Washington D.C. Employment Law Update : Washington D.C. Employment Lawyer & Attorney : Littler Mendelson Law Firm : Virginia, Tyson's Corner

Committee Chairman Tom Harkin (D-IA) claimed that it was “deeply disappointing” to see what is happening to the Board in recent years, and placed the blame on “political squabbling.” According to Harkin, the Board has not had five confirmed members in a decade.

Ranking member Lamar Alexander (R-TN) agreed that it is important to have five confirmed members, but emphasized that there exists “a troubling lack of respect” for the constitutional mandate that there be a separation of powers in our government, namely the Senate’s responsibility to provide advice and consent over executive nominees. He claimed that President Obama “made recess appointments while the Senate was not in recess. This was unprecedented.” Said Alexander, “the Senate must decide when we’re in session. Not the President.”

Alexander explained that since the January 4, 2012 recess appointments, the Board has issued 910 published and unpublished decisions; 206 of which were issued after Noel Canning, the case in which the U.S. Court of Appeals for the D.C. Circuit ruled that the recess appointments were unconstitutional. All of these decisions, Alexander noted, can be appealed and vacated.

Alexander supported the nominations of Pearce, Johnson and Miscimarra, but said he would not approve the nominations of Griffin and Block, the two recess nominees.

Sen. Patty Murray (D-WA), on the other hand, urged the Senate to consider all five nominees as a package. Sen. Elizabeth Warren (D-MA) agreed, even though she expressed concern that one of the nominees was specifically hired by the Chamber of Commerce to curb NLRB’s regulatory authority. She believed that the need to have a fully functioning Board overrode any concerns she had about individual members.

During the hearing, each member was asked specific questions about their philosophies about labor law in general, and how the Board has acted in certain situations in particular.

Chairman Pearce was grilled the most given his leadership role. Sen. Harkin asked him why he feels the Board should continue to operate given the Noel Canning decision. Pearce responded that the decision conflicts with the conclusions of three other courts of appeals, and that “historically, the NLRB has functioned in the wake of constitutional challenges. We owe it to the public to continue to work.” He pointed out that the National Labor Relations Act affords no private right of action. Therefore, “the Board is the only forum. . . .the statute of limitations on unfair labor practices continues to run,” and that the Board’s obligations are not suspended while litigation over the legitimacy of the Board is pending.

Sen. Alexander asked Pearce about the Board’s efforts to expand the information that must be provided on the Excelsior list. He said that under Pearce’s direction, the Board has led a regulatory effort to include other information such as email addresses and telephone numbers. Alexander asked whether, if re-confirmed, would Pearce continue to pursue these efforts, and if so, why would he not allow employees to opt out of this requirement? Pearce answered that “Excelsior is decades old. . . . We are creatures or victims of technology,” and that it is “appropriate and responsible” for the Board to “look at technological advances that are typical in communications between employees and employers.” He said that all manners of communication would be evaluated and taken into consideration. Alexander urged Pearce to consider privacy considerations as well as technological ones.

Sen. Johnny Isakson (R-GA) asked Pearce why the NLRB has undone decades of precedent in its Specialty Healthcare decision. In this case, the Board changed the criteria for assessing appropriate bargaining units. Under the new standard, employers have the burden of proving excluded employees share an “overwhelming community of interest” with the proposed unit – a new and uncertain standard. The decision essentially makes it easier for unions to create smaller “micro” units within a workplace. Pearce responded that “it has been a tenet of the law to determine an appropriate – not the most appropriate – unit,” and that the decision in Specialty Healthcare is “consistent with assessments of what would be an appropriate bargaining unit.”

Recess nominees Richard Griffin and Sharon Block were asked why they have not resigned in the wake of Noel Canning. Richard Griffin claimed that since the Supreme Court has not rendered a final judgment on the matter, “I felt it was important to conduct the work I took an oath to continue to do.” Nominee Sharon Block agreed, saying that the “public we serve relies on us. It is incumbent upon me to continue to provide this service while the issue is being resolved.”

