No Longer Relegated to the Backburner: The NLRB is in for a Wild End to 2024

Like John Travolta in Pulp Fiction, or Cher with her Believe album, or the Red Sox comeback from a 3-games-to-1 deficit against the Yankees, the National Labor Relations Board has experienced a remarkable return to relevance over the past few years. Few could have predicted that the NLRB would be thrust back into the spotlight, but some recent developments and upcoming events will either launch its importance into the stratosphere or rip it to shreds like an errant rocket.

SpaceX v. NLRB

Speaking of rockets, the saga between SpaceX and the NLRB continues in the Fifth Circuit. In 2022, employees of SpaceX published an open letter online, criticizing CEO Elon Musk for his comments and behavior related to his management of Twitter (now known as X).  In the letter, the SpaceX employees said, among other things, that Musk’s behavior made it difficult for them to do their jobs, pointing in particular to a payment by SpaceX of $250,000 to settle a sexual harassment claim against Musk. SpaceX conducted an intensive investigation into who organized the open letter, and ultimately terminated eight employees, claiming that the employees induced signatures from co-workers through threats and intimidation. The fired employees filed an unfair labor practice charge with the NLRB in California. The Board determined that SpaceX violated the Act by interrogating its employees about protected concerted activity and retaliating against employees engaged in protected conduct. 

In a case with potentially massive consequences for the Board, SpaceX filed suit against the NLRB, not in California federal court, but in the Southern District of Texas. SpaceX claims that even though all the operative events of the charge occurred in California, the presence of SpaceX employees in Texas confers jurisdiction on the federal courts in Texas. SpaceX has argued that a Board decision in California affects the working conditions of Texas employees, a legal theory that has led to a complicated jurisdictional dispute. The District Court declined jurisdiction over the dispute and transferred the case to California. But on appeal, the Fifth Circuit found that the jurisdiction was proper and ordered the District Court to request that the Central District of California transfer the case back to Texas, where it is now pending again.

Potentially even more important than the meaty jurisdictional issue is the multi-faceted challenge SpaceX has launched against the NLRB’s very existence.  In its Petition for Declaratory and Injunctive Relief, SpaceX has argued that the Board’s composition violates Article II of the Constitution, which requires the President to have sufficient control over administrative law judges. That ALJs can only be terminated for cause by officers who themselves can only be terminated for cause, SpaceX argues, deprives the President of the oversight endowed by the Constitution. Moreover, SpaceX alleges, the fact that the NLRB exercises executive, legislative, and judicial powers all within one agency violates separation of powers and due process. Finally, the NLRB’s make whole remedies violate the Seventh Amendment right to trial by jury. 

In short, SpaceX is asking the Courts for a radical reorganization of the NLRB. Is this challenge to the Board’s operations and structure something of a longshot? Perhaps. But if the requested relief is granted and affirmed by the Supreme Court, the Board would essentially cease to be able to function in any meaningful way.

UAW v. Musk and Trump

And speaking of famous billionaires opining on labor matters, the United Auto Workers recently filed an unfair labor practice against Elon Musk and Donald Trump for comments they made in a recent interview on Twitter (“X”).  In their discussion, Trump suggested that Musk fire any employees suspected of forming a labor union.  The next day, UAW filed the ULP charge, alleging that the statements infringe upon employee’s Section 7 rights to form and join the labor union of their choosing.  The charge was light on details, but will no doubt follow the guidance of NLRB GC Jennifer Abruzzo, who has advocated for an expansive interpretation of the Act, where any language that would tend to chill union organizing infringes on employees’ Section 7 rights. 

The Board is very likely to sympathize with that argument, but will the Courts agree? It seems logical that Musk’s comments might dissuade employees of his companies (Tesla, SpaceX, Twitter) from considering organizing, as may employees of the Trump Organization.  But Trump’s comments carry the added difficulty (and no doubt fascinating First Amendment issues) of the fact that Trump participated in the interview as a candidate for President. Surely, a political candidate can offer an opinion on the Board, its enforcement priorities, and unions generally, but the Board has its work cut out for it dissecting the statements, context, and thorny legal issues involved. 

