Companies Dispute NLRB Officials’ Power When Board Lacks Quorum

Employers are contesting NLRB’s regional directors’ authority to rule in union representation cases while the board lacks a quorum, planting the seeds for future challenges to the agency’s ability to function the next time it’s short board members.

At least nine companies, including SeaWorld’s Discovery Cove and Recreational Equipment Inc., have pending requests for the National Labor Relations Board to review regional directors’ decisions in union election cases, according to a Bloomberg Law review of the agency’s docket. The employers argue that RDs can’t wield authority that was delegated from the board when the board itself is offline.

But the board must wait until it regains its quorum to rule on the employers’ requests—and it’s unlikely to side with the companies—signaling that businesses are raising the argument now to eventually get it before courts, labor law observers said.

Beyond helping employers stave off unions, winning court challenges to the NLRB’s delegations of power would limit what the agency can do the next time the board drops below its three-member minimum needed to decide cases, they said.

“The purpose of defeating the internal delegations to RDs would be to further impede the work of the agency, to stifle what the agency can do,” said Matthew Bodie, a labor law professor at the University of Minnesota and a former NLRB lawyer.

The board dipped below its membership minimum after President Donald Trump fired member Gwynne Wilcox in late January—the first time a president ever dismissed an NLRB member. The US Supreme Court’s preliminary endorsement of Trump’s moves to expand his removal power of agency officials raises the specter of the board losing its quorum more frequently in the future.

The agency has continued many of its functions while the board is without quorum via a series of delegations that vest NLRB members’ authority in other officials. Some of those delegations are specifically designed for times when the board is paralyzed, such as granting regional directors the power to certify union election victories.

Employer attempts to disrupt RD delegations “sure feels like chaos work,” said Michael Duff, a labor law professor at the University of St. Louis and former NLRB lawyer.

“It’s another way to throw a wrench into the NLRB’s gears,” said Duff. “There must be a temptation to throw all kinds of wrenches into the NLRB’s gears, just to see what happens and assess how courts react to these arguments.”

Preserving the Argument

Regional directors perform different roles in unfair labor practice cases and union representation cases, acting as a prosecutor in the former and an adjudicator in the latter. RDs get their authority to rule on union election disputes through power that’s delegated from the board.

Many of the companies that have challenged regional directors’ exercise of that power are represented by some of the largest management-side labor and employment firms, including Littler Mendelson PC, Fisher Phillips LLP, Seyfarth Shaw LLP, and Morgan, Lewis & Bockius LLP.

Attorneys for the employers that filed challenges didn’t respond to requests for comment.

Companies including Seaworld, United Insurance Company of America, and Sharp Staffing Resource Network have asked the board to review RD certifications of union election wins.

Objecting at the NLRB level to regional directors’ ability to rule when the board has no quorum preserves that argument, ensuring companies can raise it if they go on to challenge certification in federal appeals court, said Rebecca Dormon, a labor relations consultant at People Results and former NLRB assistant regional director.

Decertification Cases

Other employers like REI have challenged RD orders granting unions’ requests to block decertification petitions seeking to eject them from workplaces.

There’s no direct, well-established path for a decertification petitioner to get federal court review of such a blocking order.

Still, raising the challenge is an additional way for an employer to underscore that there’s been an illegal delegation of power at the board as part of an attempt to get court intervention through other means, Duff said.

The Supreme Court’s 1958 ruling in Leedom v. Kyne allows parties to file in district court to contest board orders that exceed its powers and run contrary to the National Labor Relations Act.

Legal Debate

The NLRB rejected the argument that regional directors can’t exercise delegated power when the board lacks a quorum in the wake of the Supreme Court’s 2010 decision in New Process Steel v. NLRB, which established that a quorum needs at least three members.

Several federal appeals courts have affirmed the NLRB’s conclusion that RDs and the general counsel can wield delegated power when the board is out of commission. That includes the US Court of Appeals for the District of Columbia Circuit, as well as the Fourth, Fifth, Eighth, and Ninth circuits.

But companies currently raising challenges said prior rulings were based on courts deferring to the NLRB’s reasonable interpretation of an ambiguous provision of the NLRA under Chevron USA v. National Resources Defense Council. The Supreme Court last year overturned Chevron in Loper Bright Enterprises v. Raimondo., making those rulings inapplicable, employers said.

The rulings from the D.C., Fourth, and Eighth circuits cited Chevron, while those from the Fifth and Ninth circuits didn’t.

Employers frequently cited the NLRA section requiring the board to have a quorum to use its authority.

“Since the Board’s powers can only be exercised by a three member quorum, it defies common sense to suggest a two member Board can delegate authority when the Board as the actual decision maker cannot act on that very decision,” WinCo Holdings Inc. said in its request for review.