Employment Law Commentary - Volume 25, Issue 1, January 2013

The New NLRB: It's Coming for Non-Union Employers

In this second part of a two-part series, we analyze the Obama Administration's initiatives at the National Labor Relations Board, and its increasingly aggressive decisions affecting non union employers in areas ranging from the enforceability of arbitration agreements, to employment at will, and to policies prohibiting "walking off the job."1

Breaking News: Shortly before going to press, the U.S. Court of Appeals for the District of Columbia struck down President Obama's January 2012 "recess" appointment of three members of the National Labor Relations Board (the "NLRB" or the "Board"). Noel Canning v. NLRB, No. 12-1115 (D.C. Cir. Jan. 25, 2013). This decision resulted in a lack of a quorum, thereby invalidating every decision of the Board since January 4, 2012. The Court of Appeals agreed with the argument that the Senate was not in recess at the time and thus the recess appointments made by the President were not valid.

This decision will almost surely be appealed to the U.S. Supreme Court.

A few things to keep in mind with regard to the ongoing effect of the decisions discussed in this Commentary, which have now, potentially, been largely invalidated:

First, in 2010, the U.S. Supreme Court invalidated a large number of Board decisions for lack of a quorum, New Process Steel v. NLRB, 130 S. Ct. 2635 (2010). After New Process Steel, the Board essentially rubber-stamped each of its decisions that the Supreme Court invalidated. If President Obama is able to get confirmation of new Board members, rubber-stamping of these recently invalidated decisions is a real possibility. But it remains to be seen what compromises the President will need to make in order to get confirmation of new members.

Second, the decisions are likely to have a strong persuasive effect on the Board's administrative law judges and regional directors. This is true at least until an alternative policy is announced by the Board, if that occurs as a result of the new appointees. After the decision was issued, the Chairman of the NLRB, Mark Gaston Pearce, indicated that the Board would continue to operate while pointing out that the case only applied to one decision and that similar cases in other circuits were still pending.

Background

On July 5, 1935, President Franklin Roosevelt signed the National Labor Relations Act (the "NLRA" or the "Act") into law, stating that its purpose was to achieve "common justice and economic advance." The Board celebrated its 75th anniversary in 2010, but union membership has declined since its peak in 1954. In fact, on January 23, 2013, the U.S. Bureau of Labor Statistics announced the membership rate for 2012 in the private and public sectors combined was 11.3%, representing 7.3 million employees in the public sector and 7.0 million workers in the private sector. This reflects a drop of 0.5% from 2011, and is well under half of the high-water mark set in 1954 of 28.3%.2 And the percentage is even lower for private sector employees, a mere 6.6% in 2012.

Given the decreasing relevance of traditional labor to most private sector employers, what does the Board focus its attention on? "The agency also acts to prevent and remedy unfair labor practices committed by private sector employers. . . ."3

The NLRA and "Unfair Labor Practices."

To understand the Board's recent decisions, it is helpful to understand the structure of the NLRA. Section 7 of the Act sets out employee rights, and Section 8 then makes infringing on those rights, among other things, an unfair labor practice. Under Section 7, employees have the right to engage in concerted activity for their "mutual aid or protection," including, e.g., talking to each other about the terms and conditions of their employment. 29 U.S.C. § 157.4 The Board's recent controversial decisions hinge on its interpretation of the employees' right to engage in concerted activity.

Section 8 of the Act describes various unfair labor practices. Under Section 8(a)(1), it is an unfair labor practice for an employer to "to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7." 29 U.S.C. § 158.5

An employer's rule violates Section 8(a)(1) if the rule would reasonably tend to "chill" employees in the exercise of their Section 7 rights. If the rule expressly restricts Section 7 activity it is unlawful. Lutheran Heritage Village, 343 NLRB 646 (2004). If the rule does not expressly restrict Section 7 activity, it is still unlawful if "(1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights." Id. The Board has recently been relying on the first prong in determining that various policies violate Section 8(a)(1).

The Board's Increasingly Aggressive Interpretation of Section 7.

Arbitration Agreements

In Concepcion v. AT&T Mobility, the U.S. Supreme Court expressed the strong proarbitration policy contained in the Federal Arbitration Act (FAA), and concluded that it preempted California state law invalidating class-action waivers.6 Since then, companies have been including class action waivers in their arbitration agreements with employees and consumers.

In a now notorious decision, D.R. Horton, Inc. v. Cuda, 357 NLRB No. 184 (2012), the...