Corporate Attacks Against the National Labor Relations Board Could Break the Government

Dylan Gyauch-Lewis writes that efforts by big businesses, including SpaceX, Amazon, and Trader Joe’s, to undermine the National Labor Relations Board rest on poor interpretations of the Constitution but would devastate the American government and economy if successful. 

After decades of neglect, the Biden administration is empowering labor activists and unions and directing regulators to support them. For much of the last half-century, advocates of big business and deregulation, armed with neoliberal assumptions about business efficiencies, global competition, and the wayward effects of government meddling, successfully weakened unions and workers and the executive agencies that protected them through an array of lobbying efforts, including right-to-work laws. Now, labor regulation is switchbacking toward a more robust stance, thanks to the efforts of “Union Joe.” Certainly, not every action made by the president has been pro-union, particularly his handling of the threatened rail strike in late 2022. Nevertheless, he has been the most pro-labor president since at least Lyndon B. Johnson. Famously, Biden became the first sitting president ever to attend a picket line when he spoke at a United Auto Workers’ strike alongside its president, Shawn Fain.

Biden’s pro-worker ideals are perhaps the only economic value trickling down as they are reflected across the federal bureaucracy, including at the Federal Trade Commission under Chair Lina Khan and the Department of Justice Antitrust Division under Assistant Attorney General Jonathan Kanter. Recently, the FTC made the historic move of filing to block Kroger’s merger with Albertsons because of its projected negative impact on workers, something that would have been unthinkable in previous administrations. Similarly, United States Trade Representative Katherine Tai has adamantly opposed new trade deals that would hurt American workers. 

The most significant about-face on labor policy is probably occurring at the National Labor Relations Board (NLRB), which has roared back to life under the leadership of General Counsel Jennifer Abruzzo. The NLRB was founded in 1935 to enforce the National Labor Relations Act (NLRA), which guarantees the rights of most private sector employees (except for those covered by the Railroad Labor Act) to organize and engage in collective bargaining and action and otherwise protects them against unfair labor practices. Under Abruzzo, the NLRB has promulgated an addendum to the memorandum of understanding with the Departments of Homeland Security and Labor that establishes that Immigration and Customs Enforcement (ICE) will not answer calls about the immigration status of employees during a union drive. It’s limited protection, but it’s a start to re-extending NLRA protections to undocumented immigrants, who have been mostly unprotected since the Supreme Court’s ruling in Hoffman Plastics in 2002. 

Similarly, in Stericycle, the NLRB overturned a dangerous Trump-era Board ruling from Boeing, which created a balancing test between the statutory workers’ rights in Section 7 of the NLRA against “legitimate justifications” for workplace policies. In Stericycle, the NLRB replaced that standard, which required only a business-related justification, with a standard that the policy is illegal if it seriously restricts the exercise of collective action rights, with the exception of when it is a business necessity and is the narrowest possible policy to achieve that necessity. These are just a few examples of the efforts by Abruzzo’s NLRB to unwind policies harming workers.  

Unsurprisingly, corporations are unhappy about these pro-worker changes and are rallying to push back. The NLRB has recently faced a steady stream of lawsuits from businesses. Currently, it is fighting four different cases that allege its structure violates the constitution and, therefore, that its regulations are illegitimate. The first firm to make this argument was Elon Musk’s SpaceX, but it has since been joined by Starbucks, Trader Joe’s, and Amazon, all of whom currently face scrutiny of alleged violations of the NLRA.

It’s hardly new for corporations who don’t want to deal with unions to challenge NLRB’s authority or the legal rights of workers—see, for instance, Supreme Court cases like Epic Systems, Lechmere, and Yeshiva. What is new (and yet also very old) is the challenge that the Board as currently constituted is a violation of the Constitution. The constitutionality question was supposed to have been settled nearly 90 years ago in NLRB v. Jones and Laughlin Steel. However, these corporations hope that a conservative Supreme Court and conservative judges in the lower courts, especially the 5th Circuit Court of Appeals, will be willing to continue a habit of overturning precedent.

The arguments against the NLRB’s constitutionality rest on several planks. The core plank claims that the judicial arm of the NLRB is unconstitutional. Basically, the NLRB has two main components, which have three main functions. The first component is an investigatory/prosecutorial arm. When a complaint gets filed, this arm will gather information on the alleged violation and assess its merits. If, in that process, it finds significant evidence to support the complaint, it will file charges and build out a case against the subject of the complaint (usually a corporation/employer, although employers can also file complaints alleging workers or a union are acting in violation of the NLRA as well). 

This is where the NLRB’s judicial arm gets involved. The prosecutorial arm will present its case before an administrative law judge (ALJ) sitting on the NLRB. An ALJ is a legal expert who serves as an independent arbiter of the facts of a case. They are appointed by the agency for whom they work (in this case, the full five-member board that heads the NLRB) and can only be removed for cause. After the prosecutorial arm makes its case and the defendant responds, the ALJ makes a decision, which the investigators/prosecutors or the subject of the complaint can appeal to the board (it can get confusing, as “the board” can refer to both the NLRB and the five members who oversee it. Furthermore, it is worth clarifying that the five board members are never involved in the investigations). The board’s decision can then be appealed to a federal appellate court by the defendant. 

Returning to the corporations’ claims that the NLRB is unconstitutional, they specifically claim that the presence of both the prosecutorial and ALJ arms violates the separation of powers principle by giving the executive branch a route to circumvent the judiciary while simultaneously impeding the president’s ability to manage the executive branch. 

