Fifth Circuit Court Denies Enforcement of NLRB's Order Concerning IEC-TGC's Shared Man Program

The United States Court of Appeals for the Fifth Circuit, in a 2-1 decision, refused to enforce an Order of the National Labor Relations Board (NLRB) that would have forced Independent Electrical Contractors – Texas Gulf Coast Chapter (formerly Independent Electrical Contractors of Houston, Inc.) (IEC) to maintain written records of the operation of its application service for a two-year period.  The specific records that IEC would have been required to keep include “applications, hiring records, and information sufficient to disclose how employment applications are processed, marked, or segregated, and the basis for each referral or failure to refer an application to an employer seeking applications….”  

Further, if the Board’s Order had been enforced, IEC would have to submit quarterly reports to the NLRB’s Regional Office for a two-year period concerning “the processing and referral of the applications of … self-identified union applicants,” including “the number of times they were referred to member employers, and the names of the member employers to which the applications  were  referred”. The  Court’s  decision  nullified  these  reporting  and record- keeping requirements.

The Court concluded that the Board denied IEC due process of law and misapplied its own precedents. The Court held that the NLRB had previously found in the case of Pollock Electric, Inc., that the shared man program of IEC did not discriminate against union supporters, and that the IEC’s shared man program’s legality had been upheld in its decision in CenTex Independent Electrical Contractors Association.

As to the application service, the Court emphasized that the NLRB in the present case rejected its Administrative Law Judge’s (ALJ) finding that IEC discriminated against union sympathizers in the operation of the shared man program and the application service. Instead, the Board utilized a novel theory of liability by finding that IEC “interfered with the right of job applicants who were union members and ‘salts’ to be hired on an equal basis with other nonunion applicants”, thereby violating Section 8(a)(1) of the National Labor Relations Act.

The Court found that the NLRB, by refusing to consider the theory upon which the case was prosecuted and defended, but instead, finding a separate violation of the NLRA, based upon a new and previously unrecognized theory, denied IEC due process of law, rendering unenforceable the Board’s finding of an independent Section 8(a)(1) violation against IEC. In finding that IEC was denied due process, the Court did not reach the merits of the NLRB’s novel Section 8(a)(1) theory of liability.