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By: Michael Berkheimer

On September 23, 2026, the Board released its decision in Lion Elastomers, LLC (Lion Elastomers III) and returned to the standard it had previously adopted in General Motors regarding how the Board will assess misconduct that occurred while an employee was engaged in activity protected by the National Labor Relations Act. The decision is the third in the Lion Elastomers saga that has ping-ponged between the Board and the Fifth Circuit since 2020.

What Was (and Is) General Motors?

In 2020, the Board decided General Motors LLC, replacing several different tests governing employee misconduct during protected activity with the Board’s traditional Wright Line framework. Before General Motors, the Board applied different standards depending on whether the conduct involved a workplace confrontation with management, social media activity, conversations among employees, or picket-line misconduct.

The General Motors standard focuses on the employer’s reason for imposing discipline, rather than on whether the misconduct occurred during protected activity. If protected activity was a motivating factor in the discipline, the employer may still avoid liability by demonstrating that it would have imposed the same discipline for the misconduct even absent the protected activity. The decision created a more predictable and uniform standard while better accommodating employers’ obligations to maintain respectful workplaces and comply with antidiscrimination laws.

How Did We Get Here? It’s Complicated.

The procedural history of the Lion Elastomers trilogy is unusually complicated, but a brief explanation is necessary to understand Lion Elastomers III.

In 2020, shortly before General Motors was issued, the Board found in Lion Elastomers I that the company violated the Act by threatening and disciplining an employee engaged in union-related activity. Applying the then-existing Atlantic Steel standard, which considered the circumstances surrounding the employee’s protected activity and related misconduct, the Board concluded that the employee’s conduct remained protected. Lion Elastomers sought review of the Board’s decision in the Fifth Circuit.

Two months later, the Board decided General Motors and sought a remand from the Fifth Circuit to determine whether the newly issued standard affected the outcome. By the time the case returned to the Board, however, the Board’s composition had changed. Rather than applying General Motors, the Board used the remand as an opportunity to overrule it. In Lion Elastomers II, the Board returned to the Atlantic Steel standard and reaffirmed its earlier finding that the employer violated the Act.

The Fifth Circuit subsequently vacated Lion Elastomers II, holding that the Board exceeded the scope of the remand and denied the employer due process by overruling General Motors without giving the employer a meaningful opportunity to address the issue. The court remanded the matter with instructions that the Board apply General Motors to the case before it, setting the stage for Lion Elastomers III.

The Third Time Is the Charm

In Lion Elastomers III, the Board concluded that the Fifth Circuit’s 2024 vacatur of Lion Elastomers II effectively restored its decision in General Motors. Accordingly, the General Motors standard has returned and again governs employee misconduct cases.

Employers should therefore evaluate misconduct occurring during protected activity under the Wright Line framework rather than the various setting-specific standards that General Motors replaced. This simplifies discipline decisions and, for NLRA purposes at least, the central question becomes whether the employer imposed discipline because of the misconduct itself and whether the employer would have taken the same action regardless of any protected activity.

This places renewed importance on maintaining and consistently enforcing workplace rules governing conduct, harassment, safety, and professionalism. Employers should be prepared to demonstrate that comparable misconduct receives comparable discipline regardless of whether protected activity is involved. The more consistent the employer’s disciplinary practices, the stronger its position under the General Motors framework.

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By: Michael Berkheimer and Alyson Dieckman

In a July 21, 2026 decision, the D.C. Circuit struck down the National Labor Relations Board’s “successor bar” doctrine, holding that it is inconsistent with the National Labor Relations Act. In doing so, the majority opinion in Hospital Menonita de Guayama v. NLRB relied on Loper Bright and the court’s obligation to independently interpret statutes rather than to defer to an agency’s own interpretation of its statutory authority.

The decision is important for two reasons. First, it gives successor employers favorable circuit court precedent when challenging an incumbent union’s majority status. Second, it shows the willingness of the most prominent appellate court to scrutinize agency action and invalidate actions not grounded in statutory text.

What Is the Successor Bar?

The successor bar, which the Board adopted in UGL-Unicco Service Co., prohibits any challenge to an incumbent union’s representation status for one year after a business changes ownership. It applies even if the union has demonstrably lost majority support, and it blocks challenges from the employer, employees, and rival unions alike.

The NLRA does not mention a successor bar and contains no express limitation on the right to challenge a union’s majority support in the year following a change in business ownership. Instead, the successor bar doctrine was a “policy choice” of the NLRB, created to promote bargaining stability after a change in owner.

Why Did the D.C. Circuit Strike Down the Successor Bar?

The majority, hearing the case upon remand from the Supreme Court with the express instruction to consider it light of Loper Bright, looked to the text of the NLRA and held that the successor bar doctrine violates Sections 7 and 9 of the NLRA.

Section 7 of the NLRA grants employees the right “to bargain collectively through a representative of their choosing” or to “refrain” from the exercise of such rights. Section 9 of the NLRA requires that a bargaining representative have majority support among employees in a bargaining unit. Relying on that majority-support requirement, the Supreme Court held in International Ladies’ Garment Workers’ Union, AFL-CIO v. NLRB that an employer may not lawfully recognize and bargain with a union that lacks majority support among unit employees.

