by Steven M. Gutierrez and Brian M. Mumaugh

The United States Court of Appeals for the District of Columbia issued the long anticipated ruling in the Noel Canning v. National Labor Relations Board case. In this case, Noel Canning ("Canning") asked the Court to review a decision by the National Labor Relations Board ("NLRB"), finding that Canning violated the National Labor Relations Act by refusing to sign a collective bargaining agreement reached with a Teamsters local union. While a review of an NLRB decision is considered by some routine, this case was not. In addition to Canning's arguments that the findings in the case were not supported by the evidence presented at hearing or the law (both arguments rejected by the D.C. Circuit), Canning also questioned the authority of the NLRB to issue its order on two constitutional grounds – (1) that the NLRB lacked authority to act because it did not have a quorum since three members of the five-member board were illegally appointed by the President without Senate confirmation as recess appointments and (2) the vacancies filled by the purported recess appointments did not actually happen during a recess of the Senate, as required under the Recess Appointments Clause of the U.S. Constitution.

Appointments Were Invalid Because They Were Not Made During "the Recess"

Under the Recess Appointments Clause, the President has the power "to fill up all Vacancies that may happen during the Recess of the Senate, . . . ." In this case, the D.C. Circuit Court concluded that President Obama's January 2012 alleged recess appointments to the NLRB of Board Members Sharon Block, Terence Flynn and Richard Griffin were not made during "the Recess" of the Senate. Instead, the January 4 appointments were made when the Senate was operating pursuant to a unanimous consent agreement that provided the Senate would meet in a pro forma session every three business days from December 20, 2011 through January 23, 2012. Because the Senate acted to convene the 112th Congress on January 3 — fulfilling a constitutional mandate that the Senate convene on that day — under the Appointments Clause of the U.S. Constitution, nominations of Officers of the United States made by the President require the advice and consent of the Senate.

Here, the recess appointments were made by the President on the claim that, although the Senate must give its advice and consent to any appointment, the Senate was not in session (and in a de facto recess) because the Senate's pro forma sessions occurred during the holiday season when the Senators were not actually present in the Senate Chamber. Therefore, the President claimed that the appointments were valid under the Recess Appointments Clause. Rejecting this argument, the D.C. Circuit reasoned that the term "the Recess" of the Recess Appointment Clause is by definition the period of time the Senate is not in session and therefore unavailable to receive and act upon nominations from the President. The Recess Appointments Clause has strict limits and appointments under this clause can be made only when the Senate is between sessions, not during a routine adjournment, a long weekend or a lunch break during regular workings sessions of the Senate and certainly not when the President unilaterally decides that the Senate is unavailable. Thus, the term "the Recess" is limited to intersession recesses. The D.C. Circuit Court pointed out that the Senate's role through advice and consent serves an important function as a check upon the President's power.

Appointments Also Invalid Because They Did Not Arise During the Recess

The D.C. Circuit went on to conclude that the appointments were also invalid because they did not actually "happen" during a recess. The three seats the President attempted to fill had become vacant on August 27, 2010, August 27, 2011 and January 3, 2012. The NLRB argued that these vacancies could be filled under the Recess Appointments Clause because the vacancies existed during the alleged recess. The Court, however, agreed with the employer and ruled that the vacancies must arise during the Recess, not just extend into the recess period. To rule otherwise would mean that a President could fill any vacancies during the Recess regardless of when the vacancy arose, meaning that a President would never have to submit nominees to the Senate for confirmation. The Court found that these three Board member vacancies did not arise during "the Recess" for purposes of the Recess Appointments Clause. Because the vacancies did not happen during an intersession recess and these appointments were made after Congress began a new session on January 3, the recess appointments were invalid. Without the three recess appointments, the NLRB lacked its required quorum of three members when it issued its decision in the Canning matter on February 8; therefore, the decision and order must be vacated.

Consequences of Invalidating the NLRB Appointments

The result of this decision is yet to be determined, but it certainly is a decisive blow to the President who, by appointing members to the NLRB in such a controversial fashion, opened the door to a historic ruling that his appointments were unconstitutional. Because the decision finds the appointments invalid from their inception, the more than 200 decisions issued since January 4, 2012 listed on the NLRB website may also be invalid. 2012 marked a year in which the NLRB made several highly publicized and controversial decisions concerning social media, at-will disclaimers and the reversal of some long-standing labor law. The President is surely going to be disappointed and whether the NLRB's direction is going to change the direction it appeared to go will depend largely on the make-up of the Board in the years to come.

The EEOC has released statistics relating to charges filed with the agency in 2011. A complete table, including prior years, is available here. The total number of charges remains nearly unchanged from 2010 to 2011. Also significant is the fact that disability related charges remained steady from 2010 at 25,742 for 2011. This is compared to the roughly 25% increase in disability charges from 2009 to 2010.

