Federal Appellate Court Enjoins NLRB Proceedings, Concluding the NLRB’s Structure Is Likely Unconstitutional

August 22, 2025

Chris S. Edwards and Avery J. Locklear

Ward and Smith, P.A.

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In Space Exploration Technology Corp. v. NLRB, No. 24-50627 (5th Cir. 2025) (“SpaceX”), the U.S. Court of Appeals for the Fifth Circuit affirmed a district court’s preliminary injunctions that halted several ongoing unfair-labor-practice cases pending before the National Labor Relations Board (“NLRB”).

The NLRB’s Board Members and administrative law judges (“ALJs”) enjoy “for cause” removal protections, which generally means that they can be removed only for malfeasance or disregard of duty.

The Court concluded that because those protections shielded the Board Members and ALJs from Presidential oversight, the NLRB’s structure was likely unconstitutional. In other words, because the President cannot remove either Board Members or ALJs at will, they are too unaccountable to wield “executive power” under Article II of the Constitution.

While the theories might seem complicated, employers should understand the practical implications of the Court’s decision, which could permanently alter the NLRB’s structure.

Background

A group of employers, including the well-known SpaceX, received unfair labor-practice charges from the NLRB. The NLRB issues such charges when, for example, an employee is terminated for talking about pay or working conditions (known as “concerted activity”), interfering with union elections, or refusing to bargain in good faith with an NLRB-certified union.

The employers sued the NLRB in federal district court, arguing that the agency’s structure violates the Constitution’s separation of power. Their theory stems from a line of recent Supreme Court cases striking down for-cause removal protections for some federal decisionmakers. Here, the employers argued that the NLRB’s structure was unconstitutional in two respects: (1) the agency’s Board Members, who the employers argued wield substantial executive power, are protected by for-cause removal and (2) the agency’s ALJs are insulated by at least two layers of for-cause removal protection—that is, they can be removed only for cause by the board, which has its own for-cause removal protection.

Federal district courts in Texas issued preliminary injunctions against the NLRB, meaning that they concluded the employers were likely right that the agency was unconstitutional. The injunction halts the unfair labor-practice proceedings until the district court determines finally whether the agency’s structure violates the constitution.

The NLRB appealed the district courts’ decisions to the Fifth Circuit, the federal appellate court that hears appeals from Mississippi, Louisiana, and Texas. That Court issued its decision earlier this week.

The Court concludes that the NLRB’s structure likely violates the Constitution.

The Fifth Circuit concluded that the employers had shown that the for-cause removal protections for both the NLRB’s ALJs and Board Members were likely unconstitutional.

• To decide the ALJ issue, the Court relied on its earlier decision in Jarkesy v. Securities & Exchange Commission, 34 F.4th 446 (5th Cir. 2022). In that case, the Court confronted removal scheme for SEC ALJs and concluded that it violated the Constitution because (1) ALJs could be removed by the SEC only for “good cause” as determined by the Merit System Protection Board (“MSPB”) and (2) SEC Commissioners and MSPB Members themselves could be removed only for good cause. That structure rendered the ALJs unaccountable to Presidential oversight, which interfered with the President’s duty to “take care that the laws are faithfully executed.”

  The Court observed that the NLRB’s structure was identical to the structure of the SEC, which it declared unconstitutional in Jarkesy, which helped it reach the same conclusion in this case.

• As to the Board Members, the Court determined that their for-cause removal protections were likely unconstitutional because the board exercised “substantial executive power.”

  The Court’s analysis highlights another issue that has surfaced at the Supreme Court recently—the continuing viability or scope of the Supreme Court’s decision in Humphrey’s Executor v. United States, 295 U.S. 602 (1935). In that case, the Supreme Court upheld for-cause removal restrictions for commissioners serving on the Federal Trade Commission. That case is often cited for the proposition that removal restrictions for multimember expert agencies are constitutional.

