Hospitality Labor and Employment Law Blog : Hotel, Restaurant, Resort & Spa Lawyers & Attorneys: Epstein Becker & Green Law Firm: Hospitality Law

By: Barry A. Guryan

In a case recently decided by the U.S. Court of Appeals for the Eleventh Circuit (National Labor Relations Board v. Harman and Tyner Inc., d.b.a. Mardi Gras Casino, Hollywood Concessions, Inc., 2013 U.S. App. LEXIS 7555), the Court affirmed a District Court’s decision to reject the National Labor Relations Board’s (“NLRB”) petition to obtain temporary injunctive relief seeking to reinstate six discharged employees pending the outcome of an administrative hearing brought as a result of a NLRB Complaint brought against Mardi Gras.  This is one of a series of recent losses the NLRB has received from a number of courts in its strategy to aggressively prosecute employers, many of which are in the hospitality industry.

Mardi Gras operates a casino and greyhound racetrack in Florida. In the underlying administrative complaint against Mardi Gras, the NLRB alleged that the employer had unlawfully discharged certain employees during a union organizing campaign by UNITE HERE Local 355 (the “Union”) in violation of the National Labor Relations Act (the “Act”).  The Act prohibits employers from discriminating against employees for certain protected activities, including the right to engage in union organizing.

Section 10(j) of the Act gives the NLRB the power to petition the Federal District Court “for appropriate temporary relief” pending the outcome of the underlying administrative proceedings. In order to obtain temporary relief under this section of the Act, the NLRB must satisfy two conditions: (1) there is reasonable cause to believe that alleged unfair labor practices have occurred, and (2) the requested injunctive relief is just and proper.  Only the second condition was the subject of the appeal.  The Eleventh Circuit affirmed the District Court’s ruling because it found that the lower court did not abuse its discretion.  It is always important to focus on what the appellate court’s standard of review is in any appeal. In this type of case, it is whether the District Court abused its discretion which gives the lower court much leeway in reaching its decision.

This case is interesting for a variety of reasons, especially for the hospitality industry which has become a prime target of union organization.  While most employers demand that it not only be able to express its position about the need for a union at its place of business, they also demand that its employees be able to vote by secret ballot. Mardi Gras chose to enter into an agreement with the Union that it would take a “neutral approach to unionization” and that it would recognize the Union as the employee’s bargaining representative if a majority of employees signed union authorization cards rather than by secret ballot. In return, the Union agreed that it would not carry on its organizing activities in the casino’s public areas or during the employee’s work time. 

Interestingly, the Agreement was signed in 2004 and expired several years later on December 31, 2011. The Union did not mount a full campaign until the fall of 2011, most likely because they did not believe they had sufficient support until then. There is no explanation in the decision why duration of the Agreement was so long.

As of the date of the District Court’s ruling, the Union had only obtained 92 signatures, far short of a majority of 220 employees. In addition, almost all of the cards (84 of 92) were turned in prior to any of the discharges.  The employees were discharged, in the company’s view, because they “stormed the casino and caused a disruption” in public spaces and on work time. 

Over four months after the union filed charges alleging that the discharges were unlawful, the NLRB filed a petition in District Court seeking a temporary injunction pursuant to Section 10(j) to reinstate the employees pending the outcome of the administrative hearing.

The District Court denied the petition because the evidence did not meet the “ just and proper” standard required by 10(j). The Court of Appeals affirmed ruling that the District Court did not abuse its discretion in making its decision. The Court of Appeals based its decision on the following: (1) almost all of the union authorization cards were returned before the discharges occurred; (2) as of the date of the District Court’s ruling, the union’s campaign was far from successful, the number of card collected being far short of a majority; (3) the Union waited four months after it filed charges to seek temporary injunctive relief (although it found that the time delay was not dispositive, it was strong evidence against granting the relief sought); and (4) injunctive relief sought under this section of the Act is considered to be extraordinary and “sparingly employed” because it acts to short-circuit the administrative process.

There are a number of takeaways that Hospitality Employers can learn from this case:

1.      The NLRB and its General Counsel will continue to seek temporary relief of this kind in order to put more pressure on employers to settle or agree to an order concerning the underlying allegations.