When asked what his concerns would be if confirmed, nominee Harry Johnson stated that “if good faith employers cannot operate” due to regulatory impediments, “there will not be jobs, not be employees, and there would not be viable labor unions.” Nominee Philip Miscimarra said that one factor every labor law case has in common is that “at least two people see something different. If confirmed, I will approach every decision with an open mind . . . and be open to differing views.” In addition, he stated that it is important to “apply the law as written in keeping with what Congress intended.”

Sen. Robert Casey, Jr. (D-PA) asked whether he supports the Board’s rulemaking authority. Miscimarra answered that he does, but that any consideration would depend on careful consideration of the need for the rule, any authorization in the NLRA for the rulemaking, the content of the rule, and the process for receiving public input.

Sen. Bernard Sanders (I-VT) predicted that the Committee would approve the five nominees along party lines, and that once the nominations are put before the full Senate, Republicans would threaten to filibuster the nominations, and that the Democrats would not be able to garner the 60 votes needed to overcome a filibuster. Thus, come the end of August when Chairman Pearce’s term ends, the Board would be left without a quorum and thus be rendered dysfunctional.

Sen. Harkin concluded the hearing by noting that the Committee will meet to vote on advancing the nominations next Wednesday, May 22, 2013.

A webcast of the hearing can be found here.

Photo credit: webphotographeer

During floor debate, Rep. John Kline (R-MN), Chairman of the House Committee on Education and the Workforce, said “Never has [the Board] faced this level of confusion and uncertainty. . . . Roughly 600 Board decisions are constitutionally suspect, and that number continues to grow.” Kline stated that H.R. 1120 “is an appropriate congressional response to an unprecedented” presidential action.

Speaking in opposition to the bill, Rep. Robert Andrews (D-NJ) noted repeatedly that prior presidents – both Republican and Democrat – availed themselves of the same recess appointment process. Rep. Rosa DeLauro (D-CT) called the bill “a transparent attempt to simply shut down the NLRB.” Many others who spoke against the measure urged the Senate to simply take a vote on the five Board nominees.

Earlier this week, President Obama re-nominated Mark Gaston Pearce to serve as NLRB Chairman, and named Harry I. Johnson, III and Philip A. Miscimarra to fill the two vacant Republican seats. In February, the President re-nominated Democrats Sharon Block and Richard Griffin – two of the three recess appointees in question – to the Board. It remains uncertain whether the Senate will act on any of these nominations.

Despite the House’s approval of the Preventing Greater Uncertainty in Labor-Management Relations Act, the bill is unlikely to advance in the Democrat-controlled Senate. Even if the Senate were to approve the measure, President Obama has reportedly threatened to veto it.

The vote is indicative, however, of the frustration felt by many lawmakers over the uncertainty that exists in labor law today. Hundreds of Board decisions – some dealing with emerging social media policies that impact nonunion employees as well – are in jeopardy of being invalidated.

Labor Law Uncertainty

In 2010, the U.S. Supreme Court held in New Process Steel that the Board must operate with at least three sitting members. After this decision was issued, the NLRB had to revisit and resolve more than 600 cases. As discussed in a subcommittee media advisory and reiterated during the hearing, since January 4, 2012 the Board:

has issued a number of controversial decisions that expand the power of union interests and overturn long standing precedent. For example, one ruling (Piedmont Gardens) overturned more than thirty years of board precedent by allowing unions to obtain witness statements gathered during an employer’s internal investigation. Another recent decision (Kent Hospital) undermined the right of workers to not fund union lobbying activities. The fate of these and other decisions issued over the last year are now in jeopardy . . .

During the hearing, attorney G. Roger King, testifying on behalf of the U.S. Chamber of Commerce and the Coalition for a Democratic Workplace, explained why the Board’s current position is worse than the one it found itself in following New Process Steel. According to King, when former Board members Wilma Liebman (D) and Peter Schaumber (R) were the only seated members, they agreed to set aside the more controversial cases. Therefore, it was a relatively uncontentious – albeit time-consuming – process to reconsider these decisions. In contrast, the current board has issued several complex and precedent-reversing decisions in the past year. If the Supreme Court should eventually find that the current recess appointments were improper, revisiting these cases would be a much bigger ordeal.

King mentioned that there is already a split in the judicial circuits on the legality of the recess appointments, and thus waiting for other decisions would be a waste of time. “This is ripe for certiorari today.”

