For the last year, NCA has been educating its members about the National Labor Relations Board (NLRB) and its impact on the private club industry. This five-person federal agency has issued numerous regulations and rulings that have significantly hurt private clubs by strengthening unions and facilitating the union organizing process. Unfortunately, the club industry will feel the effects of NLRB’s most recent decisions very soon.
Beginning April 30, 2012, a new regulation goes into effect that requires clubs to hang a poster telling employees how to start a union and what constitutes unfair labor practices by management. On that same day, another new regulation goes into effect that allows union elections to take place more rapidly than ever before.
In an effort to rein in the NLRB, NCA worked with members of Congress to introduce legislation rolling back the NLRB’s regulations. Furthermore, we helped our allies initiate litigation to review the validity of these rules before they go into effect. In addition to these measures, we also expected one major
advantage at the start of 2012.
The NLRB Board
At the end of 2011, there were only three members serving on the Board. On January 1, the term of one of those members ended and, according to a 2010 Supreme Court case entitled New Process Steel, L.P. v. NLRB, once the NLRB dropped below three members it could no longer conduct business. Thus, it seemed our industry would be relieved from dealing with any more NLRB actions during 2012.
However, the president still had the right to nominate new appointees to bring the Board back on line. But it was clear that Senate Republicans would block the confirmation of those replacement nominees.
As such, NCA and our allies could focus our attention throughout 2012 on battling the regulations already issued. Though this was a daunting task, at least we assumed the NLRB would not hand down anything else—or so we thought.
The Pro Forma Session
Unfortunately, the president used his recess appointment power to add three new members to the Board on January 4, 2012.
With these appointments, the NLRB became legally entitled to issue regulations and hand down case decisions again. However, as soon as the president signed off on these appointees, a constitutional question was raised about the legality of these recess appointments.
While there is no doubt the President of the United States has the right to nominate appointees for the NLRB, the question arose as to whether the Senate was actually in “recess” to allow him to use his recess appointment power rather than going through the normal appointment process.
Under Article II, Section 2, Clause 2 of the U.S. Constitution, the president has a very specific and well-defined process he must follow for making appointments to federal agencies. Under normal circumstances, the president must seek confirmation of his nominees with “advice and consent” of the Senate—meaning the Senate must vote to approve his nominees. Since Senate Republicans already indicated that such consent would not be forthcoming, the president used another way to bring these nominees forward—through the recess appointment process.
Under Article II, Section 2, Clause 3 of the Constitution, the president’s recess appointment power is described as follows: “The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.”
The question regarding the legality of these appointments can only be answered by deciding whether the Senate was in “recess” for the recess appointment power to be invoked. On February 7, the House Education and Workforce Committee addressed this question in a hearing with four constitutional scholars.
Those scholars who believe the appointments were not valid focused on the fact that the Senate was not in “recess,” but in a pro forma session. Under Article I, Section 5, Clause 2 of the Constitution, Congress is granted the right to establish its own rules of proceedings. With that power, the Senate chose to be in pro forma session on January 4; therefore, the recess appointment power could not have been used.
Not only did a majority of those testifying at the hearing believe this to be the case, but it was also revealed that Senate Majority Leader Harry Reid (D-Nev.) believed it to be the case as well. During the Bush Administration, Reid specifically used the pro forma session tactic to prohibit Bush from making any recess appointments—and it worked.
Those scholars arguing that the appointments were valid stressed that the pro forma session was simply a procedural mechanism to keep the Senate technically in session. While in the pro forma session, most Senators were not in Washington to conduct business. That being the case, the Senate could not provide advice and consent on the President’s NLRB nominees. Thus, the argument went, the Senate was actually in recess and the recess appointment power was appropriately used.
To counter this argument, members of the Committee noted that a few days before these recess appointments were made, the Senate—while in pro forma session—passed the bill extending the payroll tax cut through February 29. If the Senate was actually in “recess” during that pro forma session, then 160 million Americans were not entitled to the tax cut they enjoyed at the beginning of the year—a reality no one wished to be true.
From a constitutional perspective, these NLRB appointments raise the question of whether a president may avoid the normal appointment process to escape an adverse decision on his nominees by the Senate. Obviously, this act has serious consequences for our system of checks and balances, and litigation has already been filed challenging the president’s action. Of course, it could take years for the courts to provide the final answer.
From a private club perspective, these appointments raise a different problem. With all five positions filled, the NLRB may now begin issuing new regulations and rulings, and that does not bode well for our industry—especially when two of the three new appointees have served as long-time union advocates. Therefore, we can expect this Board to be just as pro-union as the last one.
New Union Tactics to Consider
We will soon find out just how these appointees will impact our industry. The NLRB is about to rule on a case that will decide whether independent contractors (like golf pros and caddies) can join a union. Since these individuals are not employees, it would seem clear they cannot; however, that is not expected to be this Board’s ruling.
Another case NCA is following will decide whether union organizers may come onto a club’s property during business hours to campaign. Most club leaders don’t want union campaign activities taking place during their club’s social events, but that could happen.
The most alarming issue facing the club industry is the uncertainty regarding the validity of the NLRB’s actions while courts resolve the constitutional question. Until a decision is made, clubs will have to comply with whatever the NLRB decrees. However, if it is determined that these individuals were not legally appointed to the Board, then all of their regulations will be struck from the books, all of their decisions will be vacated, and each case will have to be brought up again.
For a private club caught up in this legal morass, it will mean more money spent to re-litigate an issue with no chance to recover the lost money spent on the matter the first time. That is not a prospect anyone in our industry looks forward to, but it may well be the result when the dust settles.
Not often can it be said that presidential appointments might significantly impact the private club industry, but these NLRB appointments are truly the exception to that rule. In a year when we expected no major news from the National Labor Relations Board, it seems the NLRB will be making news in more than just the usual ways. For our industry, that is a much larger problem than meets the eye.
Brad D. Steele is NCA’s vice president of government relations & general counsel.