Supreme Court Rules Two-Member NLRB Lacked Authority To Issue Decisions

Today, in a 5-4 decision, the U.S. Supreme Court ruled in New Process Steel, L.P. v. NLRB that the National Labor Relations Board (NLRB) was not authorized to issue decisions during a 27-month period (January 2008 through March 2010) when three of its five seats were vacant. Resolving a split among the federal appellate courts, the decision interpreted a confusing section (29 U.S.C. Section 153(b)) of the National Labor Relations Act that defines a quorum of the NLRB's members and its authority to act.  During this extended time when the NLRB was only comprised of current Chairman Wilma Liebman and Member Peter Schaumber, the NLRB issued nearly 600 decisions.

As a result of this ruling, the validity of those decisions and any actions resulting from those decisions are now questionable. In over 70 of those cases a party refused to comply with a decision by the two-member Board and specifically challenged the NLRB’s authority. Those cases are pending in the appropriate appellate courts, and now likely will be remanded to the NLRB for reconsideration by a properly constituted quorum of Board members.

More problematic, however, are those cases where a party did not specifically challenge the NLRB’s authority to issue a decision and may have complied with a Board decision or order. The NLRB now must decide whether to reconsider those cases, and the affected parties must consider what action to take, if any. For example, consider a “representation” case where the two-member Board denied an employer’s challenge to the appropriateness of a bargaining unit, directed the election and certified the union as the exclusive bargaining representative, which then ultimately resulted in a collective bargaining agreement. If the two-member Board decision regarding the appropriateness of the unit is ineffective to begin with, then the subsequent actions predicated on that decision may be invalid and unenforceable. It is unclear whether the NLRB on its own will declare its two-member decisions invalid or whether the issue must be raised by a party. For employers with matters considered by the two-member NLRB, the issues and questions raised by this Supreme Court decision will be challenging both legally and practically.

Moreover, while the issues decided by the two-member NLRB were largely non-controversial for employers generally, in many cases one of the two Board Members agreed to follow existing NLRB precedent for reasons of institutional expediency even where he or she may have otherwise ruled differently.  With two new pro-union recess appointees, however, Chairman Liebman would need to no longer bow to precedent that she disagrees with merely to ensure the agency continues to issue decisions.  Accordingly, the possibility exists that if the NLRB reconsiders some of these 600 decisions, the result could be less favorable for employers. 

For more information, contact the Seyfarth attorney with whom you work or any Labor & Employment attorney on our website.