2.      Employers must be careful to keep close attention to the timing and documenting of its business justification of any adverse action it takes against employees, especially if the action is in close proximity to protected activity such as a union organizing campaign. This is especially true since the NLRB, under the Obama administration, has become more aggressive in prosecuting cases to enforce the provisions of the Act.  It is also especially true at this time since unions have increased their efforts to unionize employers in certain industries including the hospitality industry which is so labor intensive.

3.      If employers are faced with a petition for temporary relief initiated by the NLRB, they must be aware of the wide discretion that the District Court has in granting such relief even though it is considered “extraordinary relief.”  They should consult with Labor counsel to respond in an effective way.  If employers lose at the District Court level, it will be very difficult to overturn its decision on appeal.

By Adam C. Abrahms and Steven M. Swirsky

In another major defeat for President Obama’s appointees to the National Labor Relations Board (NLRB or Board), the US Court of Appeals for the DC Circuit found that the Board lacked the authority to issue a 2011 rule which would have required all employers covered by the National Labor Relations Act (the “Act”), including those whose employees are not unionized, to post a workplace notice to employees. The putative Notice, called a “Notification of Employee Rights Under the National Labor Relations Act,” is intended to ostensibly inform employees of their rights to join and be represented by unions and to engage in other activity protected by the Act. The rule would also have made it an unfair labor practice for an employer to fail to post the required notice and such failure also could be considered proof of anti-union animus in other Board proceedings.

Although proposed in 2011 and scheduled to become effective on April 30, 2012, the requirement has yet been put into effect. As we discussed previously, last year, the US District Court for the District of Columbia had held that the Board lacked the authority to make it an unfair labor practice for an employer to fail to post the notice, holding that this exceeded the Board’s authority under the Act. Just prior to the rule going into effect, the DC Court of Appeals issued an emergency injunction in support of the District Court’s opinion and the NLRB opted to not enforce the rule pending the appeal.

Perhaps what is most noteworthy about the Court’s recent opinion, authored by Senior Circuit Judge Randolph, is the Court’s reliance on employers’ free speech rights which are protected by Section 8(c) of the Act. That section of the Act ensures employers the right to communicate their views concerning unions to their employees. The Court noted that while Section 8(c) “precludes the Board from finding non coercive employer speech to be an unfair labor practice, or evidence of an unfair labor practice, the Board’s rule does both.” That is because under the rule an employer’s failure to post the required notice would constitute an unfair labor practice and the Board’s rule would have allowed the Board to “consider an employer’s ‘knowing and willful’ noncompliance to be ‘evidence of anti union animus in cases in which unlawful motive [is] an element of an unfair labor practice.”

The Court focused on the question of the right of employers to “free speech,” under both Section 8(c) of the Act and under the First Amendment to the Constitution, noting that the rule would have required employers to disseminate information and that “the right to disseminate another’s speech necessarily includes the right to decide not to disseminate it,” relying on analysis from prior Supreme Court and appellate court decisions which it referred to as “compelled speech” cases.

Interestingly, the Court’s conclusion that the Board’s rule violates Section 8(c) because it makes an employer’s failure to post the Board’s notice an unfair labor practice, and because it treats such a failure as evidence of anti-union animus, suggests the Board might be able to find an alternate route to a notice posting requirement if it did not seek to create such a remedy for an employer’s failure to post the notice. However, the Court refused to leave the portion of the Board’s rule requiring the Notice posting in effect even without the enforcement and remedial provisions, because they were an inherent part of the Board’s purpose in adopting the rule. For now the beleaguered Board will need to decide whether it wishes to appeal this decision to the Supreme Court, attempt to craft a new rule with the currently constituted Board that this same Court of Appeals has ruled was unconstitutionally appointed in its Noel Canning decision or postpone any action until a new Board is confirmed by the Senate.

By:      Kara M. Maciel

The EEOC is holding a public meeting tomorrow, May 8, 2013, to discuss wellness programs and how the EEOC should interpret them under the ADA, GINA and other laws. This is welcome news to the employer community, who has been left without any guidance from the agency since 2000 as to how it will enforce wellness programs. The uncertainty generated by this lack of guidance has hampered businesses from implementing, or expanding, effective wellness programs.   