King said that in addition to decision-making, a three-member quorum is needed to make appointments of NLRB regional directors; delegate to the acting general counsel the ability to issue injunctive relief; and make rules. Delaying Supreme Court consideration would hurt employers, employees, and unions, he testified.

Various Republican congressional leaders have echoed this concern in letters sent to the President and NLRB Chairman Mark G. Pearce. In the letter to the President, the House leaders explain that “unlike other courts of appeals, aggrieved parties can always appeal a Board order to the U.S. Court of Appeals for D.C. Therefore, all prior and future orders issued by a Board that relied on intrasession appointments to constitute a quorum could be overturned.” The letter further states that:

Only three things are certain: decisions issued by the current Board cannot be relied upon, every losing party will be justified in filing an appeal, and no prevailing party can be assured they will ever benefit from a Board-ordered remedy. This uncertainty is not what the law anticipates and cannot be permitted.

Precedent-Setting Decisions

Attorney Lawrence Z. Lorber discussed some of the precedent-setting decisions the Board has issued since January 4, 2012. He claimed that these rulings indicate that the Board has “misunderstood the role that the NLRA plays.” The decision in Banner Health System, for example, has broad implications for how an employer must conduct business during an internal investigation. In this case, the Board interpreted Section 7 of the NLRA to preclude an employer from establishing a blanket policy of keeping ongoing investigations of employee misconduct confidential until they are concluded. An employer is now required to establish a specific legitimate business justification for requiring employees to maintain confidentiality during internal investigations of employee complaints. According to Lorber, the Board “cavalierly created precedent without considering other laws.” He explained that other workplace statutes, such as the Americans with Disabilities Act and the Sarbanes-Oxley Act, require investigations to be kept confidential. In addition, the Equal Employment Opportunity Commission (EEOC) “has long stated that confidentiality is important.” The Board’s decision in Banner Health System, therefore, has “precluded other agencies from carrying out their functions.”

Lorber criticized also the Board’s decision in Fresenius USA Manufacturing and International Brotherhood of Teamsters, in which the Board “elevated the rights conferred by § 7 [of the National Labor Relations Act] to outweigh the other protections afforded employees and obligations placed upon employers.” In that case, the Board found that the termination of an employee who sent harassing messages to coworkers during an election campaign violated the NLRA. According to Lorber:

Both of these decisions show a surprising disregard of the necessity for the NLRB to interpret the NLRA in a manner consistent with its own purposes but at the same time consistent with the related employment, labor and governance laws which impact the employment relationship.

Raymond J. LaJeunesse, Jr., Vice President & Legal Director of the National Right to Work Legal Defense Foundation, Inc., testified about the Board decisions that he claims infringe upon an employee’s right to object to how union dues and agency fees are spent. In the landmark Supreme Court case Communications Workers of America v. Beck, the Court held that the NLRA “does not permit a union, over the objections of dues-paying nonmember employees, to expend funds collected from them on activities unrelated to collective-bargaining activities.” Unions must therefore give employees the option of paying only the portion of dues that will be spent on collective bargaining – and not political – activities. According to LaJeunesse, “the NLRB has failed to enforce Beck vigorously, both in processing cases and applying judicial precedent.” Namely, the witness said, the Board has upheld the requirement that objections be submitted annually and filed within a certain window.

Recess Appointees Re-Nominated

During the question and answer period of the hearing, ranking subcommittee member Robert Andrews (D-NJ) stated that on Wednesday President Obama resubmitted the nominations of Sharon Block (D) and Richard Griffin (D) to the Senate for confirmation. He urged the Senate to take a simple up or down vote on their nominations instead of proceeding through the longer Senate confirmation process. He argued that “the power to advise and consent is not the power to paralyze and obstruct,” and said that both parties have been guilty of abusing use of pro forma sessions to prevent presidents from making recess appointments.

Some panelists expressed reluctance to put the NLRB nominations to a simple up or down vote, however. LaJeunesse, for example, said that that the nominations of Block and Griffin “should be defeated in any way possible” given their track record this past year.

