Government Contracts Monitor

Federal Judge Strikes Down Enforcement Provisions of National Labor Relations Board’s “Notification of Employee Rights Under the National Labor Relations Act” Regulations

March 30, 2012

On Friday, March 2, 2012, United States District Court for the District of Columbia Judge Amy Berman Jackson partially affirmed and partially struck down the National Labor Relations Board’s (“NLRB”) “Notification of Employee Rights Under the National Labor Relations Act” regulations in National Association of Manufacturers v. National Labor Relations Board, No. 1:11-cv-01629-ABJ (D.D.C. March 2, 2012).  Judge Jackson, a recent Obama Administration appointee, found that the NLRB had the statutory power to require employers to post notices of an employee’s statutory rights.  More importantly, she also ruled that the NLRB lacked the statutory authority to punish employers who fail to post the notices, in the manner contemplated by the regulations.

The Court noted that the NLRB’s enabling statute, the National Labor Relations Act, lacks any specific provision permitting or prohibiting a requirement for employers to post notices.  As such, the Court reviewed the regulations applying Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) step two analysis.  In doing so, and applying the required deference to agency regulatory enactments, the Court found that the notice regulations were not arbitrary or capricious as they were reasonably tailored to apprise employees of their 29 U.S.C. § 157 statutory rights. 

While finding that the NLRB had the power to require employers to post a notice of rights, the Court gutted the regulation’s enforcement provisions.  As written, the regulations state that a “Failure to post the employee notice may be found to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed by NLRA Section 7, 29 U.S.C. 157, in violation of NLRA Section 8(a)(1), 29 U.S.C. 158(a)(1).”  Notification of Employee Rights Under the National Labor Relations Act, 76 Fed. Reg. 54,006, 54,049 (Aug. 30, 2011) (to be codified at 29 C.F.R. § 104.210).  The Court applied the plain language of 29 U.S.C. § 158(a) and found that a mere failure to post the notice cannot constitute “interference” with any Section 7 rights.  As a result, the Court found “under Chevron step one that Congress has expressed its unambiguous intent and that the Board exceeded its authority under the NLRA when it promulgated a rule that labels any failure to post the required notice to be an unfair labor practice.” 

The Court also struck down the portion of the regulations which allowed the NLRB to “toll” or extend the statute of limitations in any case where the required employee notice was not posted.  This portion of the regulations was deemed to conflict with 29 U.S.C. § 160(b) where Congress set a six month statute of limitations.  “And because Congress left no ambiguity as to the appropriate statute of limitations under section 160(b), the Board’s promulgation of this provision exceeds its statutory authority under Chevron step one.” 

After upholding the posting requirements and invaliding the enforcement provisions, the Court then expressly determined that the posting requirements could stand on their own and be severed from the invalid enforcement provisions contained in the same regulations. 

There is a relatively strong likelihood that one or both sides of this case may appeal to the United States Court of Appeals for the District of Columbia within the next sixty days, so Judge Amy Berman Jackson’s March 2, 2012 opinion may not be the “last word” on these issues.

Judge Amy Berman Jackson’s opinion could have impacts beyond the NLRB to the realm of federal government contracts.  As previously noted in an earlier blog post when the NLRB’s final rules were published:

Federal contractors are already subject to similar posting requirements, 29 C.F.R. Part 471, so a federal contractor’s compliance with the Department of Labor’s posting requirements (found at http://www.dol.gov/olms/regs/compliance/EmployeeRightsPoster11x17_Final.pdf) satisfies the NLRB’s new rule.  It is expected that the NLRB’s poster – once one is created – will look substantially similar to the Department of Labor’s poster.

Based on the Court’s March 2, 2012 ruling, the Department of Labor Office of Labor-Management Standards’ (“OLMS”) regulations requiring federal contractor’s to post the employee notice will likely remain unchanged.  OLMS, however, may impose debarment and suspension sanctions or cause a federal contractor’s contracts to be canceled, terminated, or suspended for a failure to post the employee notice.  29 C.F.R. § 471.14(d).  While the power to impose debarment, suspension, and contract cancellation penalties on government contractors is derived from statutory and regulatory sources different from the NLRB’s enforcement powers, the logic of Judge Amy Berman Jackson’s opinion casts serious doubt on the efficacy of such government contracts enforcement provisions if the alleged failure to post employee notices cannot be deemed a violation of an employee’s 29 U.S.C. § 157 rights.  Depending on how the appellate courts handle the issues in any appeal in this case from the United States District Court for the District of Columbia, the issue of employee notices in the government contracts context may receive greater scrutiny in the future.

 

Michael J. Schrier is the attorney responsible for the content of this article.