NLRB Union Election Rule Held Invalid

A federal judge recently ruled that the National Labor Relations Board (“NLRB” or “the Board”) rule designed to expedite union elections is invalid since the rule was not approved by a quorum of the Board.

In late December, the NLRB published a new rule that changed the procedures for private sector union elections by, among other things, expediting the time period in which a pre-election hearing can be held and eliminating the prior rule that prevented a union election from being held within twenty-five days after the issuance of a pre-election hearing.  On average elections occur within thirty-eight days of filing the petition, however, the new rule shortened this to approximately twenty.   The new rule also significantly limited the employer’s ability to raise issues during the pre-hearing process as well as have issues heard on appeal.    The cumulative effect was a shortening of the time between the filing of a petition for the formation of a union and the actual election as well as a curtailing of the employer’s ability to challenge the election process.   The rule took effect on April 30, 2012.

29 U.S.C. § 153(b) which sets forth the structure of the NLRB, requires the Board to have a quorum of three members to issue decisions and new rules. (see also New Process Steel, 130 S. Ct. at 2638 ).  When this rule was issued in December, the Board was comprised of three, rather than five, sitting members – two Democrats and one Republican, Brian Hayes.  Hayes, however, refused to vote either for or against the rule and the rule ultimately passed with only two members casting votes.   The Board justified passage of the rule based on Hayes’ previous votes cast in opposition to the initiation of the rule making process for this rule and the drafting of the final rule.  From the Board’s perspective, Hayes had effectively already cast his vote in opposition to the rule, and while he did not cast a vote, he was present at the time the vote occurred which, the Board asserted, constituted a quorum.

The U.S. Chamber and a coalition of other labor groups filed a lawsuit in the U.S. District Court for the District of Columbia asserting that the rule violated the National Labor Relations Act (NLRA), the Administrative Procedure Act, the Regulatory Flexibility Act, and an employer’s rights to free speech and due process.  The judge declined to rule on the merits of the rule under the Administrative Procedure Act and the Regulatory Flexibility Act, and instead, rendered his decision based only the violation of the NLRA due to lack of a quorum.

The judge held that a quorum is established only when three members participate in a particular decision.  Here, the NLRB had engaged in the regulatory process and while Hayes had cast votes on previous measures within the regulatory scheme, the rule could not take effect without a vote by the Board to approve the final rule.  That final agency action required approval by a quorum of members present and voting.   While Hayes was physically present he did not cast a vote on the final measure, and he cannot be counted towards a quorum merely because he holds office as a Board member.  The effect of this ruling is that union elections must continue under the prior law.

While the U.S. Chamber and other employer groups certainly have reason to celebrate, the reality is that there is uncertainty as to how long the celebration will continue.  The judge made it a point to stress that he was not rendering his decision on the substance of the rule and noted that had a quorum voted on the rule it may have well been a lawful rule.  The current make-up of the Board is three Democrats (Mark Pearce, Sharon Block, and Richard Griffin) and one Republican (Brian Hayes).  The NLRB could certainly bring this issue back up for a vote, and with three Democrats, could easily pass it.  Given the pending elections, time is of the essence.  Should a new Administration be elected in November, the Board members would likely be replaced.  On the other hand, should the current NLRB properly promulgate the rule, a new Administration could overturn that decision with a rule of its own that is more favorable to employers.  For these reasons it will be interesting to see when NLRB acts on this issue.

Click here to read the full decision in U.S. Chamber v. NLRB.