Given this statutory framework and Supreme Court precedent, the D.C. Circuit held that the successor bar, “[b]y entrenching incumbent unions, irrespective of whether they enjoy majority support, . . . is inconsistent with section 7’s unqualified employee right to freedom of choice and section 9’s requirement of majority rule.”

The majority also found support for its holding elsewhere in the text of the NLRA, specifically the “certification bar” found in Section 9(c)(3). That provision prohibits the Board from conducting a second election for the same unit in the 12 months following a valid election. The court reasoned that Congress, by including only the certification bar in the text of the NLRA, did not intend for the NLRB to create additional bars in the agency’s discretion.

The majority also looked to the Board’s enforcement proceedings to show how the successor bar violated the NLRA. The primary unfair labor practice allegation in the case concerned the employer’s withdrawal of recognition from the union, in violation of Section 8(a)(5) of the NLRA. The Court noted that ordinarily an employer has an obligation to bargain with a union only if it represents a majority of its employees and can defend against a withdrawal of recognition allegation by presenting evidence that the union lacks such support. Under the successor doctrine, however, the NLRB refuses to consider such evidence. The successor bar therefore may create a situation where an employer is compelled to recognize and bargain with a union that lacks majority support.

Why This Case Matters to Employers and the NLRB Going Forward

This case may serve as a template for how appellate courts will treat NLRB doctrines built on policy decisions and judicial deference rather than the text of the NLRA. The NLRB’s main defense in Hospital Menonita de Guayama was that the successor bar reflected a “reasonable” policy choice within its general authority to regulate labor relations. The court rejected that defense outright, holding that reasonableness cannot substitute for actual statutory authority, and that policy goals like bargaining stability cannot override the Act’s specific guarantees of employee choice and majority rule.

The case therefore calls into question other NLRB doctrines, such as Cemex, the blocking charge rule, and others that rest on policy considerations rather than specific statutory text. Indeed, in Brown-Forman Corp. v. NLRB, the Sixth Circuit relied in part on Loper Bright to invalidate a Cemex bargaining orders after finding that the NLRB had exceeded its statutory adjudicatory authority.

Employers should therefore consider whether to challenge NLRB doctrines that were previously insulated by judicial deference. And because any employer may seek review of an adverse NLRB decision in the D.C. Circuit, the Hospital Menonita de Guayama decision provides especially valuable precedent for those cases.

Given the fact-specific nature and procedural complexity of these issues, employers should coordinate with labor counsel before withdrawing recognition or raising Loper Bright challenges. A miscalculation can still expose the employer to unfair labor practice liability.

Employers with questions or concerns should reach out to Seyfarth’s team of experienced labor attorneys to help guide them through these issues.

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By: Madeline Remish and Harrison Kuntz

Corrective Action and Compliance Can End the Case: when fixing the problem ends the lawsuit—for public employers.

In a significant and practical win for public employers, the First Circuit reaffirmed a core constitutional limit on federal courts: once challenged conduct stops, affected employees are made whole, and institutional policies are brought into compliance with governing law, there may be nothing left for a court to decide. Ramos‑Ramos v. Jordán‑Conde, 2026 WL 820731. Federal courts are not compliance auditors for public agencies, and they will not issue retrospective declarations when no effective relief remains available.

That principle drove the outcome in Ramos‑Ramos. There, the First Circuit dismissed a First Amendment challenge to post‑resignation union dues deductions by public‑sector employees—not because the claims lacked constitutional force, but because the dispute no longer presented a live case or controversy. The decision highlights the jurisdiction‑ending power of mootness and shows how corrective action and good‑faith compliance can significantly limit litigation exposure for public employers navigating post‑Janus union‑dues disputes.

Background

In the wake of the Supreme Court’s decision in Janus v. AFSCME, four employees of the University of Puerto Rico resigned their union memberships and requested that dues deductions stop. Despite those requests, deductions continued for years after the employees had resigned. The employees filed suit, alleging First Amendment violations and seeking damages, injunctive relief, and declaratory relief.

As the case progressed, however, the underlying circumstances materially changed. The university and the union stopped the challenged deductions, the union acknowledged that the deductions should have ceased upon resignation, and the district court ordered the union to reimburse all post‑resignation dues, without interest.

By the time the case reached the First Circuit, the employees had narrowed their appeal to a single form of relief: a judicial declaration that the past deductions were unconstitutional and that similar deductions could not occur in the future.

The First Circuit’s Decision

The First Circuit dismissed the appeal as moot, emphasizing that federal courts are constitutionally limited to resolving ongoing, concrete disputes, not issuing abstract pronouncements of law.

1. Declaratory Relief for Past Conduct

The court held that a declaration addressing past deductions would serve no practical purpose. The deductions had stopped, and a binding judgment already required reimbursement. Under those circumstances, a declaration would amount to an advisory opinion, which Article III forbids.

2. Prospective Relief and No Risk of Recurrence

The request for forward‑looking relief failed for similar reasons. The employer and union had conceded the error, changed their practices to comply with Janus, and adopted policies preventing future unauthorized deductions.

The record showed no real or immediate risk that the challenged conduct would resume, eliminating the need for declaratory relief addressing future practices.

3. Voluntary Cessation Doctrine Rejected

The court also rejected the employees’ reliance on the voluntary cessation doctrine, a narrow exception to mootness designed to prevent defendants from evading judicial review by temporarily stopping challenged conduct once litigation begins. The doctrine preserves jurisdiction where there is a realistic possibility that the challenged conduct could resume after the case is dismissed.