As we have explained in previous articles, the EEOC regulations, and the EEOC’s Interpretive and Enforcement Guidance permit employers to conduct voluntary medical examinations, including voluntary medical histories, as part of a voluntary employee wellness program. In a formal 2000 Guidance, the EEOC stated that "[a] wellness program is ‘voluntary’ as long as an employer neither requires participation nor penalizes employees who do not participate." 

The employer community has long awaited guidance from the EEOC on the nature and extent of incentives it can offer in wellness plans.  Specifically, key questions that the agency has refused to address are (i) whether and to what extent a reward or incentive mandates participation in the program, or (ii) whether the withholding of the incentive for not participating constitutes a penalty, thereby making the wellness program involuntary. In a letter issued earlier this year, the EEOC did not take a position on this key question, and employers are hopeful the May 8 public meeting will begin the process towards meaningful EEOC guidance.

Wellness programs are becoming increasingly popular with employers as they struggle with rising health care costs and looking for ways to incentivize their workforce to adopt a healthier lifestyle. In recent years, wellness programs have received a renewed focus as a result of the Affordable Care Act which provides new incentives and increased flexibility. 

There are legal implications, however, if wellness programs are not established correctly that could run afoul of federal discrimination and state privacy issues. Under the ADA, employers are prohibited from asking disability-related questions or conducting medical examinations unless the inquiry is job related and consistent with business necessity. Generally a Health Risk Assessment (HRA) does not meet this standard. The ADA, however, does allow voluntary medical exams or inquiries as part of an employee health program at work. Employers also must provide reasonable accommodations, absent undue hardship, to those individuals who are unable to meet the health outcomes or engage in specific activities due to a disability. Under GINA, wellness programs that provide rewards for completing a HRA requiring disclosure of genetic information (including family medical history) is unlawful, even if the incentives are not based on the outcome of the assessment and regardless of the amount of the incentive. 

To date, the key to the EEOC’s guidance on wellness programs under both the ADA and GINA has been that any participation in the program or disclosure of health information must be voluntary. Hopefully, after tomorrow’s public meeting, the EEOC will provide clarity to employers that incentivize wide participation by individuals in effective workplace wellness programs. 

Evan Rosen and Mark M. Trapp of the Labor and Employment practice co-wrote an article titled “What To Know About ACA Collective Bargaining.”

Following is an excerpt:

For the unionized employer, the advent of the Affordable Care Act requires careful strategic thought about its impact on upcoming collective bargaining negotiations. Indeed, for companies with a unionized workforce, the ACA poses additional challenges and strategic considerations above and beyond those confronting nonunionized workforces.

Click here to read the full article.

We are pleased to announce the release of a new version of our Wage & Hour Guide app that puts federal and state wage-hour laws at employers’ fingertips. To download the app, click here

The new version features an updated main screen design; added support for iOS 6, iPhone 5, iPad Mini, and fourth generation iPad; improved search capabilities; enhanced attorney profiles; expanded email functionality for sharing guide content with others; and easier access to additional wage and hour information on EBG’s website, including the Wage and Hour Division Investigation Checklist  and other resources.  The new version continues to be offered at no cost.    

“The wage-hour app has proved to be an incredibly valuable tool for employers, answering many of their questions in seconds, while also providing them with a link to our wage-hour blog, where they can find developments in this ever important area of the law,” said Michael Kun, co-creator of the app and national Co-Chairperson of EBG’s Wage and Hour, Individual and Collective Actions practice group, in the Los Angeles office.

How Does the App Work?

Rather than searching through a variety of cumbersome resources to locate applicable wage and hour laws, users of the Wage & Hour Guide app can follow easy-to-navigate steps to find the answers to many of their questions, including citations of federal statutes, regulations, and guidelines, as well as those of California, the District of Columbia, Georgia, Illinois, Maryland, New York, Texas, and Virginia. The following state guides were added after the initial launch of the app: Connecticut, Massachusetts, and New Jersey.  To provide the best experience possible, the app enables users to download the guide to their iPhone or iPad device for reference anywhere, at any time, with or without a connection. 

