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NATIONAL LABOR RELATIONS BOARD v. HENDRICKS COUNTY RURAL ELECTRIC MEMBERSHIP CORP.

decided*fn*: December 2, 1981.

NATIONAL LABOR RELATIONS BOARD
v.
HENDRICKS COUNTY RURAL ELECTRIC MEMBERSHIP CORP.



CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT.

Brennan, J., delivered the opinion of the Court, in which White, Marshall, Blackmun, and Stevens, JJ., joined. Powell, J. filed an opinion concurring in part and dissenting in part, in which Burger, C. J., and Rehnquist and O'connor, JJ., joined, post, p. 192.

Author: Brennan

[ 454 U.S. Page 171]

 JUSTICE BRENNAN delivered the opinion of the Court.

The question presented is whether an employee who, in the course of his employment, may have access to information considered confidential by his employer is impliedly excluded

[ 454 U.S. Page 172]

     from the definition of "employee" in § 2(3) of the National Labor Relations Act and denied all protections under the Act.*fn1

I

We have before us two cases under the same docket number. We shall first state separately the factual and procedural background of each.

The Hendricks case

Mary Weatherman was the personal secretary to the general manager and chief executive officer of respondent Hendricks County Rural Electric Membership Corp. (Hendricks), a rural electric membership cooperative. She had been employed by the cooperative for nine years. In May 1977 she signed a petition seeking reinstatement of a close friend and fellow employee, who had lost his arm in the course of employment with Hendricks, and had been dismissed. Several days later she was discharged.

Weatherman filed an unfair labor practice charge with the National Labor Relations Board (NLRB or Board), alleging that the discharge violated § 8(a)(1) of the National Labor Relations Act (NLRA or Act), 29 U. S. C. § 158(a)(1). Hendricks' defense, inter alia, was that Weatherman was denied

[ 454 U.S. Page 173]

     the Act's protection because as a "confidential" secretary she was impliedly excluded from the Act's definition of "employee" in § 2(3). The Administrative Law Judge (ALJ) rejected this argument. He noted that the Board's decisions had excluded from bargaining units only those "confidential employees . . . [']who assist and act in a confidential capacity to persons who formulate, determine, and effectuate management policies in the field of labor relations.'" 236 N. L. R. B. 1616, 1619 (1978), quoting B. F. Goodrich Co., 115 N. L. R. B. 722, 724 (1956). Applying this "labor nexus" test, the ALJ found that Weatherman was not in any event such a "confidential employee."*fn2 He also determined that Hendricks had discharged Weatherman for activity -- signing the petition -- protected by § 7 of the Act, 29 U. S. C. § 157.*fn3 The ALJ thus sustained Weatherman's unfair labor practice charge. The Board affirmed "the rulings, findings, and conclusions of the Administrative Law Judge," and ordered that Weatherman be reinstated with backpay. 236 N. L. R. B., at 1616.

[ 454 U.S. Page 174]

     Hendricks sought review in the United States Court of Appeals for the Seventh Circuit and the Board cross-petitioned for enforcement. A divided panel of the court reversed and remanded for further proceedings. 603 F.2d 25 (1979). Although the majority agreed with the Board's factual finding that Weatherman did not "assist in a confidential capacity with respect to labor relations policies," id., at 28, the majority, relying on language in a footnote to NLRB v. Bell Aerospace Page 174} Co., 416 U.S. 267, 284, n. 12 (1974), held that "all secretaries working in a confidential capacity, without regard to labor relations, [must] be excluded from the Act." 603 F.2d, at 30.*fn4 The Court of Appeals therefore remanded for a determination whether Weatherman came within this substantially broader definition of confidential secretary.

On remand, the Board found that Weatherman was not privy to the confidences of her employer and thus concluded that she did not fall within the broader definition of confidential secretary that the Court of Appeals had directed the Board to apply. 247 N. L. R. B. 498 (1980).*fn5 Hendricks again petitioned for review and the Board cross-petitioned for enforcement. The Court of Appeals, by a divided panel, denied enforcement. 627 F.2d 766 (1980). The majority held that the Board had "actually [reapplied] the old standard incorporating the labor nexus," and that the evidence in the

[ 454 U.S. Page 175]

     record failed to support a finding that Weatherman did not come within the court's broader definition of confidential secretary. Id., at 770.*fn6

The Malleable case

This case grew out of efforts of the Office and Professional Employees International Union (Union) to represent, as collective-bargaining agent, various employees of respondent Malleable Iron Range Co. (Malleable). In December 1978 the Union sought certification as the collective-bargaining representative for a unit of office clerical, technical, and professional personnel employed at the respondent's facility in Beaver Dam, Wis. At the subsequent representation hearing, Malleable challenged the inclusion of 18 employees in the unit on the ground that they had access to confidential business information. The Regional Director of the NLRB rejected Malleable's objection, concluding that none of the challenged 18 employees was a confidential employee under the Board's "labor nexus" test. App. to Pet. for Cert. 76a-94a. The Union prevailed in a later representation election, and was accordingly certified as the bargaining agent for the unit. Malleable nevertheless refused to bargain with the Union. Seeking relief, the Union filed unfair labor practice charges with the NLRB. The Board found that Malleable's refusal to bargain violated §§ 8(a)(5) and (1) of the Act, 29 U. S. C. §§ 158(a)(5) and (1), and issued a bargaining order. 244 N. L. R. B. 485 (1979).