Similarly, in the letter to the White House, the House leaders urge the President “to nominate four qualified individuals for the [Board] immediately, and work with the Senate to confirm them. Until a constitutionally appointed Board is seated, uncertainty will reign in labor-management relations to the determent [sic] of America’s workers, employers, and unions.” The lawmakers likewise implore the Board to “cease all activity” until the Supreme Court evaluates the legitimacy of the recess appointments, or until “all members of the Board are confirmed with the advice and consent of the U.S. Senate in a number sufficient to constitute a quorum. . .”

A complete list of the panelists and links to their testimony can be found here.

Photo credit: webphotographeer

Tuesday’s hearing focused specifically on the effects the NLRB recess appointments will have on businesses and the operation of the Board. According to Committee Chairman John Kline (R-MN), because the legitimacy of the President’s ability to make the appointments is in question, every action taken by the Board “will be constitutionally suspect and legally challenged.” The hearing was therefore brought to examine “the fear and uncertainty that this action has unleashed” on employers. As a result of the Supreme Court’s 2010 decision in New Process Steel, hundreds of Board decisions were invalidated after it was determined that the agency could not issue decisions with only two acting members. If the Court similarly determines that the recess appointments in this instance are invalid – a process that witnesses testified could take two to three years – “the lasting effects could be substantial.” According to Marculewicz, “every decision issued by this Board will be accompanied by the very real possibility that it might not be sustained.”

Marculewicz explained (pdf) that the prospect of this outcome means that confusion and uncertainty in labor relations will follow. He stated that after the New Process Steel decision, the NLRB had to revisit and resolve more than 600 cases. While many of these decisions were initially decided by two members and were noncontroversial, the instant situation will have a much different result, as a five-member Board will be empowered to resolve substantive issues with far-reaching consequences. The impact of these substantive decisions “will be seen far and wide,” and have a “disparate impact on small businesses that lack the resources” to challenge the decisions. According to Marculewicz, NLRB regional offices will be forced to rely on “unstable” Board precedent, and employers will bear substantial and potentially unnecessary costs in complying with new Board orders that might not be upheld in the long-term.

Under questioning, Marculewicz explained that if the NLRB issues an order to bargain with a union representative, and the Board’s authority to do so may ultimately be reversed, one option for the employer would be to simply refuse to bargain with the union, an option he claimed is neither good for the employer nor the employee.

When asked by a member of Congress what the President should have done, Marculewicz noted that two current Board members were, in fact, confirmed by the Senate, and that there was nothing to prevent the President from nominating potential candidates that would have had a good chance of being confirmed by the Senate. He also noted that in anticipation of a possible loss of quorum in 2012, the Board had already put in place a rule revising its representation case certification process as well as special procedures governing the filing of certain motions and appeals in unfair labor practice cases. Marculewicz claimed that these rules would have ensured that the NLRB – especially regional offices where much of the agency’s workload is handled – would still have been able to operate, albeit in a more limited capacity.

Others called the decision to seat members to the NLRB bad public policy and a politically expedient move. Another witness claimed, however, that because the Board is the sole entity to administer labor law in this country, it must be permitted to function. According to the union attorney witness, had the President not made the appointments, the Board would have shut down, and that there would be no place for employees to judicially seek a remedy for unfair labor practices. This witness claimed that there should be a “balance of horribles” when examining the legitimacy of the recess appointments. If the move is ultimately deemed unlawful, she testified, the Board will be put in the same place it was after New Process Steel. If, on the other hand, no appointments were made and the Board left without a functioning quorum, the agency “would be rendered impotent.”

Constitutionality of the Recess Appointments

Although much of today’s hearing addressed the recess appointments’ practical considerations for employers, the constitutionality of the appointments was the subject of significant debate among some witnesses and Members. The constitutionality of the recess appointments was also discussed during a hearing held on February 1 by the House Committee on Oversight and Government Reform.

According to the White House, making the recess appointments when the Senate is holding pro forma sessions is a legitimate exercise of executive authority. A memorandum opinion (pdf) issued by the Department of Justice’s Office of Legal Counsel (OLC) concluded that:

. . . the text of the Constitution and precedent and practice thereunder support the conclusion that the convening of periodic pro forma sessions in which no business is to be conducted does not have the legal effect of interrupting an intrasession recess otherwise long enough to qualify as a “Recess of the Senate” under the Recess Appointments Clause. In this context, the President therefore has discretion to conclude that the Senate is unavailable to perform its advise-and-consent function and to exercise his power to make recess appointments.