The First Circuit concluded the doctrine did not apply here because the defendants’ actions evinced a genuine intent to comply with Janus moving forward, rather than an effort to manufacture a mootness argument. The challenged deductions had ceased, the defendants acknowledged the conduct was unlawful, full reimbursement was ordered, and concrete policy changes were adopted, leaving no reasonable likelihood that the conduct would recur. Those conditions were met here.

Why This Matters for Public Employers

The decision offers several practical and policy‑relevant lessons for public employers, particularly those operating in unionized environments.

1. Corrective Action Can End the Case

Even after litigation has begun, promptly stopping challenged conduct and making employees whole can dramatically alter a case’s trajectory. Courts will assess whether any meaningful relief remains available, not whether the issue was once serious.

2. Mootness Remains a Powerful Jurisdictional Defense

Employers often focus on defending claims on the merits. Ramos‑Ramos demonstrates that where there is no ongoing harm and no realistic threat of recurrence, courts may decline to reach the merits at all.

3. Compliance‑Driven Policy Reform Matters

The First Circuit placed significant weight on the fact that the employer and union adjusted their practices in response to Janus, supported by admissions of error and concrete policy changes. Good‑faith, institutional compliance, particularly when tied to clear legal developments, can carry substantial jurisdictional weight.

4. Remedy Selection Can Determine Case Survival

The employees’ strategic decision to pursue only declaratory relief on appeal ultimately undermined their case. Without a preserved claim for damages or other redress, there was no longer a live controversy. Employers evaluating litigation risk should pay close attention to which remedies remain realistically in play as a case evolves.

Policy Perspective

Beyond its immediate doctrinal impact, Ramos‑Ramos reinforces a broader policy principle relevant to public institutions. Courts are not venues for abstract oversight of administrative missteps once those missteps are corrected. Where agencies respond to legal change with remediation, repayment, and policy reform, federal courts are likely to step aside rather than impose additional judicial supervision.

That framework incentivizes proactive compliance and institutional self‑correction, an outcome aligned with both separation‑of‑powers principles and sound public administration.

Bottom Line

The lesson for public employers is blunt: it is almost always cheaper to fix the problem quickly than to litigate it indefinitely. Ramos‑Ramos shows that when an employer stops unconstitutional conduct, makes employees whole, and reforms its policies, even a live First Amendment case can lose jurisdiction. Courts resolve disputes; they do not supervise corrected mistakes. Compliance, remediation, and speed can end the lawsuit altogether.

For questions regarding potential impact or compliance considerations, please contact the authors of this post or your Seyfarth attorney.

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By: Elliot Fink and Jennifer L. Mora

Since our 2024 update on California’s Labor Peace Agreement (“LPA”) requirement, the landscape for licensees in recreational cannabis states such as California and New York has remained murky. Although the evidence around compliance and enforcement of these rules has been scant, that has not prevented licensees from continuing to lodge legal challenges to these mandates. Some of these challenges have been rejected, some have succeeded based on preemption theories under the National Labor Relations Act (“NLRA”) and violations of the First Amendment, and some remain undecided.

California: Federal Lawsuit Dismissed Amidst Unclear Environment of Compliance and Enforcement

As we reported last year, a California cannabis licensee filed a lawsuit in federal court asserting that the state’s LPA mandate violated its constitutional rights. Since then, in March of 2025, the Southern District of California granted the state’s motion to dismiss ruling that it had no jurisdiction to hear the case under the equitable ‘unclean hands’ doctrine because the state’s entire cannabis industry technically remains illegal under federal law. See Ctrl Alt Destroy, Inc. v. Elliott et. al, Case No. 3:24-cv-00753, ECF 20 (S.D.CA 2025). It is not clear if this will become a defense widely utilized in other states as a means to thwart challenges to LPA mandates, or if those challenging the mandates might pivot by bringing their cases in state court. In the meantime, the California litigants have appealed this ruling to the Ninth Circuit.

Separately, as reported before, the evidence around actual compliance with the LPA mandate in California is extremely minimal. According to Department of Cannabis Control (“DCC”) data live on its website as of mid-November 2025, although there are currently 7,305 active licensees in the state, there are only 974 labor peace agreements on file. That is an even lower percentage of compliance (13.33%) than when we previously reported on this.

Furthermore, there is little evidence that the LPA mandate is being meaningfully enforced across California. Out of the DCC’s 701 enforcement actions, only eight of them have involved violations of the LPA requirements. Moreover, as before, none of these eight offenders who had their licensees suspended or denied suffered these enforcement actions solely because of their lack of LPA; instead, each of them had at least one other pertinent violation. These findings continue to suggest that California’s LPA mandate is not being strictly enforced.

Oregon Court Dismisses LPA Mandate as Unconstitutional, so State Ceases Enforcement

Oregon enacted a very similar LPA requirement as California, and, as happened there, licensees challenged the mandate as unconstitutional. Yet, in a turn of events from California, the Oregon federal district court accepted the licensees’ arguments, when it found that the LPA mandate was illegal and explicitly held that the reasoning of the earlier California case was not persuasive or compelling. The court also rejected the state’s argument that the LPA requirement should stand because it was not even enforcing it.