Epstein Becker Green is pleased to announce its 2013 Hospitality Labor and Employment Breakfast Briefing Series

Where:                                  

Epstein Becker Green                         

Resurgens Plaza
945 East Paces Ferry Road
Suite 2700
Atlanta, GA 30326-1380

Time:

8:30 a.m.- Registration, Breakfast and Networking

9:00 a.m. - Briefing

10:30 a.m. - Question & Answer

MARK YOUR CALENDARS

May 8, 2013

Trade Secrets and Non-Competes for Hospitality Companies

June 12, 2013
Avoiding Wage and Hour Liability in the Hospitality Industry

September 11, 2013
Liability Under Title III of the ADA

October 9, 2013
How to Avoid Liability Through Enforceable Employment  Policies and a Well-Drafted Employee Handbook

Seating is limited.   Click here to register to attend the May 8, 2013 briefing

Questions? Contact Elizabeth Gannon or 202/861-1850

by: Adam C. Abrahms, James S. Frank, Kara M. Maciel, and Steven M. Swirsky

President Obama has taken action designed to bolster the National Labor Relations Board’s continuing move to bolster unions and take the National Labor Relations Act further into non-union workplaces. On April 9, 2013, President Obama announced his plan to submit three more nominees to serve the National Labor Relations Board (“NLRB”). If these and the two other pending nominations are confirmed this would bring the NLRB to its full complement of five Members. 

These new nominations – who must be confirmed by the U.S. Senate – were announced against the backdrop of the NLRB v. Noel Canning decision in which the U.S. Court of Appeals for the D.C. Circuit ruled that the NLRB now lacks constitutional authority to act because the recess appointments previously made by President Obama in January 2012 were not valid. The NLRB plans to appeal the D.C. Circuit’s decision to the U.S. Supreme Court by April 25, 2013. 

The three new nominations include the current NLRB Chairman, Mark Gaston Pearce, and two Republicans, Harry I. Johnson, III, and Philip A. Miscimarra, both lawyers in private practice. While Mr. Johnson and Mr. Miscimarra both have represented management over their careers, Chairman Pearce came to the NLRB from a practice representing unions.

Mr. Pearce has served as NLRB Chairman since August 2011, and has been a Board Member since March 2010.  Previously, Mr. Pearce, who started his career at the Board’s Buffalo, New York Regional Office in 1979, was a founding partner of Creighton, Pearce, Johnsen & Giroux from 2002 to 2010.  Before founding the Creighton, Pearce firm, Mr. Pearce worked as an associate and junior partner at Lipsitz, Green, Fahringer, Roll, Salisbury & Cambria LLP from 1994 to 2002.

Harry I. Johnson, III is a partner with Arent Fox LLP. Previously, Mr. Johnson worked at Jones Day from 1994 to 2010. Mr. Johnson received a B.A. from Johns Hopkins University, an M.A.L.D. from Tufts University’s Fletcher School of Law and Diplomacy, and a J.D. from Harvard Law School.

Philip A. Miscimarra is a partner with Morgan Lewis & Bockius LLP, a position he has held since 2005. Since 1997, Mr. Miscimarra has also been a senior fellow at the University of Pennsylvania's Wharton Business School.  Mr. Miscimarra received a B.A. from Duquesne University, an M.B.A. from the University of Pennsylvania’s Wharton School of Business, and a J.D. from the University of Pennsylvania Law School.

President Obama previously submitted the nominations of Richard F. Griffin, Jr. and Sharon Block, who are currently serving as Board Members but whose recess appointments were struck down as invalid by the D.C. Circuit in Noel Canning. Member Block came to the NLRB from the US Department of Labor. Both of those nominations are before the Senate.

WHAT HOSPITALITY EMPLOYERS SHOULD DO NOW

Considering that all five nominations must now be confirmed by the Senate, where the Republican minority has frequently blocked the President’s nominations, it is unclear how and when the Senate will respond, and whether the NLRB will enjoy a full complement of Members in order to conduct lawful business any time soon. Merely announcing the nominations will not pave the way immediately for a full, validly appointed NLRB. Indeed, it may not be until the next Congress, following the 2014 mid-term elections that the Senate even considers a package deal with the White House.  

If a compromise could be achieved and all five Members were sworn-in this year or next, the Board would continue with a liberal, union-friendly majority with Chairman Pearce and Members Griffin and Block. They could be expected to continue a pro-union agenda, which would certainly bring continued aggressive enforcement and further broadening of the Board’s view of protected, concerted activity and the Act’s application in non-union workplaces. Moreover, there will be many questions about whether a new NLRB will be able to cure prior decisions that were put into doubt by Noel Canning.   

