When the Supreme Court Makes Labor Policy

Published March 14th, 2016 -  - 03.14.1616


Have you ever read a newspaper article (or the on-line equivalent) reporting on something that you know about first-hand?  If you’re like me, you notice that there are invariably some factual errors.  This is understandable – reporters tend to have tight deadlines, and they are often generalists who don’t possess detailed background knowledge about the subject they are covering.  I often have the same experience when reading a Supreme Court decision about labor law for largely the same reasons.  And that’s why the next nominee to the Court should commit to the principle of giving deference to administrative agencies.

Hoffman Plastic Compounds, Inc. NLRB, a 2002 case where the Court held that undocumented immigrants who are fired illegally cannot obtain backpay, was one of those instances where I found myself asking, “are they kidding?” as  I read the decision.  What got me wasn’t the decision to deny backpay (which I anticipated), but the majority’s assertion that the employer would not get off scot-free since the Board had imposed other “significant sanctions.”  What were these sanctions?  A cease-and-desist order and a requirement that the employer “conspicuously post a notice to employees setting forth their rights under the NLRA and detailing its prior unfair practices.”  In other words, assuming any workers actually read the notice, they would learn that their employer illegally fired their co-workers, suffered no consequences for doing so, but promised that it would not do it again.  On what planet are these “significant sanctions?”

When President Obama announces his nomination to fill the vacant seat on the Supreme Court, you will likely hear a lot of talk from all sides about judges interpreting the law rather than making law, but the reality is that the Justices often make policy decisions when they interpret statutes.  Hoffman Plastic was an atypical case because it dealt with the intersection of two different statutes – the NLRA and the Immigration Reform and Control Act.  But, most labor law cases involve the application of a single statute – the NLRA.  The Supreme Court has held in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., deference to the agency that administers a statute is appropriate unless Congress has addressed the “precise question at issue.”  Unfortunately, the Supreme Court had decided dozens of cases under the NLRA before its 1984 Chevron decision, and it has failed to acknowledge that in many, if not most of those cases, Congress had not addressed the “precise question at issue.

For instance, in 1956. in NLRB v. Babcock & Wilcox, the Court had decided that “an employer may validly post his property against nonemployee distribution of union literature if reasonable efforts by the union through other available channels of communication will enable it to reach the employees with its message and if the employer’s notice or order does not discriminate against the union by allowing other distribution.”  Nothing in the text of the NLRA, which prohibits employers from “interfer[ing] with” the right of employees to “self-organization,” and “to form, join, or assist labor organizations” compelled this result.  In Babcock & Wilcox, the Court had acknowledged that “[t]he right of self-organization depends in some measure on the ability of employees to learn the advantages of self-organization from others,” and it further conceded that the Board needs to balance property rights against organizing rights “with as little destruction of one as is consistent with the maintenance of the other.”

Subsequently, in Jean Country, the NLRB announced a three-factor balancing test, focusing on (1) the degree of impairment of Section 7 rights if access is denied, balanced against (2) the degree of impairment of property rights if access is granted; along with (3) the availability of reasonably effective alternative means.  This was the test the Board had applied in Lechmere, Inc. v. NLRB, where the question was whether a retail store had violated the Act when it prohibited union organizers from leafletting in a parking lot that was otherwise open to members of the public.  The Board found that there was no reasonably effective alternative means available for the union to communicate its message to the employees at the store.  In particular, the Board had found that the narrow strip of public property adjoining the parking lot was an “ineffective and unsafe locale for the union activity” since it bordered “a four-lane highway with a 50 m.p.h. speed limit,” and police officers had “cautioned the union organizers to be careful neither to impede traffic nor to endanger themselves” when positioned on the grassy strip.

In Lechmere, the Court should have upheld the Board’s ruling as long as the NLRB’s construction of the statute was “permissible.”  But, instead of doing that, the Court asked whether the Board’s approach “is consistent with our past interpretation of Section 7.”   The dissenting justices recognized the error of this approach because the earlier interpretations pre-dated Chevron, and thus, failed to accord proper deference to the Board.  The Court compounded its error by substituting its own judgment about when union organizers have “reasonable access” to employees outside an employer’s property.  Thus, ignoring the Board’s findings regarding the impracticality of utilizing the grassy strip adjoining the parking lot, the Court held that signs displayed from that location “would have informed the employees about the union’s organizing efforts.”

The second part of the Babcock & Wilcox test – whether an employer has discriminated against a union by allowing other distribution – was not at issue in Lechmere, but Circuit courts have split over what constitutes discrimination against a union, often denying enforcement of Board decisions. In 2010, in a case called Roundy’s Inc., the Board requested amicus briefs to help it decide what standard it should adopt to define discrimination in this context. After five years of waiting for a decision, the parties settled last year. But, eventually the Board will address this issue, and when it does, the circuit courts and the Supreme Court should defer to the Board’s construction of the Act rather than try to figure out what the Supreme Court justices meant when they decided Babcock & Wilcox in 1956. Everyone ought to concede that when Congress enacted the NLRA, it did not decide the circumstances under which employers could deny access to nonemployee organizers. As the Court explained in Chevron, the power of an administrative agency to administer a statute “necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress.” Supreme Court justices may not always agree with the policy decisions made by administrative agencies, but they should acknowledge, as the Court did in Chevron that “when a challenge to a construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency’s policy, rather than on whether it is a reasonable choice within a gap left open by Congress, the challenge must fail.”

* The original version of this post described the Roundy’s decision as pending before the NLRB.  The post has been revised to reflect the fact that Roundy’s was settled last fall.

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