South Carolina District Court Rules NLRB Poster Rule is Unlawful

In a blow to the National Labor Relations Board's ("NLRB" or "Board") efforts to require employers to post notices in the workplace regarding employees' rights to unionize, the United States District Court for the District of South Carolina struck down the Board's posting rule on Friday, April 13, 2012. [Chamber of Commerce of the United States v. NLRB, 2:11-cv-02516-DCN (D.S.C. Apr. 13, 2012)]. This decision conflicts with another ruling from the United States District Court for District of Columbia which found the rule valid, but limited the potential penalties under the National Labor Relations Act ("NLRA" or "Act") for a failure to post [NAM v. NLRB, 2012 WL 691535 (D.D.C. Mar 2, 2012)]. The NLRB had ordered all employers (both union and non-union) to post these new notices by April 30, 2012.

In overturning the rule, the Court found significant the Board's admission that the posting rule diverged from the NLRB's traditional functions of issuing representation certifications and unfair labor practice orders. While the Board had asserted that it was "taking a modest step that is 'necessary to carry out the provisions' of the [NLRA] ... [in filling] a statutory gap left by Congress," the Court noted that for over 75 years the NLRB had not engaged in informational notice posting of employee rights.

The Court, therefore, concluded that the NLRA does not require employers to post general notices of employee rights under the Act. Applying Supreme Court precedent to the NLRB's rulemaking, the Court found that Congress -- in enacting the NLRA -- had not delegated authority to the Board to regulate employees in this manner. The Court determined that neither the legislative history, plain language nor the structure of the NLRA authorized notice posting independent of the NLRB's core functions of administering union representation elections or remedying unfair labor practices. While not discrediting the Board's finding that the notice-posting rule may be useful in educating employees as to their NLRA rights, the Court concluded that the NLRB simply does not possess the power to order postings of this type.

Notably, the Court indicated that if the NLRB did possess statutory authority to issue the notice-posting rule, the Board would have satisfied its legal requirement to provide a rational and satisfactory explanation of the rule -- as the District of Columbia decision likewise found.

The scope of the South Carolina decision will be unclear until the Court separately issues its mandate (i.e., whether its invalidation of the rule will be nationwide, or, given the contrary District of Columbia ruling, only limited to South Carolina).

With conflicting District Court decisions and the likelihood of appeals, it is possible that it could take years before the issue is conclusively resolved -- with the Supreme Court potentially weighing in. However, with the NLRB -- at least at the moment -- unable to enforce the rule on a consistent, national basis, it is possible that the Board could step back from its April 30 implementation. We expect that the NLRB will announce soon how it intends to respond to the South Carolina decision, and will promptly update you on significant developments.