Michael J. Gerhardt, a Constitutional law professor at the University of North Carolina School of Law, agreed with the DOJ’s assessment, and testified during the Feb. 1 hearing that the President took a functional and credible approach in deciding to make the appointments. He said that the President had competing considerations to take into account, including the fact that the Constitution requires him to “take care that the laws are faithfully executed.” Gerhardt explained that without a director, the CFPB could not carry out its duties under the Dodd-Frank Wall Street Reform and Consumer Protection Act, and without a quorum, the NLRB could not fully execute its duties under the National Labor Relations Act.

Other witnesses and lawmakers speaking at both hearings contended, however, that making recess appointments when the Senate was still in session – albeit pro forma – is a violation of article 1, section 5, clause 4 of the U.S. Constitution, negates the Senate’s Constitutional power “to determine the Rules of its Proceedings,” and runs contrary to long-standing practice.

According to the attorney witness during Tuesday’s hearing, the OLC’s memorandum supporting the President’s decision bases its view on the fact that the Senate was unavailable at the time, an “assertion that collapses” by the “single inconvenient truth” that the Senate passed a 2-month extension of a tax cut bill on December 23, when the Senate was holding a pro forma session. According to the witness, if the Senate can pass legislation by unanimous consent during a pro forma session, it is able to confirm an agency appointment. The witness testified that the “recess appointments had nothing to do with whether the Senate was able to act, and everything to do with its unwillingness to act.”

During last week’s Committee hearing, Senator Mike Lee (R-UT) similarly denounced the President’s decision to bypass Congress in making the appointments: “If we, as Congress, do nothing, January 4, 2012 may well live on in infamy as a day the Congress refused to enforce a provision of the Constitution and instead ceded one of its rightful powers to the executive.” Other witnesses emphasized the short two-week period between the time the NLRB appointees were nominated and when they were seated to the Board as evidence that Congress’s role in the confirmation process was unlawfully circumvented.

Ranking member George Miller (D-CA) concluded his remarks during Tuesday’s hearing by stating that he welcomes a Supreme Court resolution to this issue.

A complete list of panelists for Tuesday’s hearing and links to their testimony can be found here.

Photo credit:  webphotographeer

To date, the House has not yet scheduled a vote on this resolution. Even if approved, the measure can be considered largely symbolic, as it would be nonbinding.

Days after Black offered her resolution of disapproval, however, Rep. Jeff Landry (R-LA) introduced the Executive Appointments Reform Act (EARA) (H.R. 3770), a bill that would, among other things, prevent the NLRB from having a quorum until the Senate confirms the new appointees. Without a quorum, the Board would lose the power to issue decisions, promulgate and enforce new rules, and preside over appeals.

Specifically, the bill would amend the National Labor Relations Act by adding the following provision to Section 3(b): “A quorum shall not be constituted by any member of the Board who shall not have been confirmed by the Senate.” In addition, the bill would prevent individuals from being paid who are “appointed during a recess of the Senate to fill a vacancy in an existing office, if the vacancy existed while the Senate was in session and was by law required to be filled by and with the advice and consent of the Senate.” The measure also would ban individuals from volunteering to fill the vacant positions or otherwise working for free under such circumstances. If enacted, the provisions of this bill would be retroactive to the first of the year.

In a press release, Landry stated:

As a tireless supporter of the Constitution, I believe the Recess Appointments Clause serves a very important purpose; however, it’s clear the Founding Fathers included the clause to provide the continuity of government not as a way to circumvent the “Advice and Consent of the Senate.” So as we wait for the Court to declare Obama’s appointments as unconstitutional, it is important Congress take steps now to end this gross Executive overreach and prevent similar power grabs from happening again.

The same day Rep. Landry introduced the EARA, President Obama’s move to seat three new Board members via recess appointment received its first judicial challenge. The U.S. District Court for the District of Columbia will likely be the first federal court to consider the legality of the appointments.