Checks & balances

What the Noel Canning decision means for employers and the National Labor Relations Board

On Jan. 25, 2013, the D.C. Circuit Court of Appeals held in Noel Canning v. National Labor Relations Board that President Obama's appointments of Sharon Block, Terence Flynn and Richard Griffin to the National Labor Relations Board (NLRB) Jan. 4, 2012, violated the Constitution's Recess Appointments Clause and were, therefore, invalid.

Under NLRB precedent, the board must have at least three sitting members to take any enforcement action. With three of the five board members' appointments deemed void after the Noel Canning ruling, the board does not have the three-member quorum it needs to officially function, stripping it of the authority to issue decisions and engage in rulemaking. As a result, the D.C. Circuit Court of Appeals' holding may invalidate all decisions and orders the board has issued since Jan. 4, 2012—a consequence that would significantly affect employer policies and practices, many of which have been tweaked or overhauled in response to NLRB's groundbreaking stance on long-settled labor issues during the past year.

The decision

The dispute underlying the Noel Canning decision arose out of a union's claim that a company, Noel Canning, a bottler and distributor of Pepsi-Cola products, had unlawfully refused to write and execute a collective bargaining agreement embodying the terms agreed upon by the parties during negotiations. According to the union, such refusal violated provisions of the National Labor Relations Act that prohibit employers from bargaining in bad faith and interfering with employees' rights to engage in collective bargaining activity. The administrative law judge and NLRB agreed with the union's claims. Noel Canning appealed the decision.