Compliance: Employers closely watching Supreme Court’s ruling in Canning

The Court’s ruling will likely define the scope of the president’s recess appointments power for future administrations

It’s easy to identify recess in an elementary school day: The bell rings, the kids tumble out of class and the yard fills with playful shrieks and laughter.

Not so with Congress. The U.S. Senate’s chambers may be dark, official business on hold, the senators all home on vacation, and yet the legislative body may still be in session.

The issue of defining “recess” for the Senate lies at the center of NLRB v. Canning, a case currently before the U.S. Supreme Court. The outcome could have a significant impact on employers. At stake is the status of hundreds of National Labor Relations Board (NLRB) rulings on issues ranging from employee social media policies to the legally permissible scope of workplace rules relating to employer confidentiality, employee discipline and off-duty employee access to the workplace.

More broadly, the Court’s ruling will likely define the scope of the president’s recess appointments power for future administrations. Presidents must normally obtain Senate consent to fill federal agency board positions. The Constitution permits Presidents to unilaterally fill agency vacancies when the Senate is in recess, an anachronism to the days when Congress recessed for months at a time.

Presidents from both parties, including Bill Clinton and George W. Bush, frequently used the appointments clause to bypass Congressional intransigence with respect to controversial nominees to the judiciary and other federal offices. President Obama took the practice a step further, appointing federal officials when the Senate may not have been in recess.

The Canning case arose from President Barack Obama’s 2012 recess appointments to the NLRB of three members who stood little chance of obtaining Senate confirmation because of their perceived pro-union bias. Once appointed, Terrance F. Flynn, Richard Griffin and Sharon Black constituted a voting majority on the board.

Republicans cried foul, arguing that the Senate was technically in session when the president made the appointments. The Senate’s actual status fell into a gray area. The Senate at the time had entered into a series of so-called “pro forma” sessions, meaning that the lights were off, the senators had gone home, but one member showed up every three days to open and immediately close a perfunctory Senate proceeding. It was a tactic specifically designed to prevent the President from making recess appointments.

Democrats used the same strategy numerous times during George W. Bush’s second term, successfully preventing presidential appointments during Congressional breaks. Unlike his predecessor, President Obama decided to challenge the “pro-forma” device head on.

In January 2013, the D.C. Circuit ruled in Canning v. NLRB that the president’s NLRB appointments violated the Constitution. Recess appointments, the court ruled, must occur between enumerated sessions of Congress, not during inter-session breaks. Other circuits followed suit with similar rulings.

These decisions called into question the validity of numerous NLRB rulings made when the board may have been improperly constituted. President Obama put an end to the uncertainty prospectively by nominating five candidates considered to be politically moderate, including two Republicans, all of whom were confirmed by the Senate in August 2013.

Nevertheless, Canning and its progeny placed employers in a difficult position. According to the Wall Street Journal, the NLRB issued up to 1,200 rulings between January 2012 and August 2013 with the questionably constituted board. Employers have been uncertain about the validity of the decisions, and also justifiably concerned about the threat of litigation if they make a wrong move.

Important NLRB cases decided by the recess appointees include Karl Knauz Motors, Inc., where the board held unlawful an employer handbook rule relating to social media postings that prohibited “disrespectful language” or “any other language which injures the image or reputation of the Dealership.” In Banner Health System, the NLRB held that an employer may not ask an employee who was subject to an investigation to refrain from discussing the matter during the investigation. The issue of off-duty employee access rights came up several times, culminating in Mariott Int’l, Inc., where the board severely restricted employers’ ability to control off-duty employees’ access to the workplace.

Our consistent advice to employers since Canning has been to stay conservative and follow the existing NLRB rulings until the courts provide more definitive direction. Hopefully, the nation’s highest court will provide some sorely needed clarity.

On Jan. 13, 2014, the Court heard oral argument in the Canning case. Justices from across the political spectrum appeared skeptical of the President’s broad exercise of his recess appointments power. While grilling Solicitor General Donald Verrilli, Clinton-appointee Justice Stephen Breyer asked, “Where is it in the history of the [appointments] clause, in its origination, that it has as a purpose to allow the president to try to overcome political disagreement?”

Justice Elena Kagan, an Obama appointee, observed caustically that Presidents seemed to use the clause strategically to deal “with congressional intransigence, with a Congress that simply does not want to approve appointments that the President thinks ought to be approved.”

A decision on the Canning case is expected this spring. If the Court strikes down the mostly pro-union rulings made by Obama’s recess appointees, those cases will likely come back for hearing before the newly constituted board. Note to employers: It bears remembering that the NLRB currently has three democrats and two republican voting members, so any reprieve from recess appointees’ rulings may be short lived.

Contributing Author

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Peter J. Felsenfeld

Peter J. Felsenfeld is a litigator in the San Francisco office of Barger & Wolen LLP. His practice includes insurance coverage disputes, reinsurance, bad faith...

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