Client Bulletin: Hundreds of Employment and Labor Rulings May be Invalid Following Supreme Court Decision

By Wendy Fischman, Partner

Between 2012 and 2013, the National Labor Relations Board (NLRB) made a series of highly controversial rulings that affect every workplace.  The NLRB restricted an employer’s ability to limit its employees’ activity in social media, even when employees openly disparage the employer.  It also prohibited employers from directing employees to keep workplace investigations confidential, except in limited circumstances.  These are only two examples of NLRB rulings that had a widespread impact on the employment relationship.  Many of these rulings affect your workplace, even if you do not have a unionized workforce.

What do these rulings, and hundreds more, have in common? 

They may all be invalid.  Last week, the United States Supreme Court held that President Obama violated the Constitution by appointing three members of the NLRB in January 2012, during a three-day Senate recess.  Noel Canning v. NLRB, No. 12-1281, slip op. (U.S. June 26, 2014).  Although presidents are permitted to make appointments without Senate confirmation while the Senate is in recess, the Court deemed this recess to be too short to warrant presidential appointment without Senate confirmation.

Without these “recess appointees,” the NLRB only had two validly appointed members between January 2012 and August 2013.  But, according to a 2010 Supreme Court case, New Process Steel, the NLRB may not act without a quorum of at least three properly appointed members.  As a result, all of the Board’s rulings from January 9, 2012 through August 5, 2013 are likely invalid.

What does this mean?  

The practical impact of the Court’s ruling is unclear.  For the moment, these decisions are all invalid.  But, the NLRB could invite the parties whose decisions were tainted by the recess appointments to file motions for reconsideration, in which case the current Board, which contains a majority of President Obama’s (validly confirmed) appointees, could rubber stamp the challenged rulings.

Another open question is the impact of NLRB rulings issued after August 2013 (once the Senate had properly confirmed all sitting members), where decisions rely on precedent established by the tainted Board.  Potentially, these decisions could also be challenged.  Alternatively, conforming decisions by a properly constituted Board may be understood to “remove the taint” of earlier decisions made by the improperly constituted Board.

The Board is working quickly to react to the Supreme Court’s decision in Noel Canning.  Immediately after the Court announced its decision, NLRB Chairman Mark Gaston Pearce issued a statement on the NLRB’s website stating that the Board is “analyzing the impact that the Court’s decision has on Board cases in which the January 2012 recess appointees participated. . . .  The Agency is committed to resolving any cases affected by today’s decision as expeditiously as possible.” (NLRB Website, available at http://www.nlrb.gov/news-outreach/news-story/statement-nlrb-chairman-mark-gaston-pearce-supreme-courts-noel-canning.)

How do these decisions affect your workplace? 

Several of the decisions made by the tainted Board have a day-to-day impact on your employment relationships and your workplace policies.  Here is a sampling of some of the more notable rulings from the recess appointment period:

  • The Board held in a series of cases that employers could not issue policies prohibiting employees from “making disparaging or defamatory comments” about their employer.  Likewise, employers must not restrict employees from blogging, entering chat rooms, posting messages on public websites, or otherwise disclosing “company information” if such policies could be interpreted to prevent employees from discussing wages and other personnel matters.   See, e.g., Knauz Motors, Inc., 358 NLRB No. 164 (2012); Hispanics United of Buffalo, Inc., 359 NLRB No. 37 (2012); Dish Network Corporation, 359 NLRB 108 (April 30, 2013).
  • The NLRB also prohibited employers from advising employees to refrain from discussing internal investigations, unless the employer makes a case-specific determination that such a directive is necessary to protect legitimate business interests.  See, e.g., Banner Health Sys., 358 NLRB 93 (July 30, 2012).  See also Advice Memo re Verso Paper (Case 30-CA-089350) (January 29, 2013).
  • Similarly, in Design Technologies, 359 NLRB 96 (April 19, 2013), the Board held that employers could not prohibit employees from disclosing “personnel information” such as “wages and compensation” and other “terms and conditions of employment.”  In Quicken Loans, Inc., 359 NLRB 141 (June 21, 2013), the NLRB held that a policy requiring employees to keep confidential all “proprietary” and “confidential information” was improper, where the policy defined “confidential information” to include “personnel lists, rosters, personal information of co-workers, managers, executives and officers; handbooks, personnel files, personnel information such as home phone numbers, cell phone numbers, addresses and email addresses.”

Several of these rulings hit employers hard, by prohibiting a number of previously widespread employment practices.  In turn, many employers have scrambled to revise longstanding policies to ensure compliance with the NLRB’s directives.  Now, these rulings are – at least for the moment – invalid.

What happens next and what should you do now? 

 The Noel Canning decision underscores the ever-changing landscape of employers’ compliance obligations.  Frequent legislative and regulatory changes require employers to monitor and update their employment policies regularly.

For example, the status of the more than 800 rulings by the tainted Board is not yet known.  Despite the Supreme Court’s annulment of these compromised decisions, the rulings could be reinstated.  Also, because President Obama’s (validly confirmed) appointees dominate the current NLRB, the Board’s new decisions could mirror the rulings of the 2012-2013 Board.

We will continue to monitor developments in the wake of Noel Canning, as well as other legal reforms affecting employers.  In the meantime, as always, we recommend that you routinely review your employment policies to ensure they comply with current legal requirements.

Potomac Law Group attorneys are available to audit your institution’s employment policies, structure a custom solution to suit the unique needs of your institution, and provide sophisticated, practical advice about decisions involving your personnel.

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This bulletin is not intended as legal advice.  Readers should seek professional legal counseling before acting on the information it contains.