1/9/2012

The IRS has issued a New Year's gift in the form of new and improved guidance for employers preparing to gather 2012 data on the cost of employer-sponsored group health coverage for its employees. Most employers will be required to report the cost of group health plan coverage on 2012 Forms W-2 to be issued in January of 2013. Employers may choose to provide this information on a voluntary basis for 2011 reporting. There are some exemptions from this reporting requirement, most notably for employers filing fewer than 250 Forms W-2 in the previous year.

Now is the time to ensure that payroll systems are properly coded to gather the correct information for reporting. This new guidance, IRS Notice 2012-9 (which supersedes IRS Notice 2011-28) clarifies a few points with revisions to Q&As in the previous notice and the addition of new Q&As. Employers should carefully review Notice 2012-9 for information on who must comply, how to comply and clarification of the details of reporting on Form W-2.

Highlights of What's New

An employer is required to report the cost of an employee's group medical coverage on Form W-2. Revised Q&A-19 clarifies that this W-2 reporting requirement does not apply to the cost of coverage under a health flexible spending arrangement if contributions come only from employee salary reduction elections. Revised Q&A-20 clarifies that if a dental or vision plan satisfies the requirements for being excepted benefits for purposes of HIPAA, then its costs are not required to be included in the reported amount.

Eight new Q&As (#32 through 39) were added in Notice 2012-9. The new Q&As provide, among other things, guidance regarding the cost of coverage for wellness programs, employee assistance programs and on-site medical clinics; guidance for reporting the cost of coverage for a payroll period that includes December 31 but continues into the next year; and guidance regarding inclusion of the cost of coverage for a hospital indemnity or other fixed indemnity insurance, or the cost of coverage for a specific disease.

The new guidance should help resolve a few issues, but as is often the case, it might not answer all of your questions. Please contact any member of Holland & Hart's Benefits Law Group for questions regarding this, or any other benefits issue. Happy New Year!

I am very proud of this, so I had to post.  

Holland & Hart's Labor & Employment Group is proud to announce that, among the top-rated Holland & Hart practices for 2011-12, we received the following "Best Law Firms"® Rankings:

• National Ranking  – Tier 2 – Employment Law – Management
• National Ranking  – Tier 2 – Labor Law – Management
• Metropolitan Ranking for Billings, MT – Tier 1 – Employment Law – Management
• Metropolitan Ranking for Billings, MT – Tier 1 – Labor Law – Management
• Metropolitan Ranking for Billings, MT – Tier 1 – Litigation – Labor & Employment
• Metropolitan Ranking for Cheyenne, WY – Tier 1 – Employment Law – Management
• Metropolitan Ranking for Cheyenne, WY – Tier 1 – Labor Law – Management
• Metropolitan Ranking for Colorado – Tier 1 – Employment Law – Management
• Metropolitan Ranking for Colorado – Tier 1 – Labor Law – Management
• Metropolitan Ranking for Colorado – Tier 1 – Litigation – Labor & Employment
• Metropolitan Ranking for Utah – Tier 1 – Employment Law – Management
• Metropolitan Ranking for Utah – Tier 1 – Litigation – Labor & Employment
• Metropolitan Ranking for Idaho – Tier 2 – Litigation – Labor & Employment
• Metropolitan Ranking for Utah – Tier 2 – Labor Law – Management

Holland & Hart LLP is listed among the top 20 firms in the nation based on number of first-tier metropolitan rankings by U.S.News & World Report and Best Lawyers®, one of the oldest and most respected peer-review publications in the legal profession.

Nearly 10,000 firms nationwide received rankings in the second year of "Best Law Firms." A complete list of Holland & Hart's rankings for 2011-12 can be found here.

The notice must be physically posted at the workplace, just as with other postings of employee rights under other federal labor laws. In addition, the employer must post the notice on its internet or intranet site if personnel rules and policies are customarily posted there. Employers are not required to distribute the posting by email, Twitter, or other electronic means.

The NLRB will make translated versions of the notice available, and must be posted where at least 20% of the employees are not proficient in English and speak another language.

Employers who fail to post the notice commit an unfair labor practice under Section 8(a)(1) of the NLRA, and may face tolling of the NLRA's six-month statute of limitations for filing an unfair labor practice charge. There are no recordkeeping or reporting requirements under the NLRB's rule, and the NLRB does not have the authority to fine an employer for failing to comply with the notice posting requirement.

The posting requirement applies to all private employers (including labor unions) who are subject to the NLRA, which includes all but the very smallest employers who are not engaged in interstate commerce. Agricultural, railroad, and airline employers are not covered by the NLRA, and, in response to comments received after the proposed rule was announced, the U.S. Postal Service is exempted from the rule.

The final rule, which the NLRB adopted by a 3-1 vote (Member Brian E. Hayes (R) dissenting) is substantially similar to the proposed rule published in December 2010. In response to comments, the NLRB dropped proposed requirements for emailing and color printing of the notice, and added language to the notice describing the right of employees under the NLRA to refrain from engaging in statutorily-protected activity.

For more information or questions, contact Jeffrey T. Johnson of Holland & Hart's Labor & Employment Practice Group, 303-295-8019, jjohnson@hollandhart.com