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Federal Register/Vol. 76, No. 168/Tuesday, August 30, 2011/Rules and Regulations
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the Board does not have the means to
calculate the number of small
businesses within the Board’s
jurisdiction. Accordingly, the Board
assumes for purposes of this analysis
that the great majority of the nearly 6
million small businesses will be
affected, and further that this number is
a substantial number within the
meaning of 5 U.S.C. 601. However, as
discussed below, because the economic
impact on those employers is minimal,
the Board concludes that, under 5
U.S.C. 605, the final rule will not have
a significant economic impact on any
small employers.
The RFA does not define ‘‘significant
economic impact.’’ 5 U.S.C. 601. In the
absence of specific definitions, ‘‘what is
‘significant’ * * * will vary depending
on the problem that needs to be
addressed, the rule’s requirements, and
the preliminary assessment of the rule’s
impact.’’ See A Guide for Government
Agencies: How to Comply with the
Regulatory Flexibility Act, Office of
Advocacy, U.S. Small Business
Administration at 17 (available at
http://www.sba.gov) (SBA Guide). As to
economic impact and whether it is
significant, one important indicator is
the cost of compliance in relation to
revenue of the entity or the percentage
of profits affected. Id. at 17. More
specifically, the criteria to be considered
are:
• Whether the rule will lead to long-
term insolvency, i.e., regulatory costs
that significantly reduce profits;
• Whether the rule will lead to short-
term insolvency, i.e., increasing
operating expenses or new debt more
than cash reserves and cash flow can
support, causing nonmarginal firms to
close;
• Whether the rule will have
disproportionate effects, placing small
entities at a significant competitive
disadvantage; and
• Whether the rule will result in
inefficiency, i.e., in social costs to small
entities that outweigh the social benefits
resulting from the rule. Id. at 26.
Applying these standards, the Board
concludes that the economic impact of
its notice-posting rule on small
employers is not significant. The Board
has determined that the average cost of
complying with the rule in the first year
for all employers subject to the NLRA
will be $64.40. It is unlikely in the
extreme that this minimal cost would
lead to either the short- or long-term
insolvency of any business entity, or
place small employers at a competitive
disadvantage. Since this rule applies
only to organizations within the NLRB’s
jurisdictional standards, the smallest
employer subject to the rule must have

an annual inflow or outflow across state
lines of at least $50,000. Siemons
Mailing Service, 122 NLRB 81 (1959).
Given that the Board estimates that this
rule will cost, on average, $64.40, the
total cost for the smallest affected
companies would be an amount equal to
less than two-tenths of one percent of
that required annual inflow or outflow
(.13%). The Board concludes that such
a small percentage is highly unlikely to
adversely affect a small business.193
And, in the Board’s judgment, the social
benefits of employees’ (and employers’)
becoming familiar with employees’
NLRA rights far outweigh the minimal
costs to employers of posting notices
informing employees of those rights.194
For all the foregoing reasons, the
Board has concluded that the final rule
will not have a significant economic
impact on a substantial number of small
entities. 5 U.S.C. 605.
As discussed in the NPRM, because it
assumes that a substantial number of
small businesses will be required to
comply with the rule, the Board
preliminarily considered alternatives
that would minimize the impact of the
rule, including a tiered approach for
small entities with only a few
employees. However, as it also
explained, the Board rejected those
alternatives, concluding that a tiered
approach or an exemption for some
small entities would substantially
undermine the purpose of the rule
because so many employers would be
exempt under the SBA definitions.
Given the very small estimated cost of
compliance, it is possible that the
burden on a small business of
determining whether it fell into a
particular tier might exceed the burden
of compliance. The Board further
pointed out that Congress gave the
Board very broad jurisdiction, with no
suggestion that it wanted to limit
coverage of any part of the NLRA to
only larger employers. The Board also
believes that employees of small
employers have no less need of a Board
notice than have employees of larger
employers. Finally, the Board’s
jurisdictional standards mean that very
small employers will not be covered by
the rule in any case. 75 FR 80416. (A
summary of the Board’s discretionary
jurisdictional standards appears in
§ 104.204, below.) Thus, although

several comments urge that small
employers be exempted from the rule,
the Board remains persuaded, for the
reasons set forth in the NPRM, that such
an exemption is unwarranted.195
Some comments contend that, in
concluding that the proposed rule will
not have a significant impact on small
employers, the Board understates the
rule’s actual prospective costs. One
comment, from Baker & Daniels LLP,
argues that the Board improperly
focuses solely on the cost of complying
with the rule—i.e., of printing and
posting the notice—and ignored the
‘‘actual economic impact of the rule’s
effect and purpose.’’ According to this
comment, it is predictable that, as more
employees become aware of their NLRA
rights, they will file more unfair labor
practice charges and elect unions to
serve as their collective-bargaining
representatives. The comment further
asserts that the Board has ignored the
‘‘economic realities of unionization,’’
specifically that union wages are
inflationary; that unions make business
less flexible, less competitive, and less
profitable; and that unions cause job
loss and stifle economic recovery from
recessions. Accordingly, this comment
contends that ‘‘the Board’s RFA
certification is invalid, and [that] the
Board must prepare an initial regulatory
flexibility analysis.’’ Numerous other
comments echo similar concerns, but
without reference to the RFA.
The Board disagrees with the
comment submitted by Baker & Daniels
LLP.196 Section 605(b) of the RFA states
that an agency need not prepare an
initial regulatory flexibility analysis if
the agency head certifies that the rule

193 In reaching this conclusion, the Board believes
it is likely that employers that might otherwise be
significantly affected even by the low cost of
compliance under this rule will not meet the
Board’s jurisdictional requirements, and
consequently those employers will not be subject to
this rule.
194 See further discussion in section II, subsection
C, Factual Support for the Rule, above.
195 Cass County Electric Cooperative says that,
after estimating the average cost of compliance, ‘‘the
NLRB quickly digresses into an attempt to estimate
the cost of the proposed rule on only small
businesses.’’ The Board responds that in estimating
the cost of the rule on small businesses, it was
doing what the RFA explicitly requires (and that
focusing on small businesses, which comprise more
than 99 percent of potentially affected firms, is
hardly a ‘‘digression’’). The comment also asserts
that the Board concluded ‘‘that the cost of
estimating the implementation cost will likely
exceed the cost of implementation, and thus is not
warranted. At best, this is a poor excuse to justify
the rule.’’ This misstates the Board’s observation
that ‘‘Given the very small estimated cost of
compliance, it is possible that the burden on a small
business of determining whether it fell into a
particular tier might exceed the burden of
compliance.’’ This observation was one of the
reasons why the Board rejected a tiered approach
to coverage for small entities, not an ‘‘excuse to
justify the rule.’’ 75 FR 80416.
196 In any event, the comment from Baker &
Daniels LLP and related comments are difficult to
square with the assertions made in numerous other
comments that the notice posting is unnecessary
because employees are already well aware of their
NLRA rights and have made informed decisions not
to join unions or seek union representation.

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