News

On August 19, 2025, the United States Court of Appeals for the Fifth Circuit upheld the decisions of three Texas federal district courts granting temporary injunctions to three separate employers that had raised challenges to the constitutionality of the NLRB’s structure in the face of unfair labor practice charges in SpaceX v. NLRB.[1]  Specifically, the employers had raised challenges to the for-cause removal protections of the NLRB’s Administrative Law Judges (ALJs) and Board Members. Upholding these injunctions has major implications for labor law, particularly in states within the Fifth Circuit, and sets the stage for other Circuits, and likely the United States Supreme Court to weigh in on the constitutionality of the NLRB’s structure. Additionally, the decision raises major questions about how the NLRB will conduct business for the foreseeable future, which we will discuss in further detail below.

The Cases on Appeal

The background of the cases is as follows: Three companies in different industries, SpaceX, Energy Transfer, and Findhelp, each faced unfair labor practice complaints brought by employees and pending before ALJs in the NLRB. Prior to administrative hearings on the complaint, each of these companies brought lawsuits in different federal district courts in Texas seeking an injunction declaring the NLRB’s structure as unconstitutional. More specifically, the employers argued that because both Board Members and its ALJs are protected by multiple layers of “for-cause” removal protections, presidential oversight of the agency was limited in a manner that violated Article II. District Courts in the Western, Southern and Northern Districts of Texas, respectively, granted the companies’ preliminary injunctions finding that the NLRB’s “for-cause” removal protections were likely unconstitutional, and the NLRB appealed the ruling to the Fifth Circuit.

As to the merits of the appeal, the Fifth Circuit held that the two layers of for-cause protection for ALJs violates Article II of the United States Constitution by infringing upon the president’s removal authority, consistent with the Fifth Circuit’s prior decision in Jarkesy[2]. That case involved similar challenges to the two-layers of statutory protection afforded SEC ALJs. While acknowledging that the question as to the constitutionality of removal protections for NLRB Board members was more difficult, the Fifth Circuit reasoned that because the NLRB is not a “mirror image” of agencies like the Consumer Product Safety Commission or the FTC, agencies designed to be non-partisan where statutory ALJ protections have been upheld, NLRB members cannot be insulated from at-will presidential removal.

Further, the Fifth Circuit held that being subjected to unconstitutional proceedings before ALJs or Board Members not subject to at-will removal was itself an irreparable harm and that stopping unconstitutional proceedings served the public interest and caused no legitimate harm to the government.

Accordingly, the Fifth Circuit upheld the district court’s grant of a preliminary injunction, staying enforcement of the Act against the employers, finding that they had shown a likelihood of success on the merits.

How the Decision Potentially Impacts the Board

The decision raises serious questions for the continued operation of the NLRB and may serve as a historic tipping point for the Board. In particular as to those employers residing within the Fifth Circuit – Texas, Mississippi, and Louisiana. Any employer in those states could raise a successful challenge to an NLRB proceeding on the similar grounds. Indeed, since the District Court rulings, ALJs have not issued decisions on matters raised in the states that comprise the Fifth Circuit.

Although the Board has not commented on an appeal of the Fifth Circuit’s decision, a circuit split on the issue of irreparable harm at the Sixth and Tenth Circuits, and the importance of the issue to the NLRB’s authority govern its agency and its continuity, in general, makes it likely that the Board will seek an en banc review by the Fifth Circuit, if not a direct appeal to the United States Supreme Court. Further, because similar statutory removal provisions have been challenged with respect to the Consumer Protections Safety Bureau and the Securities and Exchange Commission, this constitutionality issue will likely reach the Supreme Court in one fashion or another.

As currently constituted, the NLRB does not have quorum. Therefore, it is unable to render decisions or modify rules. The Board, through its Regions, the Acting General Counsel, and its ALJs, continues to operate. Indeed, Acting General Counsel William Cowen stated that the work of the Board “has largely been unaffected by the temporary absence of a Board quorum.” While in many ways that is true, the lack of a quorum keeps in place significant precedent developed under the Biden Board, including decisions severely limiting confidentiality and non-disparagement provisions in severance and settlement agreements, forbidding so-called captive audience meetings often used by employers during union organizing drives, making it more difficult for employers to create and enforce work rules and handbook provisions, and the Board’s landmark Cemex decision, which upended the petition process for union organizing and made it more likely that bargaining orders will be issued against employers involved in an organizing drive for even minor unfair labor practices. In addition, the quickie election rule promulgated by the Biden Board – designed to shorten organizing campaigns and to conduct elections with as little as three weeks from the date of petition – cannot be changed.

What Next for Employers?

For employers, it would appear that, at best, the Board is stuck in the mud. President Trump has nominated a new general counsel and two Board members. Their nominations await Senate confirmation. However, those confirmations are less than certain despite Republican majorities in both houses of Congress. Senator Josh Hawley (R-MO), for one, has questioned their nominations based upon their stances on issues such as captive audience meetings, right-to-work, and the PRO Act. It remains to be seen whether this opposition will be sufficient to defeat their nominations, but it may very well be sufficient to delay them. If so, we might anticipate that the Board will be without a quorum as we head into 2026. Such a delay will be impactful to employers who are looking to a newly constituted Board to set the Board onto a more employer-friendly track. As it stands, employers will need to stay in touch with labor counsel and keep an eye on NLRB developments. For now, the precedents set during the Biden administration stand. Therefore, employers must be aware that Board charges may still emanate from violations of those precedent, even if enforcement of those charges may be less vigorous.

Michael Best’s labor team will keep you posted as these matters develop. If you have questions, we encourage you to reach out to any of the members of our labor team to discuss them.