Construction labor unions and industry groups agree that a newly issued National Labor Relations Board ruling upholding union “bannering” is significant and precedent-setting. Unions are jubilant about the outcome, but industry officials contend that the Aug. 27 ruling, announced on Sept. 2, could wreak havoc on construction projects.

In its decision, the NLRB ruled the posting of stationary union banners by members of the United Brotherhood of Carpenters and Joiners of America at the workplace of a secondary employer does not violate federal labor laws. A secondary employer is a company that employs a contractor with which a union has a dispute. The 3-2 decision, split along party lines, is one of the first major rulings on a controversial issue from the NLRB’s new roster of members.

LIEBMAN

Organized labor considers the decision to be a major victory. “This is a significant win,” says John DeCarlo, general counsel for the carpenters’ union and a partner with Los Angeles law firm DeCarlo, Connor and Shanley. “Everybody’s been waiting to see what would happen with this [case] for a very long time.”

The decision applies to three cases in Arizona: Eliason & Knuth of Arizona, Inc., Northwest Medical Center and RA Tempe Corp. DeCarlo says the recent ruling likely is a bellwether for outcomes in other bannering cases. The board has at least 10 additional pending cases that involve the use of banners.

In the three Arizona cases, members of carpenters’ Local 1506 held stationary, 16-foot-long banners near two hospitals and a restaurant. The union claimed that contractors working at those sites were paying employees substandard wages and benefits. Placed near the entrance of each medical center, a banner read “SHAME ON,” followed by the name of the medical center; a third banner urged customers not to eat at the restaurant.

The carpenters’ union argued the protesters were exercising their First Amendment rights and participating in a peaceful demonstration to highlight a labor dispute.

The restaurant, one of the hospitals and one of the contractors argued that the banners were meant to coerce customers of the establishments into taking their business elsewhere. They also said the bannering constituted an unlawful secondary boycott under the National Labor Relations Act (NLRA).

In the majority opinion, the board’s three Democrats—Chairwoman Wilma Liebman and members Craig Becker and Mark Pearce—agreed with the unions the stationary posters were not “coercive.” Moreover, the majority wrote that court precedent compelled them to avoid interpreting the NLRA in such a way as to create a “serious constitutional question” regarding the First Amendment.

“It is a very significant ruling, and it is a precedent-setting ruling,” says Denise Gold, the Associated General Contractors of America’s associate general counsel. She says AGC is disappointed with the decision, which her organization believes runs counter to established labor law. Further, Gold says the ruling is disappointing in light of statements made by Liebman to AGC and others that she would take “real-world consequences” of labor actions into account in deciding cases.

Gold says, “This decision has the potential to cause extraordinary disruption of construction projects,” at a time when construction firms are struggling to survive in a difficult economy. The plaintiffs in the cases have the option to appeal the decision, she notes.

Maurice Baskin, the Associated Builders and Contractors’ general counsel, says, “The board’s action ignores the reality of the construction workplace and will no doubt embolden and encourage more unions to incorporate this practice into aggressive and irresponsible corporate campaigns.”

However, DeCarlo says the union members were not doing anything unlawful. He says, “If you’re going to be non-violent and not violate any laws, there is nothing wrong with putting your views … on a banner.”

New NLRB Lineup

The NLRB operated without a quorum from January 2008 to late March 2010. During that period, it had only two members: Democrat Liebman and Republican Peter Schaumber. In March, President Obama used recess appointments to put Democrats Becker and Pearce on the panel. In June, the Senate confirmed Pearce and Republican Brian Hayes to full terms.

The Senate has not confirmed to a full term Becker, who is strongly opposed by business groups.

The bannering ruling was one of the last in which Schaumber participated; his term expired on Aug. 27. Schaumber and Hayes wrote the dissenting opinion.