Chaos At The NLRB

There's major trouble in "them thar hills," folks. Yesterday, in a 5-4 decision, the U.S. Supreme Court held that the National Labor Relations Board (the "NLRB") lacked authority to issue nearly 600 decisions during the last two years when it had only two members.

The case is New Process Steel v. National Labor Relations Board (08-1457). It involved a steel processing plant that unilaterally withdrew recognition from the Machinists Union. The two-member Board ordered the employer to recognize the Union, abide by a collective bargaining agreement negotiated previously, and pay employees for lost income. On appeal, the employer challenged the authority of the NLRB to issue its decision with a two-member panel.

Section 3(b) of the National Labor Relations Act (the "Act") provides, in pertinent part, that "three members of the Board shall, at all times, constitute a quorum of the Board, except that two members shall constitute a quorum of any group [to which the NLRB has delegated powers]." Given that statutory language, the issue before the Court was whether two members constituted a quorum, or whether at least three members were required to issue a decision. By way of background, in 2007, there were 4 members of the NLRB and 1 vacancy. As a result of problems with Congressional confirmation of NLRB nominees and attrition due to the expiration of member terms, that Board delegated its authority to a three-member panel, of which two constituted a quorum ostensibly.

The Court, in New Process Steel, held that the NLRB lacked authority to issue a decision with less than three members, and stated that if Congress had intended for the NLRB to act with only two members, it would have said so in clear language. I think the Court missed it on this one since Section 3(b) of the Act contemplates that the NLRB can continue to operate in what amounts to an extraordinary circumstance with a two-member quorum. That's essentially what the dissent argued.

So, what does this all mean? Plenty! First of all, about 75 to 80 cases pending in the lower courts will be returned to the NLRB where those cases challenge the validity of the two-member NLRB decisions. Next, there are approximately 500 cases which may be void (i.e., those which did not raise the issue of legitimacy on appeal, and where the parties complied or are in the process of complying with the decision without appeal).

In my opinion, those who failed to challenge decisions based on the lack of authority issue likely have waived any right to overturn them on that ground now. Moreover, those parties who complied or are in the process of complying with a two-member NLRB decision are likely to now disregard that decision. This could mean that employees who were ordered reinstated may have their employment terminated, and employees whose terminations were upheld previously may attempt to get their jobs back. Also, the results of secret ballot elections certified by the two-member panel are likely to be called into question. And, what about those employers who were ordered to provide back-pay? Will they/can they now attempt to recoup those monies from the employees?

This is a real mess.