Legal Updates
Federal Appellate Decision Challenges Legitimacy Of NLRB
On August 19, 2025, the U.S. Fifth Circuit Court of Appeals issued a decision with sweeping implications for labor law. In Space Exploration Technologies Corporation v. National Labor Relations Board (“SpaceX”), the court affirmed preliminary injunctions that halted three National Labor Relations Board (the “NLRB”) unfair labor practice (“ULP”) proceedings against employers SpaceX, Energy Transfer/La Grange, and Findhelp/Aunt Bertha.
The Fifth Circuit based its decision on a determination that the structure of the NLRB may be unconstitutional. According to the ruling, the “for-cause” protections of the National Labor Relations Act (the “NLRA”) that insulate NLRB Board members and Administrative Law Judges (“ALJs”) from presidential removal likely violate Article II of the Constitution.
While the Fifth Circuit’s ruling is not definitive, it invites similar challenges by other employers and raises serious questions as to the continued viability of the NLRB, and even federal labor law itself, at least as currently structured.
Background
The Fifth Circuit’s SpaceX decision stemmed from three NLRB proceedings started during the Biden administration. The NLRB pursued ULP cases against (i) SpaceX, concerning allegedly unlawful severance agreements and work rules, as well as an allegedly retaliatory termination; (ii) Energy Transfer/LaGrange, based on a ULP charge claiming retaliatory termination; and (iii) Findhelp/Aunt Bertha, arising from multiple ULP charges alleging unlawful terminations, coercion, and surveillance tied to union organizing.
In response to the NLRB proceedings, each employer filed suit in a Texas federal district courts, challenging the constitutionality of the NLRB’s structure and seeking to block the ULP cases from proceeding. The district courts granted injunctions, finding that the employers were likely to prevail in their challenges, and that forcing the employers to litigate before an unconstitutionally structured tribunal would constitute irreparable harm.
Fifth Circuit’s Decision
The Fifth Circuit affirmed the district courts’ rulings, freezing the ULP proceedings. The court agreed that the employers were likely to succeed on their argument that the structure of the NLRB, with its members protected from removal, violates Article II of the Constitution, which gives the President the right to supervise and remove federal officers.
Notably, the Fifth Circuit did not issue a definitive ruling on this issue. Instead, it remanded the cases to the district courts to determine, through full hearings, the merits of the employers’ constitutional challenges.
Based on the proceedings to date, however, it seems likely that the district courts will uphold those challenges. If so, the prospects for further appeals in these cases seem uncertain, as the NLRB notified the Fifth Circuit in March of this year that it would no longer defend the constitutionality of the NLRA’s removal protections for Board members.
Implications For Employers
The potential significance of the Fifth Circuit’s decision is monumental. Conceivably, when the matters return to the district courts for further proceedings, the district courts could find not just the NLRB but the whole of the NLRA unconstitutional.
In practical effect, such a finding would mean that employers could not be forced to bargain with unions. Employees could not be forced to choose between paying union dues and keeping their jobs. Strikes would no longer have legal protection. Individual states could adopt their own private-sector labor laws, leading to a patchwork of state laws, because there would be no federal law preempting them from doing so.
It seems likely that the Supreme Court will ultimately resolve this constitutional issue. Indeed, the Supreme Court recently agreed to decide a similar case, involving President Trump’s removal of a member of the Federal Trade Commission.
Pending such a definitive ruling, employers – especially in the states that fall within the Fifth Circuit (Louisiana, Mississippi, and Texas) – faced with NLRB prosecutions of ULP charges may want to consider seeking similar preliminary injunctions to halt the proceedings. The Fifth Circuit’s decision suggests that federal district courts have jurisdiction to consider such challenges even where the employer has actively litigated the ULP proceedings.
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If you have questions about the Fifth Circuit’s SpaceX decision or any related NLRA matters, please feel free to reach out to one of our experienced labor attorneys.
