Businesses ask courts if the NLRB is constitutional

The National Labor Relations Board has made a point in recent years of re-examining the laws and regulations that the federal agency enforces, offering up novel new interpretations. Increasingly, businesses are doing the same, with some even asking, “Is the NLRB itself constitutional?”

Space Exploration Technologies Corp., better known as SpaceX, the company run by tech billionaire Elon Musk, has challenged the authority of the board. In a Jan. 4 filing in response to an unfair labor practices complaint the NLRB had issued, SpaceX argued that the board’s very existence violated the Constitution.

“[The] court should stay or enjoin the current agency proceedings [and] declare that the NLRB’s structure violates the separation of powers under Article II of the Constitution,” the company argued in a Texas court.

Later that month, grocery chain Trader Joe’s made the same argument. “The structure and organization of the National Labor Relations Board and the agency’s administrative law judges is unconstitutional,” the company’s attorney Christopher Murphy said, according to a Bloomberg report.

These arguments are not simply the creation of imaginative lawyers. Instead, they appear to be motivated (at least in part) by a federal appellate decision that is currently being reviewed by the Supreme Court. Nine months ago, in SEC v. Jarkesy, the Fifth Circuit Court of Appeals found that a federal agency which adjudicated fraud claims in its own administrative hearings violated two constitutional principles: the Seventh Amendment’s guarantee of a jury trial and the Constitution’s requirement that only Congress may exercise legislative powers. The Supreme Court will likely deliver its own opinion on Jarkesy sometime in the next six months.

Federal agencies, including the NLRB, are supposedly part of the executive branch but also wield prosecutorial and judicial powers. The agencies can not only issue legal complaints but run their own administrative law courts.

That’s a problem, as CEI’s own Ryan Young and Stone Washington have noted.  “The agency is not only the prosecutor, it also appoints the judge that will hear your case. It pays the judge’s salary. It sets the procedural rules your attorney must follow,” Washington and Young explain. “If this sounds unfair, that’s because it is. No wonder the government wins nearly every dispute in these special in-house agency courts.”

On top of that, many agencies, including the NLRB, do not answer to the White House. The president appoints the officials and Congress confirms them, but beyond that they act independently and cannot be fired. So not only do they have judicial powers but they are not answerable to anyone for how they use them besides the board itself.

The NLRB has been around for about 90 years, so it’s a bit odd that these questions are being raised now. The natural inclination of businesses is to accept that Washington will impose some regulations and then quibble over where precisely the line is drawn. While businesses have frequently fought the board’s actions in court, they have rarely, if ever, bothered to challenge its underlying constitutionality. What may have changed their thinking – in addition to Jarkesy – is the NLRB’s own actions.

Starting in the Obama administration, NLRB officials have pushed for radical reinterpretations of the National Labor Relations Act and the Board’s existing rules and regulations. The Biden administration has continued this trend. It has done this with the intention of boosting the power of the NLRB and of aiding unions generally. These officials believed that the NLRA mandated that the government encourage unionization (this, incidentally, is a misreading of the law’s original intent) and that the board was failing in that regard, so changes were needed.

The current NLRB general counsel, Jennifer Abruzzo, has targeted several long-standing practices that businesses use to counter workplace organizing bids, such as mandatory attendance meetings, or requesting secret ballot elections. Abruzzo has argued that these practices should be prohibited under updated readings of the NLRA.

Abruzzo argued in an April, 2022 memo that it was irrelevant that these practices were commonplace and considered uncontroversial: “I believe that the NLRB case precedent, which has tolerated such meetings, is at odds with fundamental labor-law principles, our statutory language, and our Congressional mandate. Because of this, I plan to urge the Board to reconsider such precedent and find mandatory meetings of this sort unlawful.”

She has moved to broaden the board’s prosecutorial powers on numerous other issues, and has been hampered only by the inability to find appropriate legal cases.  

There’s a reason why people tend to prefer accepting the status quo to opening up debate on the fundamentals of something: It can go in directions that the instigators do not intend. For one thing, if you can try it, then the other guy can too.

The NLRB is discovering this. After decades of being a quiet agency that handled unfair practice complaints and monitored workplace elections, its officials embarked on an effort to expand its power by reinterpreting and re-working the very rules it has operated under all this time. Some businesses have responded in kind, asking questions that raise fundamental questions about the board’s very legitimacy. And, in at least one case, those questions are being raised by a person with the resources and audacity to take it as far as he can.