A major new court decision could remake federal labor law for years to come. This decision – issued on July 21 by the U.S. Court of Appeals for the D.C. Circuit – signals that courts may soon revisit many longstanding legal standards governing labor law issues. The decision also highlights a new route for parties to appeal a broad range of cases decided by the National Labor Relations Board (NLRB).
As background, the case involved an employer who sought to challenge the NLRB’s “successor bar” doctrine. Under this doctrine, when a new business owner assumes the prior owner’s union obligations as a “successor,” the new owner cannot challenge that incumbent union’s status as its employees’ representative for one year. In this case, the new owner’s employees provided evidence that they had rejected the union, so the new owner stopped recognizing that union. The NLRB applied its successor bar and held that the employer violated the National Labor Relations Act (NLRA). After the employer appealed, the U.S. Supreme Court decided Loper Bright, which rejected the longstanding doctrine that afforded administrative agencies considerable insulation against challenges to their determinations and created a new standard for courts to review federal agency decisions on legal questions. The Court ordered the D.C. Circuit to review the NLRB’s successor bar under Loper Bright.
When the D.C. Circuit applied Loper Bright, that changed everything. The court noted that, under Loper Bright, courts should not defer to an agency’s decision about this type of legal question. Rather, the court should independently determine whether that agency-created doctrine is consistent with the agency’s statutory authority. Ultimately, the court held that the NLRB’s successor bar doctrine contravenes the NLRA, including the NLRA text conditioning a union’s status on the union having support from “the majority of employees.” Even if this decision simply overturned the successor bar, that alone would be significant. But this decision will create far broader consequences.
There are three key reasons why this decision signals major shifts to federal labor law. First, a party can appeal almost any NLRB order in an unfair labor practice case to the D.C. Circuit. Second, most labor law issues are governed by legal standards that the NLRB created. Third, courts have not yet reviewed the vast majority of those NLRB standards under Loper Bright. Therefore, this decision will strongly incentivize parties to appeal a litany of other NLRB-created standards, and they can file those appeals with a tribunal that showed it will scrutinize those standards far more closely than courts had done previously.
For now, here are the takeaways for NLRA-covered employers (i.e., most private-sector employers in the U.S.):
- If you are currently litigating a ULP case before the NLRB, or if you recently litigated and still have time to appeal, you should consider whether to challenge the legal standard the NLRB applied in deciding the case.
- You should closely monitor the litigation of this recent case, along with other cases that challenge existing NLRB legal standards on the basis of Loper Bright. It remains possible that the D.C. Circuit’s full panel will review this three-judge decision, or that the U.S. Supreme Court ultimately will provide more clarity about how Loper Bright applies to NLRB standards that purportedly stem from the NLRA. In the meantime, however, federal courts likely will revisit many other longstanding NLRB doctrines under Loper Bright. There is good reason to believe this will trigger new standards about a litany of other common labor law issues, such as whether certain types of employee conduct constitute protected concerted activity, whether certain types of employer actions unlawfully interfere with employee rights and whether certain acts by employers and unions violate their statutory duties to bargain in good faith.
- As you are planning your compliance strategy internally, you should take into account the fact that labor law could substantially change in the near future. This particular case only overturned the NLRB’s successor bar, but there are myriad other NLRB-created doctrines that have just as tenuous of a connection to the NLRA’s text. Generally, to the extent this causes existing NLRB legal standards to change, they likely will change in a way that reduces restrictions rather than increasing them, but it is difficult to predict exactly what will change. Employers should consult with counsel in order to ensure they appropriately account for this in their compliance strategies.
