Employment Law Daily NLRB: ALJs are validly appointed; Board is ‘Department,’ Members collectively are ‘Head of Department’
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Wednesday, August 8, 2018

NLRB: ALJs are validly appointed; Board is ‘Department,’ Members collectively are ‘Head of Department’

By Joy P. Waltemath, J.D.

Unified, for once, on a significant issue of Board law or procedure, the five Members of the NLRB agreed that the Board’s appointment of administrative law judges is constitutionally valid under the Appointments Clause because the Board itself is a “Department” and the Board’s Members collectively are a “Head of Department,” citing the rationale of the U.S. Supreme Court in 2010’s Free Enterprise Fund v. Public Company Accounting Oversight Board, as well as the High Court’s recent decision in Lucia v. SEC. Although the employer here argued that the ALJ assigned to its case was an inferior officer who was not constitutionally appointed under the Appointments Clause, the Board pointed to Supreme Court precedent finding the SEC to be a “freestanding component of the Executive Branch, not subordinate to or contained within any other such component,” and as such, a Department for the purposes of the Appointments Clause. That holding applied equally to the NLRB as a “freestanding component of the Executive Branch,” the Board reasoned, noting the same precedent also held that that the SEC’s Commissioners collectively constituted a Head of Department under the Appointments Clause, and this similarly applied to the Board’s Members. In Lucia, the Court reiterated this holding, which was good enough for the Board here, and it dismissed the employer’s challenge to the complaint (WestRock Services, Inc., August 6, 2018).

Motion to dismiss based on Appointments Clause. In essence, in late 2017 the employer filed a motion to dismiss the complaint in this proceeding, asserting that the Board lacked subject matter jurisdiction because ALJ Robert A. Ringler’s appointment was invalid under the Appointments Clause. The Board took the motion under advisement until the Supreme Court’s decision in Lucia v. SEC, which held that ALJs of the SEC are officers of the United States and thus are subject to the Appointments Clause. The employer contended that ALJ Ringler’s appointment was constitutionally defective because he was not appointed by the President, a Court of Law, or a Head of Department.

Board is “Department.” As to the employer’s argument that the Board is not a Department, claiming that the term encompasses only the cabinet-level agencies or Executive Departments like the Departments of State, Treasury, and Defense, the Board cited the Supreme Court’s holding in Free Enterprise Fund v. Public Company Accounting Oversight Board that the SEC, as a “freestanding component of the Executive Branch, not subordinate to or contained within any other such component … constitutes a ‘Departmen[t]’ for the purposes of the Appointments Clause.” This applied equally to the NLRB, which too is a “freestanding component of the Executive Branch.” The Board is a Department within the meaning of the Appointments Clause, its five Members held.

Members are “Head of Department.” Plus, the Members collectively constitute a Head of Department. In Free Enterprise Fund, the Court held that the SEC’s Commissioners collectively constituted a Head of Department under the Appointments Clause, reasoning that the SEC’s authority was vested in the Commissioners jointly, with a Chairman who is designated by the President and “exercises administrative and executive functions subject to the full Commission’s policies.” Like the SEC, the Board collectively is a Head of Department. Section 3(a) of the NLRA defines “the Board” as the five Members appointed by the President, with one Member designated by the President as the Chairman of Department. This was consistent with the Reorganization Act, which provides that “‘the head of an agency [may] be an individual or a commission or board with more than one member.’” In Lucia, the Court reiterated this holding, stating about the SEC that the Commission itself counts as a Head of Department.

NLRB appointments are valid. NLRA Section 4(a) says “The Board shall appoint an executive secretary, and such attorneys, examiners, and regional directors, and such other employees as it may from time to time find necessary.” Board Rules and Regulations state in part, “The Board appoints administrative law judges and, subject to the provisions of the Administrative Procedure Act and section 4(a) of the National Labor Relations Act, exercises authority over the Division of Judges.” Under these established procedures, each of the Board’s existing ALJs has been validly appointed by the Board collectively as the Head of Department, reasoned the Board, finding the ALJ here too validly appointed by the Board in November 2010. Consequently, it found that the employer had failed to show that it was entitled to have the complaint dismissed.

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