Mourning v. Family Publications Service, Inc. According to the court in Mourning, the NLRB’s rules should be upheld if they are “reasonably related” to the purposes granted under the NLRA. The Fourth Circuit disagreed, siding with the Chamber that the rule should be analyzed under the more common two-step approach laid out by the Supreme Court in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. The court found that Mourning only applies where “Congress delegated appropriate authority” under the board to make the rule. In this case, the court found that Congress did not specifically grant the NLRB the power to make notice-posting rules, and thus, the deferential standard did not apply.

Second, the NLRB argued that the court should uphold the rule “unless Congress expressly withheld the authority” to make the rule. The Chamber argued, on the other than, that the court should invalidate the rule unless the court found “that Congress intended to delegate to the [NLRB] the power to issue it.” The Fourth Circuit again agreed with the Chamber. The court found that in other contexts, such as the Food and Drug Administration, the court “deemed the question of whether Congress intended to grant authority” the appropriate consideration for determining rulemaking authority. The court further struck down the NLRB’s argument, finding that the NLRB had not been legislatively granted authority to promulgate a notice-posting rule. The court concluded instead that the NLRB’s power was specifically limited by congress to two functions: addressing ULP charges and conducting representation elections.

After resolving these two preliminary issues, the court analyzed the rule under the Chevron framework. First, in addressing the issue of “whether Congress has directly spoken to the issue,” the court applied traditional rules of statutory construction and found that the NLRA was unambiguous in requiring explicit or implicit authority to issue a rule. Thus, the court held that because the NLRA does not charge the NLRB to inform employees of their rights under the NLRA, the NLRB did not have the power to promulgate the notice-posting rule. Furthermore, the court found that the NLRA made clear that the NLRB is a “reactive entity,” and thus, does not have the power to affirmatively require employers to post notice without a finding of an ULP. Second, the court found that the NLRA’s structure does not provide the NLRB with the authority to promulgate notice-posting rules. Most importantly, the court held that the notice-posting rules are not “necessary to carry out” the NLRB’s responsibilities under the NLRA. The Fourth Circuit said that “the [NLRB] may not justify an expansion of its role to include proactive regulation of employers’ conduct by noting its reactive role under the [NLRA].” Third, the court held that the history of the NLRA “provides no countervailing evidence of an intent to bestow the [NLRB] with the power to enact the challenged regulation.” The court found that the history indicates that the NLRB was designed to serve a reactive role, limited to the functions expressly delegated by the NLRA. Finally, the court noted that Congress expressly provided for notice provisions in other labor laws, indicating that Congress would have expressly delegated notice-posting authority to the NLRB if it intended the NLRB to have such authority. Therefore, the court affirmed the district court’s holding that the NLRB did not have the authority to promulgate a notice-posting rule.

Full Opinion

– Wesley B. Lambert