On March 2, 2012, a federal trial judge in the D.C. Circuit Court of Appeals issued a highly-anticipated ruling on the National Labor Relations Board’s (NLRB) controversial notice posting rule. National Association of Manufacturers v. NLRB, No. 11-1629 (ABJ), U.S. District Court for the District of Columbia (March 2, 2012).

As most employers now are aware, private-sector employers whose workplaces fall under the jurisdiction of the National Labor Relations Act (NLRA) jurisdiction soon will be required to post a notice of employee rights regarding unionization, pursuant to the NLRB’s final rule related to the Notification of Employee Rights under the NLRA. That final rule, which becomes effective on April 30, 2012, requires employers to post and maintain the NLRB notice in conspicuous places, and to take “reasonable steps” to ensure that the notices are not altered, defaced, or covered by any other material, or otherwise rendered unreadable. The proposed rule has been pending since December of 2010, and was to have taken effect on November 14, 2011. However, that deadline was extended a number of times, most recently to allow a federal judge in the D.C. Circuit Court of Appeals to make a determination on legal challenges to that final rule.

Those legal challenges came about when, after the NLRB issued the proposed final rule on August 30, 2011, the National Association of Manufacturers (NAM) and National Right to Work Legal Defense and Education Foundation (NRTW) brought separate actions – later consolidated – against the NLRB, its members, and its General Counsel, seeking to invalidate the Rule. In addition to claiming a violation of First Amendment rights, the actions alleged that the NLRB lacked the authority: (1) to promulgate and enforce the notice posting rule; (2) to require employers to post a notice absent the filing of an unfair labor charge or union petition; (3) to deem the failure to post to be an unfair labor practice; and (4) to toll the statute of limitations for filing an unfair labor practice charge.

In the March 2 holding, the D.C. Circuit Court judge held that the NLRB did not exceed its statutory authority by requiring employers to post its "Notification of Employee Rights under the National Labor Relations Act." The court concluded that the Board has the authority under the NLRA to promulgate a rule that requires all employers to post a notice of employee rights, because there is nothing in the NLRA that indicates that “Congress unambiguously intended to preclude the Board from promulgating [such] a rule. . . .” The court further also declined to find that the NLRB’s promulgation of the notice posting provision was “arbitrary and capricious,” which could have invalidated the rule. In addressing the NLRB’s authority to penalize employers that failed to post the notice, the court held that "the Board cannot make a blanket advance determination that a failure to post will always constitute an unfair labor practice." However, the court went on to say that the Board could make this determination on a case-by-case basis. Therefore, while the Board exceeded its authority under the NLRA when it promulgated a rule that failure to post the required notice would automatically be a violation of the NLRA, a determination of whether a particular failure to post would constitute such ULP still can be determined by courts on a case-by-case basis.

The court came to a similar conclusion with regard to Section 104.214(a) of the Rule, which extends the statute of limitations for unfair labor practice proceedings arising out of the failure to post, and which applies to all unfair labor practice actions against employers where the notice was not posted. The court found that the NLRA does not authorize the Board to enact a rule that permits it to automatically toll the statute of limitations in any future unfair labor practice action involving a job site where the notice was not posted. However, also the court opened a door in this instance for the NLRB to find that tolling is appropriate on a case-by-case basis where the notice is not posted.

Therefore, based on the March 2 court decision, employers who fail to post the notice after the new deadline (April 30) may be subject to sanctions – depending on the facts of the specific circumstance – for an unfair labor practice under the NLRA and, an extended statute of limitations for filing a charge involving other unfair labor practice (ULP) allegations against the employer. Importantly, if an employer knowingly and willfully fails to post the notice, that failure also may be considered evidence of unlawful motive in any unfair labor practice case involving other alleged violations of the NLRA, meaning that the failure to post could inadvertently provide adverse evidence in an unrelated ULP matter.

It should be noted that another challenge to the Rule, which was filed by the U.S. and South Carolina Chambers of Commerce, is still pending in U.S. District Court in Charleston, and has yet to be decided.