In particular, the Court granted the challengers’ requests for declaratory and injunctive relief when it concluded that Oregon’s LPA requirement “is preempted by the NLRA in violation of the Supremacy Clause and violates Plaintiff’s First Amendment rights.” See Casala, LLC v. Kotek, 789 F. Supp. 3d 1025, 1031 (D. Or. 2025). As a result, the Oregon Office of Liquor and Cannabis Commission formally postponed its enforcement of the LPA mandate on May 29, 2025.

The suit also highlighted other practical issues with the state’s LPA requirement that have been seen in other states, such as California. Specifically, the litigants highlighted how there were only two “bona fide” labor organizations in the state that would have even been eligible to contract with a licensee regarding the required LPA.

Because these unions’ practical monopoly on access to organizing cannabis workers in Oregon gave them so much perceived leverage, the unions allegedly sought terms which one of the challenging entities felt were both unfair and illegal under state and federal law, such as 24 hour access to facilities and the disabling of cameras during organizing meetings. Meanwhile, the other challenging entity, a smaller operation, never even received a call back from the single eligible union it contacted.

Licensees File Suit in NY and NJ; while CT and RI LPA Requirements Remain Unchallenged

As discussed, these LPA requirements have also been mandated on cannabis licensees in the heavily-populated Northeast states of New York, New Jersey, Connecticut, and Rhode Island.

In New York and New Jersey, licensees have brought lawsuits challenging these mandates raising similar arguments as litigants did in California and Oregon, such as NLRA preemption and denial of First Amendment speech rights. The New York suit was brought in April in the Southern District of New York, see Hybrid NYC LLC v. N.Y. St. Cannabis Control Bd. Et. Al, Case No. 1:25-cv-03067-AKH, ECF 1 (S.D.N.Y. Apr. 14, 2025), while the New Jersey case was lodged recently in October. See Curaleaf Hldgs, Inc. v. N.J. Cannabis Reg. Comm’n, Case No. 3:25-cv-16397, ECF 1 (D.N.J. Oct. 9, 2025). Both cases remain pending at the federal trial court level.

On the other hand, although Connecticut and Rhode Island have similarly instituted LPA mandates, these have yet to be meaningfully challenged. In Rhode Island, a licensee filed suit in mid-2024; however, that case was dismissed in February 2025 before it could be adjudicated on the merits because the Court determined that the claims were not yet ripe against Rhode Island’s Cannabis Control Commission since it had not yet even promulgated rules nor began accepting licenses under the state’s new recreational cannabis regulation scheme. Therefore, in both these states, it remains unclear whether such mandates are legal and for that reason, we anticipate both states to continue taking a cautious approach towards enforcement.

Ongoing Takeaways for Licensees and Employers

Given the state by state patchwork in which cannabis businesses find themselves operating, care must be taken to approach this issue on a state by state basis. While there is added clarity to the situation on the ground in Oregon, confusion continues to abound in California, New York, New Jersey, Connecticut, and Rhode Island.

We therefore recommend that cannabis operators consult with appropriate management-side labor attorneys and cannabis counsel who can advise any specific business on the risks and considerations about potentially signing a LPA if and when it should be required under a specific state’s cannabis regulatory regime. Please contact Seyfarth’s labor and cannabis specialists with any specific questions or concerns.

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By: Arthur Telegen and David S. Ostern

Seyfarth Synopsis: On Tuesday, June 17, 2025, the New York State Assembly overwhelmingly approved A8590 / S8034 by a vote of 128-14. This bill, which now heads to Governor Kathy Hochul’s desk, aims “[t]o make sure employees still receive protections guaranteed by the National Labor Relations Act if the National Labor Relations Board is unable to successfully assert jurisdiction.”

For nearly six months, the National Labor Relations Board (“NLRB” or the “Board”) has been without a quorum. This is a result of President Donald J. Trump’s dismissal of former-Member Gwynne Wilcox, who continues to challenge the legality of her firing (unsuccessfully thus far). Under the NLRA, three members are required to constitute a quorum of the Board. See 29 U.S.C. § 153(a). Without Wilcox and given the two Member vacancies, the Board remains  unable to render decisions. Meanwhile, many employers continue to litigate the constitutionality of the NLRA, claiming for example, that it unduly restricts executive power over the Board and deprives respondent of an argued right to a jury trial.

While Chairman Marvin Kaplan and Member David Prouty await the appointment and confirmation of at least one additional Member (or the reinstatement of Wilcox) to resume their official business, and the constitutional challenges to the Board’s structure and procedure are ongoing, the New York legislature has sent a bill to the Governor’s desk that would supposedly fill in the void and restore protections for New York private-sector workers.

The bill provides that unless the Board “successfully asserts jurisdiction over any employer, employees, trades, or industries pursuant to an order by [a] federal district court . . . ,” such organizations or private-sector workers would be protected and subject to the New York State Labor Relations Act. In the absence of the Board exercising jurisdiction, the New York State Labor Board would immediately, “upon application and verification, promptly certify the exclusive bargaining representative of any bargaining unit previously certified by another state or federal agency.”

Assuming Governor Hochul signs the bill, it will almost certainly be subject to immediate legal challenge because it invades the jurisdiction that Congress has explicitly granted exclusively to the NLRB and also violates established preemption doctrine.

