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Jan 28, 201306:24 AMForward HR

with Diane Hamilton and Nilesh Patel

Court rules NLRB has no power

Court rules NLRB has no power

(page 1 of 2)

The current National Labor Relations Board has been upending settled employment practices at a furious rate. Legal karma may have caught up to the agency and the Obama administration, with both facing an unsettling legal ruling upending a decades-old practice of presidents making executive appointments during Senate recesses. On Jan. 25, 2013, the U.S. Court of Appeals for the D.C. Circuit ruled that recent board members were appointed in an unconstitutional manner and the board has not had a quorum to conduct any business since January 2012.

Rare constitutional challenge rescues the employer

The case came about when a union at Noel Canning, a bottler and distributor for Pepsi-Cola, filed unfair labor practice charges against the company. The company lost in front of the administrative law judge (ALJ) and the board affirmed the decision. The company appealed and would have lost if it had had to rely on the arguments presented to the ALJ. However, the company was able to persuade the court on some unprecedented arguments.

The company raised two constitutional arguments challenging the board’s authority to validate and ultimately uphold the ALJ’s decision. The company had not raised the constitutional arguments prior to the appeal, and usually this would mean an appellate court would ignore them, absent extraordinary circumstances. In addition, there was no direct precedent here to support the company’s argument. However, relying on an analogous case challenging an agency’s jurisdiction, the court ruled there are extraordinary circumstances if there are questions about an agency’s ability to exercise its authority.

The court then considered two constitutional arguments, both leading to the conclusion the board did not have the statutorily required quorum to take any actions.

Invalid recess appointments

The board is composed of five members and needs three for a quorum. The company argued that on the day the board affirmed the ALJ’s decision, there was no quorum because only two of the board members had valid appointments.

President Obama had appointed three board members under recess appointments. Under the Recess Appointments Clause of the U.S. Constitution, presidents can temporarily fill vacant positions while the Senate is in recess, which is supposed to allow the government to keep functioning. Recess appointments only last until the end of the next session of the Senate. A key benefit, sought regularly in modern times, is that a president can fill a position without seeking the advice and consent (or experiencing obstruction) of the Senate.

The 112th Congress had two sessions, and in order to thwart recess appointments, the Senate did not adjourn, instead staying in session for the most part only as a formality. President Obama appointed three board members during this time, on Jan. 4, 2012. The company argued recess appointments have to happen during an intersession recess, when the Senate is actually away and unable to receive and act upon nominations. The court agreed and ruled that since the appointments happened while the Senate was still in session, the board did not have quorum.

The court could have, and perhaps should have, stopped its analysis after accepting the first argument. Instead, it kept going and in the process made an even broader ruling: To make a recess appointment, the vacancy must happen or occur during that specific intersession recess.

Two of the recess appointments to the board immediately failed to meet this standard because the vacancies occurred on Aug. 27, 2010 and Aug. 27, 2011, while the Senate was in regular session. The last vacancy happened on Jan. 3, 2012 but did not qualify since the Senate had not adjourned.

The court did not address and did not seem troubled by a thorny question: Is there a constitutional problem, perhaps affecting separation of powers, where the Senate can obstruct the president’s authority to make appointments during a regular session and can then interfere with recess appointments by refusing to adjourn? As it stands, the Senate does not appear to have formally adjourned, using the term sine die, since the 111th Congress began on Jan. 6, 2009.

Legal impact

The court’s ruling suggests that essentially any formal action that required the board’s authority will require review. All of the board’s final actions since Jan. 4, 2012 are suspect, including any actions approving ALJ decisions.

Currently, there are only three members on the board, with two considered invalid appointments. The remaining member, Chairman Mark Gaston Pearce, should not be able to exercise the board’s powers. However, Chairman Pearce released the following statement:

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About This Blog

 Diane Hamilton, PCC, SPHR, is the owner and founder of Calibra, a coaching and consulting firm focused on maximizing leadership potential. Nilesh Patel is the principal attorney of the Mahadev Law Group, LLC, which focuses on human resources and employment law issues for organizations. He can be reached at npp@mahalawgroup.com. Both bloggers are members of Wisconsin SHRM, which is dedicated to being the state leader in HR management and the premier source for HR expertise and resources. More information can be found at www.wishrm.org. You can follow the WI SHRM blog at http://wishrm.wordpress.com.

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