As we approach the November 2nd mid-term Congressional elections, chances for passage of the Employee Free Choice Act (EFCA) grow dimmer and dimmer. The union lobby lacks the votes in the Senate to stop a filibuster to take EFCA to the floor, and members in both Houses of Congress are reluctant to take on tough labor votes so close to the election. Now, even passage of an EFCA alternative bill, which might allow “quickie” union representation elections within two or three weeks from a union petition and include limitations on free speech rights of employers, seems unlikely before the November election (but watch the post-election “lame duck” session).

What has not diminished is the unions’ push for EFCA-like “reforms” through the National Labor Relations Board (NLRB), especially now that the unions have a solid three-vote majority of former union lawyers serving on the Board (and the prospects for a heavily pro-union General Counsel). While the business community must remain vigilant regarding EFCA and other labor law “reform” legislation, the battleground clearly has shifted to the regulatory front – namely, the NLRB.

NLRB Composition

The NLRB is finally up to its five-member complement, after operating as a two-member Board for over two years. On June 22, the Senate confirmed Board Members Mark Gaston Pearce (D) and Brian Hayes (R). Both had been nominated by President Barack Obama in July 2009. The term for Member Pearce, who had been serving a “recess” appointment, now extends to August 2013, while Member Hayes has been confirmed to fill an existing term which expires in December 2012.

They will join Chairman Wilma Liebman (D) and Board Member Peter Schaumber (R), whose terms expire in August 2011 and August 2010, respectively. The fifth Board member, Craig Becker, the controversial former Assistant General Counsel of the Service Employees International Union (SEIU) and the AFL-CIO, was blocked for confirmation to a full term by the Senate, but will continue to serve as President Obama’s “recess appointee” until Congress adjourns at the end of 2011.

President Obama also named career NLRB lawyer Lafe Solomon as the “Acting General Counsel” following the resignation of former General Counsel Ronald Meisburg. Solomon was appointed under the Federal Vacancies Reform Act of 1998. His experience includes 10 years as the Director of the NLRB’s Office of Representation Appeals and he has served on the staffs of 10 different Board members.

When Member Schaumber’s term expires this August, many expect a political “package” to be proposed by the President consisting of a Republican replacement as Board member and most likely a Democratic union lawyer for the General Counsel’s position.

NLRB Rebuked by Court’s New Process Steel Decision

Initially, the new NLRB is rushing to issue new decisions reversing NLRB precedent while the Board still consists of five members. At the same time it also will have its hands full reconsidering a series of cases previously decided by the two-member Board following the U.S. Supreme Court’s stunning rebuke to the Board’s authority to issue such rulings.

In a strongly worded 5-4 decision authored by departing Justice John Paul Stevens in New Process Steel v. NLRB on June 10, the Court ruled that the NLRB did not have the authority to issue two-member Board orders. That means that hundreds of relatively non-controversial decisions issued by Democrat Wilma Liebman and Republican Peter Schaumber are now invalid.

By way of background, as 2007 came to a close the NLRB consisted of four members with one vacancy, with the recess appointments of two of the four sitting members set to expire at the end of the Congressional session. That would leave the Board with only two members. Senate Majority Leader Harry Reid refused to recess or adjourn the Senate, thus denying then-President George W. Bush the opportunity to fill the vacant seats with “recess” appointments. Thus, when the vacancies occurred they were never filled. The Board operated with only two members for 27 months, from January 2008 to April 2010, during which it continued to decide over 600 less controversial cases while deferring consideration of over 100 cases where the two members could not agree or that would reverse NLRB precedent.

It was that practice which the Supreme Court rejected in New Process Steel on the basis that Section 3(b) of the National Labor Relations Act – the “delegation clause” – authorizes the Board to delegate its powers only to a “group of three or more members.” That group must maintain a membership of three in order for the delegation to remain valid.

The U.S. Chamber of Commerce filed a very influential amicus curiae brief with the Supreme Court urging that the Board lacked authority to issue orders as a two-member Board. In words that will be long remembered, Justice Stevens wrote that “the Rube Goldberg-style delegation mechanism employed by the Board in 2007 – delegating to a group of three, allowing a term to expire, and then continuing with a two-member quorum of a phantom delegee group – is surely a bizarre way for the Board to achieve the authority to decide cases with only two members.”

The Court’s ruling further stated: “We are not insensitive to the Board’s understandable desire to keep its doors open despite vacancies. Nor are we unaware of the costs that delay imposes on the litigants. If Congress wishes to allow the Board to decide cases with only two members, it can easily do so. But until it does, Congress’ decision to require that the Board’s full power be delegated to no fewer than three members, and to provide for a Board quorum of three, must be given practical effect rather than swept aside in the face of admittedly difficult circumstances.”

Justice Stevens concluded with the following memorable words: “Section 3(b), as it currently exists, does not authorize the Board to create a tail that would not only wag the dog, but would continue to wag after the dog died.”

As a result of this decision, on July 1 the Board requested that its orders from the 96 two-member decisions pending in all federal courts of appeals be remanded to the Board for further consideration. Each of the remanded cases will be considered by a three-member panel of the Board which will include Chairman Liebman and Board Member Schaumber. Consistent with Board practice, the other Board members not on the panel will have the opportunity to participate in the case if they so desire.

