Round 2 of NFIB’s lawsuit against the NLRB’s “poster rule” got underway yesterday with arguments in the federal Court of Appeals in Washington, D.C. The rule, announced in August 2011, would require business owners to prominently post a notice in the workplace telling employees how to unionize.

After the NRLB issued the notice in 2011, NFIB sued to stop the rule. Besides taking issue with poster’s outrageously pro-union language, NFIB argued in court that the NLRB doesn’t have authority to impose a posting requirement on over six million employers. As a creature of statute, the NLRB can do only what Congress tells it to do. And Congress hasn’t told the NLRB to issue a poster. In March, federal District Court Judge Amy Berman Jackson ruled that the NLRB had authority to issue the poster rule. NFIB and other employer groups appealed Jackson’s order and asked the federal court of appeals to adopt the opinion of a federal District Court judge in South Carolina who, in another lawsuit, struck down the rule.

During yesterday’s argument, the NLRB apparently conceded that the agency lacks power to impose affirmative obligations on employers unless the employer commits an unfair labor practice. Then,—remarkably—the NLRB made the bold, and unwieldy, claim that failure to inform employees of their rights under labor laws is an unfair labor practice in itself.

In other words, the NLRB believes that the agency can order millions of employers to post information about labor law because federal law currently imposes an affirmative obligation on employers to educate employees about their right to unionize. More outrageous – under the NLRB’s view, employers who fail to inform employees of their rights are today in violation of the National Labor Relations Act. Not surprisingly, this assertion, which would give the NLRB seemingly unlimited power, met skepticism from the judges.

The NLRB contends that changing workforce demographics justify the poster rule. In the agency’s words, because there is a higher percentage of non-English speaking workers and lower percentage of union members, workers don’t know their NLRA rights. Such an assumption is dubious in the Internet age. And the agency conducted no empirical study to back up its assertion that a (biased, one-sided) poster in the break room will increase awareness of NLRA rights. In other words, the NLRB hasn’t shown the rule is necessary, a requirement for federal rulemaking (this is assuming the agency had authority to issue a poster rule, which it doesn’t).

The bottom line is that yesterday’s argument failed to demonstrate why the NLRB has authority to compel business owners to display these posters. Moreover, there is something dubious about the agency’s suggestion that it should have free reign to decide the scope of its own jurisdiction. To be sure, there is nothing stopping the NLRB from imposing further burdens on employers if it gets away with this. Perhaps next it will require employers to pay employees to attend labor training, or file annual reports on labor issues, or to allow union activists on to their property to lecture employees on labor issues. If we throw away the statutory limitations on the agency’s powers, then anything goes.