All of these cases start with how the NLRB allegedly impedes presidential control, claiming that Article II of the Constitution requires the president to be able to fire and replace executive branch personnel at will. Neither the five board members of the NLRB nor the ALJs are subject to at-will dismissal by the president. However, the challenges go further, and allege violations of Articles I and III and the Fifth and Seventh Amendments as well. 

The argument about violating Article III is the most straightforward. As mentioned above, the challenges to the NLRB’s legitimacy cite it as a mechanism of circumventing federal courts. Article III explicitly states that “The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may…establish.” It’s pretty straightforward to go “aha! Administrative law judges!”and claim that clearly violates the plain text since they reside in the executive branch. However, that misunderstands what ALJs fundamentally are. They are not deciding disputes the way courts do. Rather, they are a key part in the executive branch’s power to enforce the law. The power to issue fines and civil penalties for violating the law is a self-explanatory derivative of that executive power, one that Congress has also given explicitly to many agencies, including the NLRB, FTC, Securities Exchange Council, and Environmental Protection Agency. Plus, every decision made by the NLRB is appealable to an Article III court; it isn’t a matter of weakening judicial oversight, merely a question of where the proceedings originate.

Table 1. NLRB’s Alleged Constitutional Violations, According to Four Corporations

Amazon’s Article I claim (presumably echoed by Starbucks and maybe Trader Joes, though neither of them have fleshed their arguments out) is weirder, but mostly boils down to trying to employ the major questions doctrine. Put simply, the argument is that executive agencies shouldn’t be able to issue rules and regulations on important economic matters because that power ought to be reserved for Congress. This is closely tied to the supposed “nondelegation” doctrine, which adherents claim holds that Congress cannot deputize the executive branch to fill in the gaps left by legislation. This argument runs into the problem that it basically makes the entire federal government unworkable. Congress does not have the necessary expertise (or time) to dictate every little detail of every single policy. As a result, it makes a lot of sense for Congress to give broad objectives and mandates and then for the executive branch to execute those goals and mandates, filling in the blanks as needed. This is how the federal government has operated since its founding. In an era before the telegraph, let alone the internet, the founding generation would have found it very confusing to think that federal employees in the territories—or even then far-flung states like Maine or Georgia—would await word from Congress on each implementational ambiguity they encountered. Every executive agency, from the EPA to the Surface Transportation Board operates by interpreting Congressional mandates into specific policy.

The Fifth and Seventh Amendment arguments are fundamentally connected. The Fifth Amendment requires that no one can be charged with “a capital, or otherwise infamous crime” without a grand jury indictment. The Seventh guarantees a right to a jury trial in civil suits where the dispute’s monetary value is more than $20. Of the two arguments, the Seventh Amendment one is substantially stronger. Overall, the Fifth Amendment contention makes little sense as the entire text is about the rights of defendants charged in criminal cases. The NLRB does not issue criminal charges. However, since the NLRB’s decisions are not self-enforcing, if the subject of a complaint refuses to comply, then the NLRB has to take them to federal court. However, this is not really an ordinary civil suit, nor has it historically been treated as one. Rather, there is longstanding precedent that disputes involving administrative agencies are subject only to such judicial oversight as Congress dictates, because the agencies’ actions are an extension of congressional legislation. Plus, Jones and Laughlin Steel already litigated the Seventh Amendment question, so that challenge is presumably settled to the extent to which the promises of judicial nominees to avoid “judicial activism” are remotely sincere.

Ultimately, there are numerous problems with the claims of unconstitutionality on the part of the NLRB. The way that agencies like the NLRB work is sort of like how local law enforcement works. Where Congress empowers the NLRB to issue fines and penalties to enforce labor law, city councils authorize their police departments to issue parking tickets. Where the NLRB can take the issue to court if you fail to comply, a police department can take you to court if you don’t pay the ticket. And in neither of those cases is the penalty a circumvention of judicial power, because it is a fundamental part of the executive implementing mandates given to it by a legislative body. So then when it goes to court, it is not pursuing a typical civil or criminal suit, but only an order to enforce an already established penalty. Similarly, that is why claims about rights to due process and jury trials are largely inapplicable as it is neither a true civil dispute nor a criminal trial. 

If any of the arguments about the NLRB violating Article I, II, or III eventually make it to court and are affirmed, it could undermine much of the administrative state, which, as this Federalist Society blog implies, is precisely the point. If the courts were to rule against the NLRB on the Article II argument, it would threaten any agency with a degree of insularity from presidential removal (not to mention being a major departure from case law), including the Federal Reserve, the FTC, and the United States Postal Service. Although independent agencies that use a different type of adjudicator in lieu of an ALJ may see only minimal impacts of such a decision (depending on its breadth), as many as 27 different agencies that use ALJs could be directly affected, including the Social Security Administration, the Department of Health and Human Services, and the Federal Energy Regulatory Commission. And a ruling under Article III could undermine all proceedings within administrative agencies. Any way a court finds to neuter the NLRB will have wide-ranging implications that undermine the entire structure of the executive branch, not to mention stripping workers of the protections they are guaranteed in the NLRA. The absurd consequences of big business’ arguments against the constitutionality of the administration’s regulatory system reveals how broken the government’s acquiescence to business and abandonment of labor has been.  

Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.