Malleable petitioned the Court of Appeals for the Seventh Circuit for review of the order and the Board cross-petitioned for enforcement. In an unreported opinion, a divided panel of the court denied enforcement. App. to Pet. for Cert.

[ 454 U.S. Page 17656]

     a-60a. Order denying enforcement, 631 F.2d 734 (1980). The majority noted that the Regional Director, in determining that none of the 18 individuals was a confidential employee, had applied the Board's labor-nexus test which the Seventh Circuit had rejected in the earlier decisions involving Hendricks. The court remanded the case to the Board for reconsideration consistent "with the Hendricks case." App. to Pet. for Cert. 56a, 59a.

We granted the Board's petition for certiorari in both cases to resolve the conflict among the Courts of Appeals respecting the propriety of the Board's practice of excluding from collective-bargaining units only those confidential employees with a "labor nexus," while rejecting any claim that all employees with access to confidential information are beyond the reach of § 2(3)'s definition of "employee."*fn7 450 U.S. 964 (1981). We hold that there is a reasonable basis in law for the Board's use of the "labor nexus" test. We therefore reverse the judgments of the Court of Appeals, with directions in the Hendricks case to enforce the Board's order,*fn8 and with

[ 454 U.S. Page 177]

     directions in the Malleable case for further proceedings consistent with this opinion.

II

Section 2(3) of the NLRA provides that the "term 'employee' shall include any employee . . ." (emphasis added), with certain stated exceptions such as "agricultural laborers," "supervisors" as defined in § 2(11), and "independent contractors."*fn9 Under a literal reading of the phrase "any employee," then, the workers in question are "employees." But for over 40 years, the NLRB, while rejecting any claim that the definition of "employee" in § 2(3) excludes confidential employees, has excluded from the collective-bargaining units determined under the Act those confidential employees satisfying the Board's labor-nexus test. Respondents Hendricks and Malleable (hereafter respondents) argue that contrary to the Board's practice, all employees who may have access to confidential business information are impliedly excluded from the definition of employee in § 2(3).

In assessing the respondents' argument, we must be mindful of the canon that "the construction of a statute by those charged with its execution should be followed unless there are compelling indications that it is wrong, especially where Congress has refused to alter the administrative construction." Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381 (1969) (footnote omitted); see NLRB v. Bell Aerospace Co., 416 U.S., at 274-275; Zemel v. Rusk, 381 U.S. 1, 11-12 (1965). We therefore proceed to review the Board's determinations from 1940 to 1946 whether confidential employees were "employees" within § 2(3) of the NLRA (Wagner Act), and then determine whether Congress, when it considered those determinations in enacting the Labor Management Relations Act of 1947 (Taft-Hartley Act), intended to alter the Board's practice.

[ 454 U.S. Page 178]

     A

In 1935 the Wagner Act became law. 49 Stat. 449. The Act's broad objectives were to "[encourage] the practice and procedure of collective bargaining and . . . [protect] the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection." Id., at 449-450. The employees covered by the Act were defined in § 2(3): "The term 'employee' shall include any employee . . . but shall not include any individual employed as an agricultural laborer, or in the domestic service of any family or person at his home, or any individual employed by his parent or spouse." Although the Act's express exclusions did not embrace confidential employees, the Board was soon faced with the argument that all individuals who had access to confidential information of their employers should be excluded, as a policy matter, from the definition of "employee." The Board rejected such an implied exclusion, finding it to have "no warrant under the Act." Bull Dog Electric Products Co., 22 N. L. R. B. 1043, 1046 (1940). See also Creamery Package Manufacturing Co., 34 N. L. R. B. 108, 111 (1941). But in fulfilling its statutory obligation to determine appropriate bargaining units under § 9 of the Act, 29 U. S. C. § 159, for which broad discretion has been vested in the Board, see Packard Motor Car Co. v. NLRB, 330 U.S. 485, 491-492 (1947); Pittsburgh Plate Glass Co. v. NLRB, 313 U.S. 146 (1941), the Board adopted special treatment for the narrow group of employees with access to confidential, labor-relations information of the employer. The Board excluded these individuals from bargaining units composed of rank-and-file workers.*fn10 See, e. g., Brooklyn Daily Eagle, 13 N. L. R. B. 974, 986

[ 454 U.S. Page 179]

     (1939); Creamery Package Manufacturing Co., supra, at 110. The Board's rationale was that "management should not be required to handle labor relations matters through employees who are represented by the union with which the [company] is required to deal and who in the normal performance of their duties may obtain advance information of the [company's] position with regard to contract negotiations, the disposition of grievances, and other labor relations matters." Hoover Co., 55 N. L. R. B. 1321, 1323 (1944).

Following its formulation, through 1946, the Board routinely applied the labor-nexus test in numerous decisions to identify those individuals who were to be excluded from bargaining units because of their access to confidential information.*fn ...


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