For now, our advice and recommendations to hospitality employers remains the same as following the ground-breaking decision of Noel Canning. Employers should closely monitor how courts in their jurisdictions decide similar cases challenging the recess appointments, and watch how the Supreme Court will address it next term, should it take the NLRB’s petition for certiorari, while watching to see what happens in the Senate.   

By:  Kara Maciel and Elizabeth Bradley

On March 8, 2013, amendments to the Family and Medical Leave Act (“FMLA”) take effect which change the provisions governing military caregiver leave for veterans, qualifying exigency leave for paternal care, and job-protected leave for airline personnel and flight crews.

Relevant to hospitality employers, the amendments extend the right to take military caregiver leave to eligible employees whose family members are recent veterans with serious injuries or illnesses, and expand the definition of a serious injury or illness to include injuries or illnesses that result from preexisting conditions.  The amendments also expand the right to take qualifying exigency leave to eligible employees with family members serving in the Regular Armed Forces, and added a requirement that for all qualifying exigency leave the military member must be deployed to a foreign country.

All employers with more than 50 employees must post a revised FMLA poster no later than March 8, 2013.  The poster is available on the Department of Labor’s website at http://www.dol.gov/whd/regs/compliance/posters/fmla.htm

Presented by:  Gretchen Harders and Kara M. Maciel

Tuesday, March 5, 2013 at 12:00pm EST / 9:00am PST

To Register, please click here

Please join Epstein Becker Green’s Labor & Employment practitioners as we continue to review the Affordable Care Act and its ongoing impact on hospitality employers and their group health plans and programs.

This webcast will provide an update on the implementation of the law including planning for 2014 and beyond and will focus on how the law will impact hospitality employers both large and small, and what they should do now to plan for it.

During this program, Epstein Becker Green practitioners will:
 
• Review the ACA implementation timeline
• Discuss the structure of the law and basic concepts affecting hospitality employers 
• Discuss critical employer decision making and planning for 2014
• Review alternative plan design options available to hospitality employers
• New developments

Registration Is Complimentary and Reservations are Limited

Don't Miss This Opportunity!   To Register, please click here.

By: Allen B. Roberts

I wrote the February 2013 version of Take 5 Views You Can Use, a newsletter published by the Labor and Employment practice of Epstein Becker Green. In it, I discuss an alternative view of five topics that are likely to impact hospitality employers in 2013 and beyond. One topic involved the potential for labor organizing by pop-up unions in break-out units.  

Despite some perceptions of cohesiveness and political acumen, influence and wherewithal following the 2012 election cycle, labor unions represent only about 7.3 percent of the private sector workforce in the United States, and only 6.6 percent of workers are actually union members. When concentrations in certain industries and geographic areas are factored, that leaves entire swaths entirely union-free, or substantially so.

Foreseeably for the next four years, unions will continue to benefit from a National Labor Relations Board ("NLRB") that has innovated changes in substantive law and introduced procedures during the past four years that facilitate organizing and restrict the time for responsive employer communications. That advantage has not yet translated into material membership gains by "Big Labor"—although it may still.

However, together with other breakthroughs by way of social media and electronic and physical access to employer premises and communications systems, expanded interpretations of protected concerted activity, and such movements as Occupy Wall Street and grass roots organizations, conventional unions may be eclipsed, if not displaced, by one-off, special purpose organizations formed solely to serve discrete affinity groupings of employees in new bargaining units. If this occurs, it will be enabled by two bedrock principles of the National Labor Relations Act ("NLRA"), aided by a recent interpretation in case law.

First, notwithstanding the attention given by supporters and critics alike to large, well-financed conventional unions with institutionalized structures and processes, the NLRA defines a "labor organization," capable of winning certification as the exclusive representative of employees, to mean any body that exists, in whole or in part, for the purpose of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work. This means that an outside force, planning and funding offsite meetings and campaigns, is not necessary; something as simple as a homegrown pairing or grouping of workers having common interests or worries could qualify as a labor organization.

