Ever since the labor board proposed the rule in December 2010, business groups have asserted that the move exceeded the board’s authority and was an improper imposition on nearly six million employers, most of them small businesses.
In its decision, the United States Court of Appeals for the District of Columbia Circuit concluded that the N.L.R.B.’s rule violated a federal law that bars the board from punishing an employer for expressing its views so long as those statements do not constitute threats of retaliation or force.
The labor board had originally said that an employer’s failure to post the notice would be considered an unfair labor practice, resulting in penalties, but the circuit court said the board would be acting illegally to punish an employer for expressing a statement or in this case, for failing to post a statement under orders by the labor board.
The labor board’s rule told employers to post a notice, informing workers of their right to form or join a union, to strike, to bargain collectively and to act together to improve working conditions.
The federal circuit court issued an injunction in April 2012, suspending the labor board’s rule, after two lower courts differed on whether the board had overstepped its powers.
The circuit court cited several Supreme Court rulings to reach its decision that employers have a right to disseminate views as well as a right not to disseminate views. The court relied on First Amendment rulings that prohibit the government from telling people what they must say, like telling schoolchildren they must recite the Pledge of Allegiance.
Many businesses asserted that the labor board’s proposed poster was one-sided and pro-union, although the board said the poster was neutral.
The National Association of Manufacturers applauded the court’s ruling, calling it “an important victory in the fight against an activist N.L.R.B. and its aggressive agenda.”
“The poster rule is a prime example of a government agency that seeks to fundamentally change the way employers and employees communicate,” the manufacturers’ association said. “The ultimate result of the N.L.R.B.’s intrusion would be to create hostile work environments where none exist.”
The A.F.L.-C.I.O. attacked the ruling. “The Republican judges of the D.C. Circuit continue to wreak havoc on workers’ rights,” its president, Richard L. Trumka, said. The labor federation, like the Obama administration, was already upset with the circuit court for ruling in January that President Obama’s recess appointments to the labor board were illegal and that the board thus did not have a quorum needed to operate. The Obama administration has appealed that decision to the Supreme Court.
Mr. Trumka questioned the sweep of Tuesday’s ruling, saying: “In today’s workplace, employers are required to display posters explaining wage and hour rights, health and safety and discrimination laws, even emergency escape routes. The circuit court’s ruling suggests that courts should strike down hundreds of notice requirements, not only those that inform workers about their rights and warn them of hazards, but also those on cigarette packages, in home mortgages and many other areas.”
In holding that the labor board could not punish employers for failing to post the notice, the court decided to vacate the rule altogether, saying that the labor board would not have wanted to propose a merely voluntary rule that it could not enforce.
In a statement, the labor board said it was reviewing Tuesday’s ruling and would “make a decision on further proceedings at the appropriate time.” It noted that the Fourth Circuit Court of Appeals was also reviewing the legality of the poster rule.