On August 19, 2025, the Fifth Circuit Court of Appeals issued a decision that could significantly impact the National Labor Relations Board’s (“NLRB”) operations. The Court upheld injunctions blocking the NLRB from prosecuting unfair labor practice claims against SpaceX, Aunt Bertha, and Energy Transfer LP while those companies challenge the constitutionality of the agency’s structure. Although the decision applies only within Texas, Louisiana, and Mississippi, the ruling sends a clear message:
Courts are willing to question the NLRB’s independence and the limits of executive authority in labor law enforcement.
The Fifth Circuit’s decision centers on the removal protections enjoyed by NLRB Board Members and administrative law judges (“ALJs”). These protections were designed to promote independence by insulating agency officials from political pressure. However, the Court found that this structure may go too far, infringing on the President’s constitutional duty to oversee executive branch officials.
The Court highlighted a “two-layer” system of protection for ALJs. An NLRB ALJ can only be removed for cause by the Merit Systems Protection Board (“MSPB”), and MSPB Members themselves can only be removed for cause. This double layer of protection, the Court concluded, makes ALJs too insulated from accountability. The panel relied heavily on its earlier decision in Jarkesy v. SEC, where it struck down a similar removal scheme at the Securities and Exchange Commission.
The Fifth Circuit also questioned the protections for NLRB Board Members. While the Supreme Court upheld removal restrictions for Federal Trade Commission (“FTC”) officials from Humphrey’s Executor v. United States (1935), the Fifth Circuit emphasized that the NLRB differs from the FTC. According to the panel, NLRB Members exercise “substantial executive power,” which makes it harder to justify insulating them from presidential oversight.
Although the ruling does not immediately dismantle the NLRB, it creates a significant precedent for employers:
- First, the decision signals growing skepticism toward independent agencies insulated from presidential removal power. Courts have already questioned the structure of the Consumer Financial Protection Bureau and the SEC. The NLRB is now squarely in the spotlight.
- Second, the ruling highlights the uncertainty surrounding labor law enforcement. Employers in the Fifth Circuit may be able to challenge NLRB enforcement actions on constitutional grounds, while businesses in other regions remain fully subject to the agency’s authority. Until the Supreme Court resolves the issue, the result will be a patchwork of rules that varies by jurisdiction.
- Third, the decision could encourage more employers to test constitutional arguments as a defense strategy. Although success is far from guaranteed, this case illustrates that courts are increasingly willing to hear such challenges.
Employer Takeaways
Employers should not interpret the Fifth Circuit’s ruling as a green light to ignore labor law. The NLRB continues to enforce the National Labor Relations Act, and most courts will still back its authority. However, the decision does create opportunities – and risks – that businesses should consider.
- Stay compliant. Even with the injunction in place, employers should continue to follow all NLRB rules and regulations. Noncompliance could expose businesses to significant liability if higher courts ultimately uphold the agency’s structure.
- Understand the geographic limits. The injunction applies only to Texas, Louisiana, and Mississippi. Employers operating outside of the Fifth Circuit cannot rely on this decision as a defense – at least not yet.
- Monitor developments closely. Appeals are almost certain, and the Supreme Court may step in to resolve the issue. If the Supreme Court affirms the Fifth Circuit, the decision could reshape the NLRB and other federal agencies. If it rejects the challenge, the NLRB’s authority will remain intact.
- Evaluate legal strategy. Employers facing NLRB charges in the Fifth Circuit should consult with counsel about whether constitutional arguments may strengthen their case. Even outside the Fifth Circuit, companies should watch how other courts respond to similar challenges.
The Fifth Circuit’s ruling is almost certainly not the final word. The NLRB and the Department of Justice are expected to appeal, and the Supreme Court may ultimately decide whether the agency’s structure passes constitutional muster. A Supreme Court decision striking down the NLRB’s protections would have sweeping implications, potentially affecting other agencies that rely on similar structures. Such a ruling would strengthen presidential control but weaken agency independence, altering the balance of administrative law.
On the other hand, if the Supreme Court reaffirms Humphrey’s Executor and upholds the NLRB’s structure, employers may see their constitutional arguments quickly shut down. Until then, uncertainty will continue to cloud labor law enforcement.
The Fifth Circuit’s decision marks a pivotal moment in the ongoing debate over the NLRB’s legitimacy. By questioning the constitutionality of the Board’s structure, the Court has given employers a new legal avenue to challenge agency authority.
Employers should continue to comply with federal labor laws but remain attentive to how this litigation unfolds. Whether the Supreme Court ultimately limits or affirms the NLRB’s independence, the stakes could not be higher. The outcome may redefine the balance between executive oversight and agency autonomy – and reshape the future of labor law enforcement nationwide.
At Hoyer Law Group, we help employers stay compliant while protecting their rights. If your business faces NLRB charges or you have questions about how this decision may affect your operations, our team can provide the guidance and strategies you need. Contact us today at Hoyer Law Group to discuss how we can support your organization.
