Labor Board Hounded by Another Appointment Controversy

For much of the Obama Administration, the National Labor Relations Board (Board) has been operating as, at least from the perspective of some, a rogue agency (and not just because of its willingness to overturn precedent to expand union and employees’ rights). With just two of the required five members for the first two years of the Administration, the Board lacked a quorum to make binding decisions. Last year, the U.S. Supreme Court unanimously invalidated more than a year-and-a-half of Board decisions, ruling that the president’s recess appointments of three Board members were unconstitutional. In a further check on the Administration’s actions relative to the Board, on August 7, a federal appeals court ruled unanimously that the president’s appointment of the Board’s top prosecutor and legal advisor was also unlawful.

At issue in the recent case was the 2010 appointment of Lafe Solomon as the Board’s acting general counsel. The general counsel exercises enormous power—he or she operates independently of the five Board members who decide cases and is tasked with investigating and prosecuting unfair labor practice cases and supervising the agency’s field offices. When the general counsel position becomes vacant, as it did in 2010, the president may appoint an “acting” general counsel to take over the job until someone else can be nominated and confirmed by the Senate. The Federal Vacancies Reform Act allows acting officials to serve for up to 210 days, but that person cannot become the permanent nominee for that position. Solomon, while acting general counsel, was nominated to serve a full, four-year term as general counsel in 2011, but he was never confirmed. He remained as acting general counsel through 2013.

In 2013, an Arizona ambulance services company got caught in the Board’s crosshairs for failing to pay bonuses under a collective bargaining agreement and was found guilty of an unfair labor practice. At its hearing, the employer made a number of objections, including that the unfair labor practice complaint against it was defective because the general counsel’s office, led by Solomon, could not lawfully issue complaints because Solomon’s appointment was invalid.

Although Solomon’s initial appointment as acting general counsel was valid in 2010, the D.C. Circuit determined that he unlawfully continued serving in that post after he was nominated to be the permanent general counsel in 2011. The court interpreted the Federal Vacancies Reform Act as plainly prohibiting acting officers like Solomon from serving as permanent nominees (unless two narrow exceptions apply). The court also rejected the Board’s argument that Solomon’s unlawful appointment was “harmless”—it stressed that the general counsel has final authority over all unfair labor practice complaints, so it could not be “confident” that the employer would have been hit with the same unfair labor practice complaint if a different general counsel were in charge. Therefore, the complaint against the Arizona employer was void, and the court reversed the Board’s unfair labor practice finding against the employer.

But, the court went on to “emphasize the narrowness” of its decision, pointing out that “this case is not the Son of” the decision invalidating the president’s recess appointments and retroactively overturned Board precedent decided by members who were unconstitutionally appointed. It emphasized that only parties that challenged Solomon’s authority from the get go, like the Arizona employer, may have an unfair labor practice decision overturned. So any employer that is still litigating an unfair labor practice complaint issued between January 5, 2011 and November 4, 2013 can now have those complaints thrown out if they initially raised the issue. This goes to show the importance of raising every available defense—employers that fail to assert a defense right away generally lose the right to make the argument later.

Interestingly, two Obama-appointed judges joined the unanimous opinion invalidating Solomon’s appointment as acting general counsel. Although the decision itself may provide relief for a limited number of employers, other courts might be more sympathetic to parties that did not think to object to Solomon’s authority. While this is just the latest example of the Board overstepping its authority, there is little question that the Board and general counsel will continue to aggressively go after employers.