  To conclude, the Board Members’ appointments were unconstitutional in SpaceX, the Fifth Circuit determined that the narrow exception in Humphrey’s Executor did not apply because the NLRB’s Board exercised substantial executive power and lacked structural, partisan balance. As the Court explained, under the National Labor Relations Act, those Board Members have the power to “determine bargaining units, direct representation elections, adjudicate unfair-labor-practice charges, and seek enforcement of their orders in federal court.”

  In addition, the Court observed that, unlike other multi-member boards that are politically balanced, the NLRB’s work is recognized as inherently political, which counseled in favor of giving the President greater control of the agency. In other words, the agency is already understood to be political, so the independence touted by Humphrey’s Executor need not apply.

What will happen next?

The NLRB might apply to the Supreme Court of the United States for a stay of the district court’s injunction. That is, it could ask the Supreme Court to lift the injunction while the case plays out in the federal district court.

Whether it chooses to do so will be interesting. One reason for such interest would be the politics underlying the decision. The Court was right when it said that the NLRB’s functions are viewed as political. And SpaceX proves the point. The unfair labor-practice charges were brought during Joe Biden’s administration. But by the time the NLRB filed its brief in the Fifth Circuit, the Trump administration had shifted its policies. As a result, in its brief, the NLRB conceded that the removal protections were unconstitutional. The NLRB still wanted the injunction lifted or limited for other reasons, so it may seek further review, but the Fifth Circuit adopted the NLRB’s position on the merits of the parties’ dispute.

If the NLRB elects to seek relief from the Supreme Court, it may get it—but not necessarily because the Court disagrees with the Fifth Circuit’s merits conclusion. Whether a party is entitled to injunctive relief depends on several factors, only one of which is likelihood of success on the merits. Other factors include whether the party seeking the injunction will suffer irreparable harm and whether the public interest favors an injunction.

While the NLRB may argue about irreparable harm and the public interest before the Supreme Court, that Court has already tipped its hand on the merits question. In a decision issued in May in Wilcox v. Trump, No. 24A966, the Supreme Court lifted an injunction that had prohibited the Trump administration from removing NLRB Board Member Gwen Wilcox. Many legal commentators have suggested that Wilcox could signal an end to Humphrey’s Executor and for-cause removal protections for independent administrative agencies, like the NLRB, FCC, or FTC.

Is this the end of the NLRB?

So what will become of the NLRB? It’s unlikely that the agency itself is unconstitutional or that an injunction will prohibit it from doing its work. But a decision here could fundamentally alter how the NLRB is structured going forward.

Here are some questions that employers covered by the National Labor Relations Act might have and a quick answer on how this decision might affect your company:

• If the NLRB’s structure is unconstitutional, does that mean the agency disappears? Not necessarily. The National Labor Relations Act, which creates the NLRB, has a severability clause. That type of clause normally creates a presumption that offending provisions can be cut away while the rest remains.
• If the Court could severe the removal protections for ALJs and Board Members, why didn’t it do so? Because severability is a merits question. The Supreme Court’s severability decisions all came after a final determination that a specific statutory feature was unconstitutional. As the district court put it—and the Fifth Circuit quoted—“[a] statute must be found unconstitutional as written before the issue of severance can be reached.” In other words, courts decide first whether there is a constitutional defect; then they decide what to sever. That is not a reason to deny preliminary relief.
• What does this mean for the NLRB? As we’ve said, it’s unlikely that the NLRB will disappear. But it may become more political. Board Members serve terms during which they are protected from removal, and ALJs are career employees. If the Fifth Circuit or Supreme Court finally concludes that the NLRB’s for-cause removal structure violates the Constitution, the agency will likely become more political and its priorities may shift from administration to administration.

Conclusion

Because Ward and Smith’s clients are largely in North Carolina, which falls under the jurisdiction of the Fourth Circuit, the decision may not have an immediate effect.

Even so, active NLRB matters may be affected for parties who bring similar challenges. If your company faces an NLRB complaint and is considering a structural challenge, the opinion provides a clear roadmap for seeking interim relief: jurisdiction, likelihood of success (ALJs and—on this record—Board Members), irreparable harm, and equities.

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© 2025 Ward and Smith, P.A. For further information regarding the issues described above, please contact Chris S. Edwards or Avery J. Locklear.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.