With respect to jurisdiction, the bill ignores long-standing Supreme Court precedent and Section 14(c) of the NLRA. In 1957, the Supreme Court held that the Board has exclusive jurisdiction over matters entrusted to it by Congress, even when the Board has not exercised that jurisdiction. See Guss v. Utah Labor Relations Bd., 353 U.S. 1, 6-10 (1957); see also 29 U.S.C. § 160(a) (providing for explicit cession by agreement with a state agency). 

Two years after the Guss decision,  Congress passed Section 14(c)(2) of the NLRA, which effectively codified the Supreme Court’s holding in Guss while permitting the states to Act where the Board “by rule of decision or by published rules” has declined to assert jurisdiction. See Act of Sept. 14, 1959, Pub. L. No. 86-257, at p. 542. The NLRA does not contain any other authority to fill the gaps.

Nonetheless, according to New York Assembly Labor Chair Harry B. Bronson, this bill is necessary because “‘[w]ith attacks at the federal level, it is up to the states to lead the way and in New York State, we value the rights of our workers, their health and safety on the job, and our strong principles of unionism.’” In other words, the New York bill is intended to step into a perceived breach that Congress and the Supreme Court have placed off limits. Although the Trump Administration has not yet nominated anyone to fill the two Board vacancies, this delay is not unusual and hardly can be construed to mean the Board has “declined” to act.

In addition, the bill is likely to be challenged under the long-standing doctrine of Garmon preemption. Garmon preemption derives from the 1959 Supreme Court decision, San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959), where the Supreme Court held that states and federal courts “must defer to the exclusive competence of the [Board] . . . ” when the activity or regulation at issue is arguably subject to Section 7 or 8 of the NLRA. 359 U.S. at 245; see also Amalgamated Ass’n of St., Elec. Ry. & Motor Coach Emps. v. Lockridge, 403 U.S. 274, 276 (1971).As the Supreme Court stated in Garmon, in determining whether a particular activity or regulation is arguably protected or prohibited by the NLRA, it is “left in the first instance to the National Labor Relations Board.” Garmon, 359 U.S. at 244-45.

Given the direct connection Chair Bronson appears to make (see supra) between the New York bill and the purpose and scope of the NLRA, New York likely will also have an uphill battle in convincing a federal court that Garmon does not “prevent[ ] States . . . from providing their own regulatory [scheme] . . . for conduct prohibited or arguably prohibited by the [National Labor Relations] Act. See Belknap, Inc. v. Hale, 463 U.S. 491, 498-99 (1983) (citations omitted).

Seyfarth’s Labor Management Relations team will continue to provide updates on this legislative development. Employers with questions or concerns should reach out to Seyfarth’s team of experienced labor attorneys.

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By: Kamran Mirrafati and John T. Ayers-Mann

Seyfarth Synopsis: Newly issued guidance from the NLRB encourages efficient resolution of labor disputes, giving employers more flexibility in crafting resolutions to reach practical compromises in appropriate cases. The memorandum also effectuates a limitation of the Board’s Thryv, Inc. decision, such that losses indirectly caused by an unfair labor practice charge are not to be included in settlements where the causal link to the alleged violation is not sufficiently clear.

On May 16, 2025, the Acting General Counsel of the National Labor Relations Board (NLRB)  issued GC Memorandum 25-06 in order to re-define how remedial relief should be approached in settlements of Unfair Labor Practice charges (ULPs). The memorandum provides an encouraging look into the NLRB’s philosophy on settlements moving forward— which is a marked departure from the former General Counsel’s approach.

The memorandum confirms that settlements continue to be the backbone of resolving ULPs and that the vast majority of cases settle. However, the Acting General Counsel noted that, with respect to ULPs where it found merit, 99.3% of cases settled in 2019 as compared to a slightly reduced settlement percentage of 96.3% in 2024. The memorandum encourages Regions to continue pursuing settlements as a cost-saving tool.

While the scope of remedies should continue to match the relief the NLRB would typically order, unless otherwise approved by the Divisions of Operations-Management and Advice (when appropriate), the memorandum provides helpful guidance to the Regions on what to include (and avoid) in settlement agreements:

  • Default language, which outlines consequences for noncompliance, is encouraged, but not mandatory.
  • Non-admissions clauses are allowed, particularly in the early stages of investigation, but are off the table for repeat violators absent extraordinary circumstances.
  • Make-whole relief is still a cornerstone for the agency, but Regions can approve settlements offering less than full recovery in appropriate cases where the nature of the violations, risks of litigation, and prompt resolution of the matter warrant such settlement.

The memorandum further addresses the impact of the Board’s Thryv, Inc. 372 NLRB No. 22 (2022), reversed as to the merits on appeal 102 F.4th 727 (5th Cir. 2024),  decision, which broadened the NLRB’s remedial scope. There, the Board called for employers to cover all “direct or foreseeable pecuniary harms” caused by unfair labor practices. Since Thryv did not spell out a clear standard, the memorandum explained that harms should be compensable in settlements only when the “causal link” to the ULP is “sufficiently clear.”

In summary, GC Memorandum 25-06 provides useful guidance for employers and lays out the Region’s priorities when settling matters. Importantly, it provides helpful limitations on the holding of Thryv, Inc. in the settlement context.

