After Invalid Appointments, NLRB Should Proceed With Care

The U.S. Court of Appeals for the D.C. Circuit issued a ruling last week that has tremendous impact on businesses and labor relations.  

In Noel Canning v. NLRB, the appeals court invalidated President Obama's appointment of three members to the National Labor Relations Board. The court held that the purported "recess" appointments, which led to a number of pro-union decisions, violated the U.S. Constitution because they were made when the Senate was not actually in recess, for vacancies that did not occur during the Senate's recess. 

This ruling now puts into doubt an array of recent NLRB decisions that many have called part of an activist agenda. 

For example, the NLRB has broadly interpreted board law to now place significant restrictions on an employer's right to prohibit its employees from disparaging their employer through social media. This is just one in a long list of decisions that have had a detrimental effect on business.

Although the NLRB has taken a defiant tone with respect to the appellate court decision, it should be very concerned about its future prospects. 

It looks like a long, protracted battle that could take a year or two until the U.S. Supreme Court either overturns the decision, allowing those appointments to stick, or upholds the decision, leaving the NLRB in need of new appointees.  And if the decision is upheld, another issue arises. In 2010, the Supreme Court in New Process Steel v. NLRB invalidated hundreds of decisions by the board because they were not decided with at least a three-member quorum. 

If Obama's recess appointments are invalid, then hundreds of NLRB decisions made by the recess appointees will similarly be invalidated. Unlike the situation following New Process Steel, however, there will be no current board that can rubber-stamp the decisions made by the invalidated board. 

There is an alternative. President Obama can — and must — negotiate with the Senate to find candidates acceptable to a filibuster-proof majority.

This article appeared in the February 1, 2013 edition of the Daily Business Review.