Lion Elastomers, LLC v. NLRB

Assuming the NLRB emerges unscathed from the pending SpaceX litigation, a recent decision from the Fifth Circuit seeks to curtail the Board’s whipsawing back and forth between Presidential administrations. In Lion Elastomers, LLC, v. NLRB, the Fifth Circuit held that the Board should not be permitted to change its litigation positions while an appeal is pending in one of the Circuit Courts of Appeal. In May 2020, the Board determined Lion Elastomers committed unfair labor practices by threatening, disciplining, and discharging an employee for engaging in protected activities. When determining whether a union member’s behavior was protected activity, the Board applied the four factors adopted in Atlantic Steel Co., which considered (1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature of the employee’s outburst; and (4) whether the outburst was, in any way, provoked by an employer’s unfair labor practice. In June 2020, Lion Elastomers filed a petition for review of the Board’s Decision.

Only one month later and even before briefing of the Board’s decision, the Board issued General Motors LLC, which replaced the Atlantic Steel factors, to assess whether employees have been unlawfully discharged or discipled in connection with activity protected by Section 7 of the NLRA. Instead, the Board would apply the Wright Line burden-shifting framework which required an initial showing that (1) the employee engaged in Section 7 activity; (2) the employer knew of that activity; and (3) the employer had animus against the Section 7 activity, which must be proven to show a causal relationship between the discipline and Section 7 activity.  The Wright Line standard generally makes it easier for employers to show the employee’s misconduct caused the discipline or discharge, not the protected activity. Additionally, General Motors ruled that the Board would apply Wright Line retroactively to all pending cases. The Court then granted the NLRB’s motion to remand, based on the Board’s decision in General Motors.

Then in May 2023, the Board issued a Supplemental Decision and Order that overruled General Motors and returned to earlier precedent, which included the analysis issued in Atlantic Steel. However, the Fifth Circuit instructed that its remand Order was “not an invitation for the Board to reconsider what legal standards should apply but rather an instruction to apply the legal standards in General Motors.” By overturning its own decision, the Board exceeded the scope of the remand. Even further, without giving Lion Elastomers the opportunity to present any argument under this new theory before any decision is made, the Board violated Lion Elastomers’ due process rights when it overturned General Motors.

The Court ultimately vacated the Board’s Supplemental Decision and Order and issued a remand for the Board to apply General Motors to the present case based on the presumption that the parties to an adjudication will be afforded a full opportunity to be heard before the Board makes any determination.

Key Takeaways

So now that NLRB may as well stand for “No Longer Relegated to the Backburner,” what should employers do?

First, keep in mind much union activity arises from dissatisfied employees who perceive that management is not responsive to their needs.  In many cases, listening sessions, employee surveys, or just an overall review of safety measures, salary, benefits, and other working conditions can avert having employees turn to a union for outside assistance. After all, why pay union dues to improve conditions if things are going well? (One caveat: if an organizing campaign is underway, an employer may not promise to make improvements to the workplace if employees reject the union).

Second, front-line managers should be trained on how to respond to union organizing campaigns, including recognition that audio and video recording is easier than ever before. Any speech, interrogation, or off-hand remark could end up as an exhibit in a Board hearing. Keep in mind that unions regularly employ “salts” for the sole purpose of getting hired by a company to recruit members or uncover unfair labor practices.

Third, recognize when employees are engaged in protected concerted activity and avoid retaliatory actions. Any time an employee makes a complaint regarding working conditions, wages, or hours, employers should treat it as protected activity (unless it can be said with near certainty that the complaint is purely personal).

Finally, it helps take a holistic view of your company and its public image. There are innumerable social media accounts dedicated to trying to shame companies, to garner clicks. Media sensationalism can also play a role, where excerpts from ALJ and Board decisions being plastered across headlines without context or the employer’s point of view. For example, the social media/news aggregation site Reddit has been a hotbed of pro-union and anti-employer activity. The subreddit r/antiwork became famous for pointing out companies who were behaving badly, but the subreddit also has a “Win!” flair for posts when companies treat their employees well. Over 2.8 million users are subscribed, and countless more see stories across social media or through word of mouth about employers who are doing the right things.