Second, with respect to the NLRB's formulation of a unit appropriate for collective bargaining purposes, it is not necessary that the unit be the most appropriate or that it conform to management's organizational structure. Historically, the NLRB has been mindful of its authority to make determinations of the unit appropriate for purposes of collective bargaining, consistent with legislative policy assuring that employees have the "fullest freedom" in exercising statutory rights to organize. If it survives Circuit Court of Appeals challenge on review, an NLRB standard adopted in 2011 could lead to a proliferation of small, fractionated bargaining units; it would place the burden on an employer contesting the appropriateness of a labor organization's preferred bargaining unit to show that employees excluded from the unit sought by the petitioning labor organization share an "overwhelming community of interest" with another readily identifiable group. If a readily identifiable group exists based on such factors as job classification, department, function, work location, and skills, and the NLRB finds that the employees in the group share a community of interest, the petitioned-for unit will be an appropriate unit, despite an employer's contention that employees in the unit could be placed in a larger unit that also would be appropriate—or even more appropriate.

Much as the NLRB's approach has been perceived to benefit large, established unions, it may not be surprising if employee groups, newly aware of the NLRB's outreach and enlargement of rights to engage in protected concerted activity through social media and other means, realize also that they are capable of becoming homegrown, single-purpose labor organizations with authorization from the NLRB to define a bargaining unit by its lowest common denominator—or to invade and fractionate existing bargaining units currently represented by Big Labor.

For more Take 5 Views You Can Use, read the full version here.

By Michael Kun

We have written previously in this blog about California’s obscure “suitable seating” law, which requires that some employers provide “suitable seating” to some employees.

In short, the plaintiffs’ bar recently discovered a provision buried in California’s Wage Orders requiring employers to provide “suitable seating” to employees when the nature of their jobs would reasonably permit it. The provision was not designed to cover employees in the hospitality industry who often stand to show that they are ready to assist customers. Instead, it was written to cover employees who normally worked in a seated position with equipment, machinery or other tools. Nonetheless, employers in a variety of industries have been hit with class actions alleging that they have violated those provisions – and those cases are typically brought by a single plaintiff who was well aware that the employer expected him or her to be standing while performing the job at the time he or she applied. Just as typically, those employees have not even requested a seat before filing suit.

Now, reversing a district court decision that dismissed a “suitable seating” class action on the grounds that there had been no request for a seat, the Ninth Circuit has held that an employee need not request a seat to be entitled to one.

The Ninth Circuit explained that the district court had read into the Wage Orders something that was not there – a requirement that employees affirmatively request seats. Importantly, the Ninth Circuit expressly declined to comment on whether the nature of the work would reasonably permit seats in the case at issue. As before, it appears that will be the dispute in most “suitable seating” cases.
 

Epstein Becker Green is pleased to announce the availability of a Wage and Hour Division Investigation Checklist, which provides hospitality employers with valuable information about wage and hour investigations and audits conducted by the U.S. Department of Labor (DOL). Like EBG’s first-of-its kind Wage and Hour App, which provides detailed information about federal and state laws, the Checklist is a free resource offered by EBG.

The Checklist provides step-by-step guidance on the following issues: preparation before a Wage and Hour Division investigation of the DOL; preliminary investigation issues; document production; on-site inspection activities; employee interviews; and back-wage findings, and post-audit considerations.

“The multitude of wage and hour claims and lawsuits that workers have filed under the Fair Labor Standards Act and its state law counterparts have made wage and hour law the nation's fastest growing type of litigation. And federal and state agencies are investigating and pursuing wage and hour claims more aggressively than ever,” said Michael Kun, the national Co-Chairperson of the firm's Wage and Hour, Individual and Collective Actions practice group. “We hope that our Checklist will serve as an important resource for hospitality employers to use when confronted with an audit – and perhaps help them avoid an audit altogether.”

