The NLRB wields its rulemaking authority: the new face of representation elections.

• Jurisdiction: United States
• Date: 22 December 2011
• Author: McHenry, Amanda

"Big Labor has found faithful friends on the Obama N.L.R.B., who are working hard to fix a process that isn't broken." (1)

INTRODUCTION

In June 2011, a majority of the National Labor Relations Board ("NLRB" or "Board") proposed radical revisions to its representation election procedures. The final rules were published in the Federal Register on December 22, 2011 and will take effect on April 30, 2012--less than one year after they were first proposed. The unprecedented controversy that followed the June announcement involved a two-day public Board meeting, legislation intended to block the undesirable effects of the proposed amendments, and at least one federal lawsuit. This latest--and radical--attempt at substantive rulemaking has left many observers questioning the legitimacy of the Board itself.

This Comment analyzes the substance of these amendments, their practical effect on all parties, and the reasons for their enactment. This Comment concludes that the amendments are unprecedented, sweeping, and unfair; they put employers at an extreme disadvantage in their ability to express their views about unionization, and, as a result, deprive employees of their right to make an informed decision. Part I provides a brief overview of the National Labor Relations Act ("NLRA"), (2) focusing on its main provisions; the NLRB, and its function as an adjudicative versus rule-making body; and finally, the NLRB's existing representation election procedures. Part II then explores the significant decline in union membership and considers whether that decline can be attributed to an unfair election process. Part III details the substantive changes made to representation elections through the Board's amended election rules, as well as what the Board intends to accomplish with these new rules, and analyzes whether these new amendments effect a positive or negative change. Part III also analyzes the reaction to and controversy surrounding the proposed amendments and criticizes the Board's reasoning and its hasty decision-making process.

1. BRIEF OVERVIEW OF THE NLRA, NLRB, ITS ADJUDICATIVE VERSUS RULEMAKING FUNCTION, AND REPRESENTATION ELECTION

   The NLRA is the principal law governing relations between labor organizations and private-sector employers engaged in interstate commerce. (3)

   1. The NLRA Is Born and Its Constitutionality Is Upheld

      The NLRA was enacted in 1935 with the passage of the Wagner Act. (4) In order to promote commerce and alleviate industrial strife, (5) the Act made explicit employees' rights to organize and bargain collectively. Specifically, the Act provided that "[e]mployees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purposes of collective bargaining or other mutual aid or protection." (6) The NLRA also affirmed employees' right to strike, curtailed private sector labor and management practices that could injure both individual employees and the national economy, prescribed the process for representation elections, created the NLRB, and provided for judicial enforcement and review of Board orders. (7)

      The Commerce Clause, which gives Congress the power "[t]o regulate Commerce ... among the several States, (8) is the constitutional basis for the Act. (9) Professor William B. Gould IV of Stanford Law School (10) noted that "[t]he constitutional theory upon which the [Act] is predicated is that statutory regulation of labor and management is necessary to diminish industrial strife that could disrupt interstate commerce." (11) The Supreme Court, in NLRB v. Jones & Laughlin Steel Corporation, (12) upheld the Act. Chief Justice Hughes's majority opinion rejected the idea that labor relations had only an indirect effect on interstate commerce:

      When industries organize themselves on a national scale, making their relation to interstate commerce the dominant factor in their activities, how can it be maintained that their industrial labor relations constitute a forbidden field into which Congress may not enter when it is necessary to protect interstate commerce from paralyzing consequences of industrial war? (13) Because the ability of employees to bargain collectively is "an essential condition of industrial peace," the Court held that the national government was justified in penalizing employers that "[r]efus[ed] to confer and negotiate" with their employees. (14)

   2. The NLRB

      The NLRA is administered by the NLRB. The Board is principally charged with conducting representation elections and investigating unfair labor practices. (15) However, the Board also has the power to adjudicate cases when the NLRB Administrative Judge decision is appealed. (16) A panel of three Board members usually decides these cases; but the full Board will hear those that are "novel or potentially precedent changing." (17) Case-by-case adjudication is the primary method by which the Board exercises its policy-making authority. (18)