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By: Kenneth Dolin and Elliot Fink

As expected, on December 10,  in Endurance Environmental Solutions LLC, 373 NLRB No. 141 (2024), the Democratic majority on the National Labor Relations Board (“NLRB” or “Board”) overruled MV Transportation, 368 NLRB No. 66 (2019) and its more even-handed and practical “contract coverage test” and returned to the prior Board waiver standard in the context of employer’s defenses to claims of unlawful unilateral mid-term changes.  This waiver standard will once-again diminish the parties’ intent in agreeing upon contract language as well as diminish the language of the collective bargaining agreement (“CBA”) itself.  While it applied this waiver standard retroactively to the parties in this dispute the majority deferred the question of whether its updated standard would apply to other pending cases for “future determination.”

Reversing the Administrative Law Judge’s recommended dismissal of the unilateral change allegations against the employer, the Board’s decision centered on a refuse truck operator’s unilateral decision to install security cameras and surveillance devices in its trucks across its nationwide fleet. Although, as the dissent pointed out, these cameras were not actually installed for the handful of unit employees at issue, the employer planned to install these new items without providing advance notice or opportunity to bargain to the union representing employees at one Kentucky location; the ALJ had found that language in the management rights article of the operative CBA allowing “changes in equipment” meant that the Union had waived its right to bargain over this change.  Viewing this case as an example of how the previous “contract coverage test” gives employers too much latitude in unilaterally changing mandatory subjects of bargaining of represented employees, the Board majority reinstated the prior “clear and unmistakable waiver” test for determining whether an employer unilaterally changed a mandatory subject of bargaining during the term of the CBA in violation of the Act.

In returning to its pre-2019 standard, the Board will now once again require that any employer relying on the language of its CBA to make decisions about its unionized employees regarding mandatory subjects of bargaining without union input and delay must meet the extremely difficult burden of demonstrating that “such a waiver was explicitly stated, clear, and unmistakable.” 373 NLRB 141, slip. op. at 8.  In other words, if the employer cannot prove that the parties unequivocally and expressly intended to permit unilateral action with respect to the particular employment term at issue, whether by bargaining history, the parties’ past practice, the express language of the CBA or some combination, waiver will not be found, even if there is CBA language that arguably privileges the employer to take such action.  As noted by the dissent, the decision in particular targets broadly-worded management rights language.

Under this waiver standard, unions will invariably prevail because some ambiguity will almost certainly be identified in the CBA language sufficient to preclude a finding of clear and unmistakable waiver.[1]  As the MV Transportation majority noted, this waiver standard has many drawbacks, including undermining contractual stability (by encouraging perpetual bargaining both during the term of the CBA and thereafter) and its associated grievance-arbitration dispute resolution machinery (by encouraging unions to bypass the very grievance-arbitration procedure that it had agreed to use and instead immediately file a unilateral change claim at the Board where it will be the beneficiary of a more favorable standard).  Returning to the waiver standard will result in the Board impermissibly sitting in judgment on the terms of parties’ CBAs (despite the many Supreme Court pronouncements that arbitrators and the courts should be the primary authorities for interpreting CBAs), and making post-hoc alterations to the bargain reached by the parties in the form of that CBA (by giving less weight to the parties’ actual intent when they had agreed to the CBA language at issue).  

Of critical importance, Endurance Environmental again renders the Board’s test squarely at odds with the standard used by the D.C. Circuit; this is especially significant because every employer on the losing end of a Board decision can petition for review in the D.C. Circuit.  Moreover, the D.C. Circuit has had a long running dispute with the Board and has repeatedly criticized the Board for its “obstinacy” and “bad faith” when it continued to defend the clear and unmistakable waiver standard before that court.  Indeed, the D.C. Circuit finally sanctioned the Board by ordering it to reimburse the employer for its costs and attorneys’ fees in opposing the Board’s use of the clear and unmistakable waiver standard shortly before the Board overturned its waiver standard. See Heartland Plymouth Court v. NLRB, 838 F.3d 16, 19, 20, 27 (2016).

Furthermore, the newly reinstated clear and unmistakable waiver standard is also at odds with the First and Seventh Circuit’s full and Second Circuit’s partial adoption of the “contract coverage test,” which the Board in Endurance Environmental nevertheless continues to maintain is both unsupported by the text of the Act and Supreme Court precedent.

Ultimately, it is somewhat unclear whether the Circuit Courts of Appeals’ prior dissonance will continue in future reviews of the Board’s reinstated waiver standard, and in particular, the D.C. Circuit’s plenary jurisdiction to review Board decisions will likely play an active role in that process.  Nonetheless, employers should be aware that as before, Endurance Environmental now makes it more likely that unions will not only bring unilateral change charges when they are not given notice and a chance to discuss material changes to wages, hours, or other terms and conditions for their represented employees, but also that unions will be more likely to prevail on those claims (at least before the Board) because the Board will only consider whether a clear and unmistakable waiver exists and will not consider the parties’ actual intent to determine whether the CBA covers the employer’s alleged unilateral actions.

In practice, this decision makes it more important for employers to seek counsel before taking unilateral actions during the term of the CBA that might impact a mandatory bargaining subject.  An employer should consider simply providing adequate notice and bargaining opportunities to the affected union sufficient to reach agreement or an impasse before making any change where the employer cannot prove waiver under the reinstated standard.  Following this decision, it becomes more important for an employer contemplating a mid-term change of a mandatory subject of bargaining to assess the viability of bargaining to agreement or impasse.

