During the second wave of the New Deal, the National Labor Relations Act (“the Act”) was enacted to address the imbalance of bargaining power between employers and employees. The Act explicitly states that “[e]mployees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in concerted activities, for the purpose of collective bargaining or other mutual aid or protection.”[i] This critical piece of legislation guarantees employees the right to participate in collective bargaining and form unions, empowering American workers to negotiate for improved working conditions, better benefits, and higher wages. Significantly, the Act established the National Labor Relations Board (“NLRB”). The NLRB serves as the principal enforcer of employees’ rights under the Act, ensuring justice for workers who have experienced unfair labor practices.

Soon after the Act’s enactment and the establishment of the NLRB, employers, now subject to new regulations, initiated legal challenges to assess the constitutionality of its provisions. By 1937, in NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 43 (1937), the United States Supreme Court upheld the Act as constitutional, deeming it a legitimate exercise of Congress’ authority to regulate interstate commerce. Despite this fundamental ruling in US labor law, legal actions attacking the NLBR’s constitutionality persist, primarily from major companies.

On January 14, 2023, popular grocery-chain, Trader Joe’s, was charged by the NLRB for engaging in illegal retaliation against workers, including firing a union supporter and disseminating false information to thwart an organizing campaign.[ii] These charges against Trader Joe’s emerged soon after Elon Musk’s company, SpaceX, was faced with similar charges. On January 3, the NLRB filed a complaint against SpaceX accusing the company of unlawfully firing eight former employees who had circulated an open letter raising workplace concerns.[iii] SpaceX responded with a lawsuit, asserting that the NLRB is unconstitutionally structured and its action against the company is unlawful. Specifically, SpaceX alleges that the NLRB’s “structure violates Article II, the Fifth Amendment, and the Seventh Amendment of the Constitution of the United States.”[iv]

As an independent federal agency, the NLRB is governed by a five-person Board and a General Counsel, all of which are appointed by the President with the consent of the Senate. Once the NLRB issues a complaint against an employer, an NLRB Administrative Law Judge (“ALJ”) presides over the case. Here, SpaceX contends that under Article II, NLBR ALJs “are unconstitutionally insulated from the President’s oversight.”[v]  ALJs allegedly have two layers of removal protection because they can only be removed for cause, as opposed to at will, by the NLRB, who themselves can only be removed for cause by the President. Next, SpaceX claims that under the Seventh Amendment, the NLRB’s administrative complaint seeks expansive remedies that warrant a trial by jury. Finally, SpaceX argues that the NLRB exercises “all three constitutional powers—legislative, executive, and judicial—in the same administrative proceedings,” thus making its very structure unconstitutional.[vi] Subsequently, Trader Joe’s is likely to follow in SpaceX’s footsteps and make a similar constitutional argument as an affirmative defense in response to the NLRB charges.[vii]

While the Court has yet to rule on these specific issues, with both recent legal actions by SpaceX and Trader Joe’s still in progress, the NLRB must continue to be supported as constitutional. Regarding the Seventh Amendment argument, the Supreme Court has already ruled that the NLRB and ALJ’s authority to grant “expansive” remedies, such as reinstatement of the employee and payment for time lost, are appropriate and constitutional.[viii] The two-layer removal and separation of powers argument also falls flat. This is primarily because, despite SpaceX’s best efforts to prove that the NLRB exercises substantial executive power while simultaneously acting as a quasi-legislative, quasi-judicial body, the NLRB is designed to combat this concern with its set structure governed by two distinct sides: the General Counsel and a five-person Board.[ix] In fact, numerous other federal agencies carry out duties that involve both quasi-judicial and quasi-legislative functions. While the NLRB is not the only federal agency facing constitutional attacks, the Federal Trade Commission and Securities Exchange Commission face similar challenges to their structure in Axon Enter. v. FTC, 598 U.S. 175 (2023), claiming that this structure alone breaches the Constitution would imply that a significant portion of the federal government is unconstitutional.

Furthermore, maintaining the NLRB as constitutional aligns with the recent findings in Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183 (2020). In Seila Law, the Supreme Court held that “the [the agency’s] leadership by a single individual removable only for inefficiency, neglect, or malfeasance violates the separation of powers.”[x] The opinion emphasized that, unlike almost all other federal agencies, the Consumer Financial Protection Bureau is led by a single individual and exercises broad executive power. Accordingly, although Seila Law limited how federal agencies could be structured, the NLRB’s structure fits within the expectations laid out because it is a multiple member expert agency and does not exercise substantial executive power.[xi]

Ultimately, as these legal challenges unfold, it becomes imperative to uphold the constitutional foundation of the NLRB, ensuring the continued protection of workers’ rights and the preservation of a fair and balanced labor force in the United States. Major corporations, given their considerable impact within the economic sphere by employing thousands of workers, should no longer feel comfortable attacking the Act and the NLRB. The NLRB is dedicated to upholding and advancing the rights of workers and attempts to dismantle it undermine the well-deserved rights of American workers.

[i] 29 U.S.C.S. § 157.

[ii] See Dave Jamieson, Trader Joe’s Attorney Argues National Labor Relations Board Is ‘Unconstitutional,’ HuffPost (Jan. 26, 2024, 6:27 PM), https://www.huffpost.com/entry/trader-joes-attorney-nlrb-unconstitutional_n_65b41e7ae4b014b873b11cc2 (“Trader Joe’s is facing a litany of union-busting charges before the National Labor Relations Board. The agency’s prosecutors have accused the company of illegally retaliating against workers, firing a union supporter and spreading false information in an effort to chill an organizing campaign.”).

[iii] See Loren Grush & Josh Eidelson, SpaceX Sues US Labor Board Over Fired Employees Case, Bloomberg (Jan. 4, 2024, 4:11 PM), https://www.bloomberg.com/news/articles/2024-01-04/spacex-sues-us-labor-board-over-fired-employees-case (“National Labor Relations Board prosecutors filed a formal complaint against SpaceX, accusing the space transportation company of illegally firing eight employees over an internal letter that sharply criticized Musk.”).

[iv] See Space Expl. Tech. Corp. v. Nat’l Lab. Rel. Bd. et al, Docket No. 1:24-cv-00001 (S.D. Tex. Jan 04, 2024), Court Docket.

[v] Id.

[vi] Id.

[vii] See Josh Eidelson, Trader Joe’s Follows SpaceX in Arguing US Labor Board Is Unconstitutional, Bloomberg (Jan, 26, 2024, 6:13 PM), https://www.bloomberg.com/news/articles/2024-01-26/trader-joe-s-follows-spacex-in-arguing-nlrb-is-unconstitutional (“Trader Joe’s argument echoes that of Musk’s aerospace company, which filed a lawsuit Jan. 4 arguing that an NLRB case against it should be put on hold because the agency’s structure violates the “separation of powers” established in the US Constitution.”).

[viii] See NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 48-49 (1937).

[ix] See John Fry, Understanding the Latest Constitutional Attacks on the NLRB, OnLabor (Jan. 30, 2024), https://onlabor.org/understanding-the-latest-constitutional-attacks-on-the-nlrb/.

[x] See Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2197 (2020).

[xi] See Fry, supra note 9 (“Even when the Roberts Court limited how agencies could be structured in Seila Law, it acknowledged the constitutionality of ‘expert agencies led by a group of principal officers removable by the President only for good cause.’”); see also Seila Law, 140 S. Ct. at 2199-200 (noting two expectations for President’s at-will removal power: “one for multimember expert agencies that do not wield substantial executive power, and one for inferior officers with limited duties and no policymaking or administrative authority.”).