      The Board is typically comprised of five members. (19) Each member is appointed for a five-year term by the President, subject to Senate approval, with one member's term expiring each year. (20) But when the Board amended its election procedures in 2011, the Republican-controlled Senate had blocked each of President Obama's nominations and, as a result, the NLRB was composed of only three members. (21) President Obama named Mark G. Pearce, already a Board member, Chairman after Wilma B. Liebman relinquished the position at the expiration of her term. (22) Pearce's term will expire in August 2013. (23) Brian Hayes, the only Republican Board member, will lose his position in December 2012. (24) The term of the third Board member, Craig Becker, a recess appointment, (25) expired in January 2012. (26) The composition of the Board is an important preface to a discussion of the Board's revisions to its representation election procedures because the position taken by each member during the comment period bears on this Comment's analysis that the revisions are largely defective.

      1. The NLRB's Rulemaking Authority

         The Board undoubtedly possesses substantive rulemaking power. This power is rooted in section 156 of the Act: "The Board shall have authority from time to time to make, amend, and rescind, in the manner prescribed by [the Administrative Procedure Act], (27) such rules and regulations as may be necessary to carry out the provisions of this [Act]." (28) In American Hospital Association v. NLRB, a unanimous Court upheld the Board's substantive rulemaking authority. (29) In that case, the Board had promulgated a rule to define the scope of collective bargaining units in healthcare facilities. (30) The Court held that the Board's "broad rulemaking" powers (31) under section 156 were "unquestionably sufficient to authorize the rule at issue." (32) In sustaining the rule, the Court noted the "extensive notice and comment rulemaking conducted by the Board, its careful analysis of the comments that it received, and its well-reasoned justification for the new rule." (33)

         The Board also has broad discretion to choose whether to exercise its rulemaking authority or rely exclusively on adjudication. (34) As one commentator explained, "[this choice] probably does not reflect a straight-forward effort to identify the method that will produce the best substantive decision. The agency will be primarily concerned with choosing a policy-making method that will allow it to be efficient and yet survive judicial review." (35) Nevertheless, courts defer to this choice because they understand that agencies, given the minefield in which they must operate, are in the best position to choose the appropriate course of action. (36) Notably, the NLRB has relied almost exclusively on case-by-case adjudication. (37) In enacting comprehensive changes to its representation election rules, the Board disregarded this self-imposed tradition.

      2. A Preliminary Analysis: Rulemaking as a Superior Law-Making Mechanism

         Many commentators recommend that the Board enact more law through formal rulemaking instead of case-by-case adjudication. (38) In particular, rulemaking would produce stability and confidence in Board rules, ensure political accountability, and enhance policy making.

         The primary benefit of rulemaking is that it would produce stability and confidence in Board rules. Adjudication provides little guidance to regulated parties or the agency itself. As one commentator observed, "[u]nless the adjudicatory decision is distorted with dictum on situations not involved in the case being decided, both agency and regulated public must resort to reading a line of cases and formulating from them a statement of the principles or policies followed by the NLRB with respect to a particular matter." (39) Rulemaking would enable laypersons and lawyers alike to understand and adhere to Board rules. (40) The process would also give those subject to the rules greater confidence that the rules will not transform with each new administration. (41)

         The rulemaking process would also ensure political accountability. It may be unclear, in the course of a particular adjudication, whether the Board is making an important policy decision. (42) Conversely, if it were to utilize rulemaking, the Board could not avoid political accountability by masquerading important policy decisions as facts specific to an individual adjudication. (43)

         The Board's use of formal rulemaking, therefore, would be a welcome departure from its customary reliance on case-by-case adjudication. Indeed, some members of the public applauded the Board for its most recent use of the process to propose amendments to the representation election process. Professor Lofaso, for instance, said that "[t]he Board should be commended for acting under its statutory rulemaking authority to modernize outdated and confusing rules."...