SpaceX’s NLRB Challenge Could Force Labor Law Enforcement Reset

Last week, Elon Musk’s SpaceX sued the National Labor Relations Board in federal court, challenging the constitutionality of the Board’s ability to try cases internally before its own administrative law judges before proceeding to federal court. The outcome of the case could be influenced by a U.S. Supreme Court ruling in a similar pending challenge to SEC proceedings.

How the law is currently enforced: The National Labor Relations Act is unique among most federal employment laws. Most of the enforcement is done within the NLRB itself, and cases will only go to federal court if appealed. 

• Aggrieved parties cannot sue in federal court, but must present allegations of unfair labor practices (“charges”) to the NLRB’s General Counsel, who may then issue a “complaint,” which is akin to an indictment. Most charges are settled by the parties before the case proceeds any further.
  
  
• A determination of guilt or innocence is then made by an administrative law judge (ALJ), who is appointed and employed by the NLRB. 
  
  
• Issues of law are then decided by the 5-member National Labor Relations Board, which generally defers to the ALJ’s fact determinations.
  
  
• Only after the Board has ruled may the case go before a federal circuit court (and potentially the U.S. Supreme Court) for a review of the NLRB’s interpretation of the law.
  
  
• Significantly, the NLRB issues very few regulations, relying instead on case-by-case adjudications to shape interpretation of the law’s broad terms.

SpaceX’s challenge: If this sounds like the NLRB acts like prosecutor, judge, and jury, that’s essentially what SpaceX is alleging.

• SpaceX is seeking to enjoin NLRB from further proceedings in an unfair labor practice case against the company.
  
  
  1. Quoting James Madison, SpaceX argues that the “accumulation of all powers legislative, executive and judiciary in the same hands [is] the very definition of tyranny.”
     
     
• A similar suit against the SEC (SEC v. Jarkesy) resulted in a Fifth Circuit ruling that the setup violates the constitutional separation of powers.
  
  
  1. That case will be decided by the U.S. Supreme Court later this year.
     
     
• Critics of the NLRB are heralding the case as a way to prevent the Board from “rewriting labor law to limit employer rights to manage their workforces.”

What it could mean for your company: If the SpaceX decision results in the elimination of NLRB ALJs in their current form, it could bring to a halt the adjudication and enforcement functions of the agency.

• It remains to be seen whether the NLRB itself could revise the ALJ function on its own or whether it would require an Act of Congress.
  
  
• If the latter, it could prompt a reexamination by Congress of the National Labor Relations Act, which has not been significantly amended since 1947.