While some courts have complied with the Board’s request to remand the cases, others have refused to enforce the Board’s order – inviting the argument that the Board has no mechanism to reconsider the decision. For example, the Eighth Circuit Court of Appeals denied enforcement in NLRB v. White-sell Corp. (June 10, 2010) and NLRB v. American Directional Boring, Inc. (June 24, 2010).

In other recent action related to the New Process Steel decision, the new NLRB consisting of all five members announced that it had ratified the December 2007 temporary delegation to the General Counsel of all litigation authority that normally would have required Board approval, such as the decision to seek section 10(j) injunctive relief. The new Board also ratified all personnel and administrative decisions made during that time frame.

Pending Issues

Although the new Board has been distracted by the New Process Steel decision, there are several significant issues that have been recently decided or are awaiting Board action.

Member Becker’s Recusal Stance
NLRB Member Becker, who is believed to be the first member to have worked for a labor union immediately prior to service on the Board, recently announced that he would not recuse himself from cases involving local unions affiliated with his former employer, the Service Employees International Union (SEIU). That issue was a point of contention during Member Becker’s Senate confirmation hearing.

In Pomona Valley Hospital Center, 355 NLRB No. 40 (June 8, 2010), which involved an SEIU local union, Member Becker wrote that he would adhere to the ethical standards he agreed to uphold as described in the Standards of Ethical Conduct for Employees of the Executive Branch (5 CFR Part 2635) and Executive Order 13490 (“Ethics Commitments by Executive Branch Personnel”). While he acknowledged that those standards include significant restrictions on deciding cases involving former clients he represented in the two years preceding his swearing in, Member Becker said that he would not recuse himself from the cases of local SEIU unions (since SEIU is a separate legal entity from its local affiliates).

As to whether he had pre-judged issues reflected in his controversial writings on labor policy as a law school professor and union lawyer, Member Becker declared: “a `reasonable person’ appearing before the Board will distinguish between the roles I played as an advocate and a scholar in the past and the position I now hold as a Member of the NLRB.” However, he agreed to recuse himself from consideration of the Dana Corp. case, involving pre-recognition bargaining, in which he had written an amicus curiae brief filed by the United Auto Workers and the AFL-CIO.

Since then, the NLRB’s Inspector General has ruled that Member Becker did not violate ethics rules by deciding St. Barnabas Hospital and Committee of Interns and Residents, Local 1957, SEIU.

Members-Only, Minority Bargaining
A group of 46 labor law professors led by Professor Charles Morris is again pressing the Board (through the filing of a 69-page brief) to engage in rulemaking to advance “members-only, non-majority bargaining.” Under this proposed rule, an employer would be required to bargain with a minority of employees about their wages, hours and working conditions simply because they are members of a union, but outside the concept of “majority rule” and “exclusive representation” of all employees in a bargaining unit.

This would result in small, fragmented bargaining units confronting a single employer, where multiple unions would represent only a minority of employees in a single workplace. On the other hand, in the words of Professor Morris, “minority-union bargaining will allow unions to grow the natural way that most associations grow – by starting small and growing larger with experience and achievement.”

In Dick’s Sporting Goods, Case 6-CA-34821 (June 22, 2006), the NLRB’s General Counsel refused to issue a complaint against an employer that had refused to bargain with a minority, members-only union. The General Counsel’s Memorandum “underscore(d) that the statutory obligation to bargain is fundamentally grounded on the principle of majority rule.”

Electronic Balloting in Union Representation Elections
The new Board has taken its first steps toward making significant changes in the area of union representation elections. Many expect rulemaking (or simply a guidance memorandum) shortening the period between a union’s filing of an election petition and the election itself. Currently, the Board’s goal is 42 days, and the average was 38 days last year.

However, the Board is expected to reduce the time for the election to two to three weeks from the filing of the petition, thus reducing the period for employers to communicate with their employees about the company’s perspective on unionization. The inability of the employer to communicate means that employees would be prevented from casting a fully informed vote.

Now there’s another concern. On June 9, the Board published a request for information related to the procurement and implementation of electronic voting services for remote and on-site union elections. “Electronic balloting” by telephone, email or the Internet may soon replace traditional secret ballot elections, which are protected by NLRB agents and observed by a union and employer observer to prevent last minute campaigning, voting fraud and other misconduct. Also, just as with postal ballots (which the Board will order in rare cases where the employees are geographically dispersed), electronic balloting would limit the time for employers to communicate with employees about the election. The free speech restrictions on postal ballots begin with the mailing of ballots to employees; presumably the same rule would apply to the mailing of electronic balloting instructions.

Note: This article was published in the July/August 2010 issue of The Employment Law Authority.

Browse More Insights

Street protest against war in Ukraine in town square.
Practice Group

Traditional Labor Relations

The attorneys in Ogletree Deakins’ Traditional Labor Practice Group have vast experience in complex and sophisticated traditional labor law matters. This includes experience advising and representing employers of all sizes and across virtually all industries in connection with union representation campaigns, collective bargaining negotiations, strike preparations, labor arbitrations, and National Labor Relations Board proceedings.

Learn more

Sign up to receive emails about new developments and upcoming programs.

Sign Up Now