National Labor Relations Board’s Cemex Decision Faces Crucial Appellate Court Test

October 18, 2024

Last summer, the National Labor Relations Board drastically changed the landscape of union organizing campaigns in its landmark decision in Cemex Construction Materials Pacific LLC, 372 NLRB No. 130 (2023). The doctrine that came from this decision, which completely changed the playing field for employers faced with a union organizing campaign, is now at serious risk on appeal in front of the U.S. Court of Appeals for the Ninth Circuit.

The Cemex Decision:

In Cemex, the NLRB effectively did away with secret ballot elections and made it easier for unions to gain recognition. Under the new standard, if a union simply asserts that it has support of a majority of workers, the employer has only two options: (1) accept the union’s position and recognize and bargain with the union as the exclusive representative of its employees or (2) proactively file a petition with the NLRB for a Board sponsored election to determine the union’s support.

This decision drastically lowered the threshold for issuance of affirmative bargaining orders as well. Under the classic standard of NLRB v. Gissel Packing Co., 395 U.S. 575 (1969), the NLRB issues an affirmative bargaining order only in situations where the employer was found to commit labor violations that were so egregious that it destroyed any possibility of a fair election. Under Cemex, if an employer commits any unfair labor practice leading up to the Cemex election, then the Board will dismiss the employer’s election petition and order the employer to recognize and bargain with the union.

The Appellate Challenge to Cemex:

The Cemex decision has had a widespread effect across the country. Because of this, Cemex, the employer in the matter, has appealed the Board’s decision. Cemex is arguing that the NLRB overstepped its authority in making this drastic change to employers’ bargaining obligations and that, as a result, the standard should be thrown out under the “major questions doctrine.” Under the “major questions doctrine,” if a governmental agency seeks to decide an issue of major national significance, its action must be supported by clear congressional authorization.

The Supreme Court has rejected an agency’s claim of regulatory authority when (1) the underlying claim of authority concerns an issue of vast economic and political significance and (2) Congress has not clearly empowered the agency with authority over the issue. Util. Air Regul. Grp. (UARG) v. EPA,573 U.S. 302, 324 (2014). A very recent example of a regulation that was shut down due to the “major questions doctrine” is the Occupational Safety and Health Administration’s (OSHA) emergency order seeking to impose vaccination and testing requirements on employers nationwide.

While it is clear that the Cemex doctrine concerns an issue of vast economic and political significance, it is far less clear whether Congress has given the NLRB the authority to do so in the National Labor Relations Act. According to the Board, this standard does not implicate the “major questions doctrine” at all. Even if it does, the Board believes it clearly fits within the its authority.

What is to Come:

The Ninth Circuit is set to hear oral arguments on this issue on October 21, 2024. A decision against the standard would be a huge blow for the Board and a big win for employers nationwide. While this Ninth Circuit decision would only impact appellate cases in the Ninth Circuit, it’s plausible that other Federal appellate courts across the country will follow suit and begin to question the legitimacy of the standard.

No matter what side the Ninth Circuit takes, this issue seems destined for Supreme Court review. Both parties are likely to petition the Supreme Court to review the decision if they don’t receive a ruling in their favor. Even if the high court declines to review, this decision will open the door for a potential circuit split down the line if another circuit disagrees with the Ninth Circuit. Employers should be on the lookout for the Ninth Circuit’s decision and prepare themselves for the ramifications of either outcome.

If you have any questions regarding the Cemex decision, the Ninth Circuit appeal, or their effect on your business, please contact Gaetano Urgo at gurgo@dcamplaw.com or by telephone at (312) 995-7128.