One of the hottest labor issues in Washington is whether the President exceeded his powers on January 4, 2012 when he unilaterally filled three vacancies on the National Labor Relations Board. Two of the Obama appointees were openly pro-union Democrats with significant ties to organized labor. The other was a Republican, who resigned on May 26, 2012 in the midst of an ethics investigation.

Those who opposed these so-called "recess appointments" argued that what the President did was illegal because the Constitution requires U.S. Senate approval of NLRB appointments. The Administration countered that it was able to bypass the approval process because the Senate was not really in session at the time the President made the appointments.

Last Friday, a three-member panel of the federal appeals court in Washington issued a major ruling on the issue. The court said that the President did not have the legal authority to make the disputed "recess appointments" because the Senate was actually "in session" both when the three vacancies occurred and when President Obama filled them. This is a stunning defeat for the Administration. It is expected that the NLRB will ask the full court to rehear the matter. Failing that, the Administration will likely appeal the ruling to the U.S. Supreme Court.

The legal question may seem like a purely academic one, but it's not. Indeed, there is a lot at stake for both unionized and non-union employers alike. Since last January, the recess appointees have been at the forefront of one anti-employer decision after another, reversing NLRB precedent as far back as 1962. If the recess appointees were not properly appointed to their posts, then all of their decisions become invalid because the law says that the NLRB cannot legally issue decisions unless it has a legally constituted quorum (a least three lawfully appointed Members). Without the recess appointments, the NLRB only had two confirmed Members (which was reduced to only one confirmed member on December 16, 2012).

Some of the NLRB's controversial decisions that may ultimately be invalidated include:

• attacks on common sense employer restrictions on what employees may say about their employer and co-workers on social media;

• requiring an employer to continue giving wage increases even after the union contract has expired;

• finding an employer committed an unfair labor practice by not responding to a union's request for information even though the union was not entitled to demand the information;

• making NLRB awards more expensive by requiring employers to pay an employee's extra taxes on lump sum payments of back wages;

• requiring employers to continue deducting union dues from employees' pay after a union contract expires;

• requiring employers to bargain with the union over each employee disciplinary action before reaching a first agreement;

• requiring union members to pay part of the union's lobbying costs even if they object to union dues being used for that purpose; and

• requiring employers to give the union confidential witness statements in employee disciplinary matters.

Shortly after the court's decision was issued the NLRB Chairman said the Board will continue to decide cases. Thus, the Board is going to disregard the court's ruling unless the agency is ordered to follow it. If you have a case before the NLRB, we recommend that you consult with counsel to determine how best to preserve the company's rights in light of the uncertainty surrounding the NLRB's authority to act.

We will continue to monitor developments in this matter. As always, please call your contact at the Firm if we can be of any assistance.

Sincerely,

RR

Founding Partner

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