Employers Get Second Bite at the Apple as Supreme Court Finds Senate Recess Appointments Unconstitutional

July 02, 2014

In a unanimous decision, on June 26, 2014, the United States Supreme Court held in Noel Canning v. NLRB that President Obama violated the Recess Appointment Clause by appointing three members of the National Labor Relations Board (the “NLRB” or “Board”) while the Senate was meeting every three days. The Court held that, although recess-appointment powers may be exercised during inter-session and intra-session Senate recesses and are not limited to vacancies that first arise during a recess, the President exceeded his authority when he appointed three members of the NLRB on January 4, 2012.

The case came before the Supreme Court on appeal by the Solicitor General on behalf of the Board. In 2012, the NLRB ordered Noel Canning, a Pepsi-Cola distributor, to execute a collective bargaining agreement with its union and make employees whole for any damages they sustained due to the distributor’s prior failure to execute the agreement. The distributor asked the Court of Appeals for the District of Columbia Circuit to set aside the order on the grounds that three of the Board members were invalidly appointed, leaving the Board without the minimum three lawfully appointed members required for it to act. The Court of Appeals found for the distributor, but on different grounds than the Supreme Court.

The Supreme Court’s decision is monumental because the NLRB decided 436 cases during the eighteen months the recess appointees were seated on the Board. More than 100 of these cases have been challenged in federal court and the validity of many decisions is now in question. Moreover, dozens of Board decisions have been appealed to the federal appeals court on the grounds that the President’s recess appointments were unconstitutional. This is not the first time the NLRB will be forced to reconsider decided cases. In 2010, the Supreme Court held that the board needed at least three sitting members to issue decisions leading to the reconsideration of 100 of the 600 cases decided by two Board members. The Board took up to three and a half years to reissue some of these decisions.

Prime areas for reconsideration which affect both union and non-union employment settings include confidentiality in workplace investigations, social media policies and the ability of employers to terminate employees based on social media postings.

For example, in Banner Health Sys. d/b/a Banner Estrella Med. Ctr., 358 NLRB No. 93 (July 30, 2012), the NLRB held that Banner’s “blanket approach” of instructing employees who are interviewed in workplace misconduct investigations not to discuss the matter with other employees violated employees’ Section 7 rights under the NLRA to engage in concerted activity for their mutual aid and protection. The NLRB ruled that, in any given investigation, the employer must first determine whether “witnesses need[] protection, evidence [is] in danger of being destroyed, testimony [is] in danger of being fabricated, or there [is] a need to prevent a cover up.” According to the Board in Banner, only a legitimate business justification that outweighs employees’ section 7 rights can justify a prohibition on employee discussions of ongoing investigations.

During the time of the recess appointments, the NLRB also heard its first social media policy case (Costco Wholesale Corp., 358 N.L.R.B. No. 106 (2012)). In Costco, the Board and struck down the electronic posting rule in Costco’s employee handbook which warned employees to “be aware that statements posted electronically (such as to online message boards or discussion groups) that damage the company, defame any individual or damage any person’s reputation or violate the policies outlined in the Costco Employee Agreement, may [subject the employees] to discipline, up to and including termination of employment.” It also invalidated rules that prohibit workers from sharing private information about sick calls, leaves of absences, workers’ comp injuries, personal health information, payroll, credit card and social security numbers.

In addition, the Board in Hispanics United of Buffalo, Inc., 359 N.L.R.B. No. 37 (2012) ordered an employee reinstated following her termination after she initiated a Facebook discussion between colleagues about a co-worker who complained the other employees did not sufficiently assist their clients. The Facebook discussion included cursing and complaints about the workplace.

While employers are likely to get a second bite at the apple as the Board revisits these and other decisions, the conservative approach would be for employers to expect that the Board will reach the same decisions given the Board’s current makeup. Employers should consult with counsel before revising policies based on an assumption that they need not follow the Banner, Costco and Hispanics United Buffalo decisions or any other NLRB decisions.


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This article was originally published by Bingham McCutchen LLP.