In the particular situation where midterm bargaining is not viable, the likelihood of prevailing by defending the employer’s actions in the Circuit Courts of Appeal under a contract coverage theory, as opposed to foregoing the change, as well as the practical risks, benefits and costs of taking such a position, should be considered.

Finally, during subsequent CBA negotiations, employers should consider the practicality of seeking more explicit CBA language covering specific contemplated management actions in addition to general language to avoid the need for subsequent bargaining over known operational priorities. In this regard, it seems likely that if an employer seeks such modifications and fails to achieve them in bargaining, it will negatively impact a future argument that the employer is entitled under the CBA to make the change.

If you have further questions, please reach out to the authors or any member of Seyfarth’s labor team for specific advice on this or other bargaining or labor management-relations issues.

[1]              In contrast to this artificial waiver standard that almost always tilts in a union’s favor, the Board and Courts of Appeals have rejected an employer’s contract coverage defense where they interpreted the CBA provision not to privilege the employer’s unilateral action. See e.g,, DuPont Specialty Prod. USA, LLC, 369 NLRB No. 117 (2020) (finding 8(a)(5) violation by employer’s unilateral contracting out of emergency response team even after review under contract coverage standard); Regal Cinemas v. NLRB, 317 F.3d 300, 306-307 (D.C. Cir. 2003).

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By: Paul Galligan

On November 4, 2024, Mayor Adams signed Intro 0991-2024, also known as the Safe Hotels Act.  The Act will become effective 180 days after November 4th.  Initially proposed at the NYC Assembly in July 2024, the Safe Hotels Act created a lot of controversy with several hotel associations opposed to it, particularly because of the requirement that hotels in NYC directly employ hotel employees in “core” parts of the business, specifically Housekeeping and Front Desk functions.

The other key provisions contained in the Act include requirements that hotels be licensed (renewable every two years), that all hotel employees who enter guest rooms be provided with a panic button, and that hotels provide continuous employee coverage when guests are registered at the hotel.  The Act also requires daily room cleaning unless the guest explicitly declines it. 

The ban on subcontracting was justified by Assemblyperson Julie Menin and other Assembly sponsors and the politically connected Hotel and Gaming Trades Council (“HTC”) on the basis that employees of subcontractors are frequently exploited.  The Hotel Association of New York initially opposed the legislation, but ended up supporting the Act after the Assembly excluded hotels that employed less than 100 employees from the direct employment requirements of the Act.

There remains strong opposition to the Act from the NYC Minority Hotel Association, the American Hotel and Lodging Association and the Asian American Hotel Owners Association.  Those associations maintain that this Act unnecessarily increases costs to smaller and family run hotels.  They also believe the licensing requirement is unnecessary because hotels already have to be licensed through tax ID and Certificate of Occupancy requirements.  The Act will be enforced by the Department of Consumer and Worker Protection (“DCWP”) and there is concern that the Act contains a broad enforcement mandate for the DCWP, which includes the Commissioner’s ability to deny license renewal and impose civil penalties.  The DCWP is also required to issue regulations to monitor compliance with the Act.  

However, the most contentious part of the Act is the direct employment requirement for Front Desk and Housekeeping functions.  According to the associations that condemn the Act, this will add significant cost to the operation of hotels and does not seem to have a direct connection to the safety improvements highlighted by the politicians that support the Act.  The elephant in the room is that the requiring all hotels in NYC with over 100 rooms to directly employ all Front Desk and Housekeeping employees not only adds significant cost and reduces market value, but also makes it easier for the HTC to organize non-union hotels. 

Notably, the requirements of the Act are waived if the hotel is covered by a collective bargaining agreement that “expressly incorporates” the requirements of the Act.  The Industry Wide Agreement (“IWA”), the collective bargaining agreement the HTC has with the Hotel Association of New York, covers most of the large hotels and hotel chains operating in NYC.  In 2020, the HTC backed Local Law 99, known as the Displaced Hotel Service Workers Act which requires purchasers or transferees of hotels (or concessions within the hotel) to offer employment to all hotel workers employed by the seller and to employ the workers for a period of 90 days after the sale or transfer of the hotel at the terms and conditions established by the transferor.  Our blog on the Local Law can be found here.  Local Law 99 also contained an exemption for hotels covered by a collective bargaining agreement.  This Law has also altered the business landscape for non-union hotels in NYC, their lenders and financial backers.    

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By: Alyson Dieckman, Jennifer Mora, and Glenn Smith

Seyfarth Synopsis: On August 22, 2024, the National Labor Relations Board (“NLRB” or the “Board”) issued a decision in Metro Health, Inc. d/b/a Hospital Metropolitano Rio Piedras ending more than 50 years of the Board’s practice of approving consent orders, whereby an administrative law judge (“ALJ”) resolves unfair labor practice (“ULP”) cases absent the agreement of the charging party and the General Counsel.  Chairman McFerran was joined in the majority opinion by Members Prouty and Wilcox.  Member Kaplan dissented. 

Consent Orders Under the National Labor Relations Act

Historically, once a complaint issued in a ULP, it could be resolved in one of four ways: (1) dismissal by the General Counsel; (2) bilateral settlement (between the respondent and the General Counsel and/or the charging party); (3) litigation through hearing; or (4) consent order.  In the context of ULPs, a consent order is the procedure by which a respondent can propose a resolution for approval by the presiding ALJ, and without agreement from the General Counsel and/or charging party.