               Click Here to Download EBG's Wage and Hour Division Investigation Checklist

 by: Adam C. Abrahms, Kara M. Maciel, Evan J. Spelfogel and Steven M. Swirsky

In a time when employers do not receive much good news out of Washington D.C., the U.S. Court of Appeals for the D.C. Circuit may have given some very welcome relief to employers facing issues before the National Labor Relations Board (“NLRB” or “the Board”) in light of recent precedent reversing NLRB decisions.  Quoting from early Constitutional authority including The Federalist Papers and Marbury v. Madison, the D.C. Circuit ruled today that President Obama’s “Recess Appointments” of three new NLRB members in January 2012 were unconstitutional and as a result the Board lacked any constitutional authority to act since that time. Noel Canning v. NLRB

In a unanimous panel decision written by Chief Judge Sentelle that The New York Times called “an embarrassing setback for the President,” the Court analyzed two constitutional questions, both focusing on whether the Board lacked authority to act because three Board members were never validly appointed. The first issue examined whether the Senate was “in Recess” when the appointments were made, and the second whether the vacancies these three members purportedly filled “happen[ed] during the Recess of the Senate,” as required for recess appointments under the Constitution.

As to the first issue, after dissecting the Board’s arguments, the Court ruled that “the Recess” referred to in the Constitution to permit a presidential recess appointment is limited to the Recess between Sessions of the Senate and does not include brief adjournments or other intrasession recesses. Likewise, the Court ruled that the power to appoint during the Recess was limited and could only be issued if the vacancy both first arises (i.e, “happened”) during the Recess and also was filled during that Recess.

Noting that the Board conceded on appeal that the appointments at issue were not made during the intersession Recess because the President made them on January 4, 2012, after Congress began a new Session on January 3, 2012 and while that new Session continued, the Court held that “[c]onsidering the text, history and structure of the Constitution, these appointments were invalid from their inception.”

The Court also found, and the parties did not dispute, that based on the Supreme Court’s ruling in New Process Steel, L.P. v. NLRB,if the vacancies were not properly and lawfully filled, the Board would only be left with two valid members and would therefore be left without a quorum to act. Consequently, the Court ruled conclusively that the Board’s order in the underlying case was “outside the orbit of the authority of the Board because the Board had no authority to issue any order [because] it had no quorum,” stating that the “lack of quorum raise questions that go to the very power of the Board to act and implicate[s] fundamental separation of powers concerns.”

The Court further rejected any argument that its ruling otherwise would make government inefficient through an ineffectual federal agency, stating: “The power of a written constitution lies in its words. It is those words that were adopted by the people. When those words speak clearly, it is not up to us to depart from their meaning in favor of our own concept of efficiency, convenience, or facilitation of the functions of government.”

In short, the Court vacated the Board’s order, finding that the company’s “understanding of the constitutional provision is correct, and the Board’s is wrong. The Board had no quorum, and its order is void.” 

This decision, which certainly will be appealed to the U.S. Supreme Court, provides much anticipated relief to business groups and employers who have been struggling with the aggressive, pro-labor agenda of the current Board. It also leaves the Board with only one validly appointed member, Chairman Mark Pearce, whose term is set to expire in August 2013, effectively shutting the Board down with respect to any ongoing activity. That’s good news for employers who were anticipating new regulations on the speedy election rule or the notice posting requirement. In addition, for those Board rulings that have been issued since January 4, 2012, there is a strong argument that those decisions are similarly invalid, certainly if those cases are pending within the jurisdiction of the D.C. Circuit. 

WHAT EMPLOYERS SHOULD DO NOW

All employers with cases pending before the Board or on appeal should review this decision closely with legal counsel to examine its impact on current cases and potentially cases recently decided but yet appealed. NLRB Chairman Mark Pearce issued a statement today in response to and disagreeing with the Court’s decision, “the Board will continue to perform our statutory duties and issue decisions."

Epstein Becker Green will follow future developments.

Andrea R. Calem and Frank C. Morris, Jr. have released an Act Now Advisory  - DOJ Serves Notice: Celiac Disease and Severe Allergies Now Classified as Disabilities Under the Americans With Disabilities Act, Creating Far-Reaching Implications for Virtually Every Facility Serving Food.    

Following is an excerpt:

A recent settlement agreement between the United States Department of Justice (“DOJ”) and Lesley University in Cambridge, Massachusetts explicitly extends the protections of the Americans with Disabilities Act (“ADA”) to individuals with severe allergies and autoimmune conditions such as celiac disease. The position of the DOJ Civil Rights Division reflected in this precedential settlement agreement shows that every entity serving food to the public, leasing to those who serve food and even employers with cafeterias must consider how ADA requirements may affect what food is offered, how it is prepared and even how it is stored.

Read the full advisory on the Epstein Becker Green website.