Invalidation of NLRB appointments has many debating over which regulations to follow.
When the U.S. Court of Appeals for the D.C. Circuit throws out a year’s worth of National Labor Relations Board (NLRB) decisions, calls into question decades more NLRB decisions and even casts a shadow on the rules issued by other agencies like the new Consumer Financial Protection Bureau, what’s a compliance officer to do? Comply with the rules and decisions, pending appeal? Or ignore the rules and decisions while trying to expand the decision’s application with new lawsuits? The U.S. Chamber of Commerce, which brought the case, has an answer: it has advised its members to bring new challenges.
These questions stem from the January 25, 2013 decision in Noel Canning v. NLRB, which invalidated the January 4, 2012 recess appointments of three members of the NLRB. That brought the NLRB below a quorum, invalidating all of its decisions since that date. To reach its conclusions, the Circuit Court interpreted the Constitution to mean that the President can make recess appointments only in between sessions of Congress (as opposed to during vacations during a session). The Circuit Court also held that for such a recess appointment to be valid, the vacancy being filled also had to have come open while Congress was between sessions.
The broader implications of the decision are hard to quantify. Some things are clear: law firm Baker Hostetler has an article summarizing key NLRB decisions issued in the year affected by the decision, including rulings relating to social media, employer confidentiality rules, off-duty site access rules, union dues check offs and employee discipline. Additionally, any pending cases decided by the current board have uncertain import; some 34 pending cases have already been put on hold. However as the Baker Hostetler piece notes, if the decision stands, NLRB decisions dating back to August 27, 2011 are likely to be invalidated, as that was the date at which recess appointees became necessary for the NLRB to have a quorum. (This is actually the most recent date, as the situation has arisen many times before.) Baker Hostetler suggests the Supreme Court could use fairness considerations to prevent the decision from applying too far back in time.
The decision could also reach far beyond the NLRB. For example, Richard Cordray was a recess appointment to head the Consumer Financial Protection Bureau. On the same logic, his appointment was invalid and thus any rules the Consumer Bureau issued as a result of his appointment (the appointment gave the CFPB more power, under its authorizing legislation) would be invalid. That is not yet the case, as the decision has not yet been applied in that context.
In fact, the radical nature of the opinion is clear by the number of recess appointments that would have been invalidated in the past 30 years under its logic. The Congressional Research Service did a preliminary analysis, released February 4, applying the decision to recess appointments made by President Reagan and each President since. The CRS found that of the 652 recess appointments it could document, 329 would be invalid as they were ’intra-session’ rather than ‘inter-session’, and further that some, many or all of the 323 ‘inter-session’ appointments would be invalidated on the grounds that the vacancy did not occur during a gap between sessions.
Returning to the narrower focus of the Canning case’s impact on the NLRB, the situation is further complicated by the fact that the NLRB has simply taken the decision in stride, as if its ability to issue rulings with its current membership is not in question. In the immediate wake of the decision, NLRB Chair Mike Pearce put out this statement:
‘The Board respectfully disagrees with today’s decision and believes that the President’s position in the matter will ultimately be upheld. It should be noted that this order applies to only one specific case, Noel Canning, and that similar questions have been raised in more than a dozen cases pending in other courts of appeals.
In the meantime, the Board has important work to do. The parties who come to us seek and expect careful consideration and resolution of their cases, and for that reason, we will continue to perform our statutory duties and issue decisions.’
The NLRB had no further comment when contacted for this article, beyond confirming that as of now, no decision has been made regarding whether or how to appeal this decision. The key appeals deadlines are March 8 and April 25. If the NLRB wants to ask the D.C. Circuit to review the decision, it has to file by March 8; a request for U.S. Supreme Court review must be done by April 25. If filed, any appeal could take months, even years to reach final resolution. In the meantime, the board is expected to issue as many as a few hundred decisions before Chairman Pearce’s term expires August 27. At that point, the NLRB will be without a quorum of any type unless President Obama succeeds in getting people confirmed. The difficulty in getting people confirmed seems obvious given the current politics of Washington, which were underscored by Senate Republicans’ efforts to shut the NLRB down in the wake of this decision.
The bottom line: this decision has great potential to radically change what federal rules companies must follow. Compliance officers need to follow this case and the other dozen or so pending ones until the U.S. Supreme Court finally resolves the issues about what the U.S. Constitution requires for a legitimate recess appointment.