The Board approved the first consent order resolving a ULP in 1971.  Local 201, Intl. Union of Electrical Workers, 188 NLRB 855 (1971).  In Electrical Workers, the respondent union proposed a resolution to a pending ULP.  The Board accepted the ALJ’s recommendation that it approve the respondent’s proposed resolution despite objections by the charging party and the General Counsel.  The Board explained that the proposed consent order “provides a full remedy with respect to all aspects of the [. . . ] violations alleged in the complaint,” and further reasoned:

that it will protect the public interest and effectuate the purposes and policies of the Act; and that further hearing herein with respect to Respondent’s defense could not result in any changes in the proposed consent order and notice which would be more favorable to the General Counsel and Charging Party.

Over time, the Board further developed its approach including by applying the “reasonableness” standard adopted in Independent Stave to consent orders.  Copper State Rubber of Arizona, Inc., 301 NLRB 138 (1991) citing Independent Stave Co., Inc., 287 NLRB 740 (1987).  Under the Independent Stave standard, the Board considered whether consent orders “substantially remedied” the alleged violations.

In 2016, the Board issued its decision in United States Postal Service, in which it held that the appropriate standard for reviewing consent orders was a “full remedy” standard.  364 NLRB 1704 (2016).  One year later, the Board overturned United States Postal Service in UPMC, and returned to the Independent Stave standard. 365 NLRB 1418 (2017). UPMC remained the controlling precedent until Hospital Metropolitano.

Factual Background

This case arises from a dispute between Hospital Metropolitano (the “Employer”) in San Juan, Puerto Rico and Unidad Laboral de Enfermeras(os) y Empleados de la Salud (the “Union), which represents four units of the Employer’s employees.  The Board consolidated two charges involving the same Union and employer, but separate bargaining units.  Ultimately, the two Complaints alleged that the Employer violated Sections 8(a)(5) and 8(a)(1) of the Act as follows:

  1. In 12-CA-284984, the Union alleged that the Employer failed to produce certain payroll documents in response to a request for information made on October 14, 2021, for one of the four bargaining units the Union represents at the Employer’s hospital.
  2. In 12-CA-279497, the Union alleged that the Employer unilaterally subcontracted bargaining unit work and laid off bargaining unit employees from a different one of the four bargaining units the Union represents at the Employer’s hospital.

The hearing opened on June 6, 2022.  At the hearing, the General Counsel and the Employer engaged in settlement negotiations in the request for information case (12-CA-284984), but were unable to reach an agreement. 

On June 17, 2022, the Employer filed a motion to sever the request for information case (12-CA-284984) and to approve a proposed consent order.  The General Counsel and the Union objected to the approval of the consent order.  The ALJ approved the consent order, finding that it “‘wholly comport[ed]’ with the informal settlement agreement proposed by the General Counsel in Case 12-CA-284984 except that it contained a non-admission clause and did not include a provision explicitly requiring the Respondent to distribute the notice to employees by text message.”

On August 10, 2022, the General Counsel filed a request for special permission to appeal the ALJ’s approval of the consent order.  Now – more than two years later – the Board issued its decision ending the Board’s practice of approving consent orders and removing significant authority from its ALJs.

The Board Will No Longer Accept Consent Orders

The Board held “[i]n this case, and in all pending and future unfair labor practice cases, the Board will not terminate the case by accepting or approving a consent order.”  In its decision, the Board also specifically overruled its decision in UPMC. 

The majority’s rationale was four-fold:

1. The Board’s Rules and Regulations.  The Board noted that its “Rules and Regulations do not mention the term ‘consent order,’ much less authorize the Board or an administrative law judge to accept one under any circumstances.”  The Board acknowledged that the Rules and Regulations expressly permit mutual settlements, but that the Rules and Regulations’ silence on the issue of consent orders renders them unlawful.  The Board further explained that “the practice of approving consent orders would seem to violate the Board’s Rules and Regulations insofar as they prohibit judges from ‘adjusting cases.’” 

This perspective seems, irrationally, to ignore the more than 50-year history of the Board permitting such consent orders, albeit under differing standards.

2. Administrative Burden and Inefficiencies.  The Board noted that even the “full remedy” standard announced in United States Postal Service “poses administrative challenges and inefficiencies.”  Ultimately, the Board majority held that it “do[es] not believe the administrative benefit of retaining the consent order practice outweigh the costs.” 

This rationale was not supported by any data, but was rather a blunt proclamation.

3. The General Counsel’s Prosecutorial Authority.  Consent orders undermine the General Counsel’s prosecutorial authority by empowering ALJs to resolve cases over the General Counsel’s objections.  The Board held that an ALJ’s approval of a consent order “intrudes into the General Counsel’s statutory role of exercising her prosecutorial authority.” 

This likely gets to the crux of the issue – the General Counsel does not wish to relinquish any authority, even to a fact finder, and the current Board Majority supports her agenda.

4. Public Policy.  The Board’s public policy aims include “early restoration of industrial peace.”  Independent Stave, 287 NLRB at 742-743.  Consent orders are inferior to settlements between the parties because they do not require the parties to meet in the middle to find a mutually acceptable resolution to the dispute.  Because consent orders were often entered over the objections of the charging party and General Counsel, they “risk[ed] further inflaming the very labor dispute that lead to the fling of unfair labor practice charges in the first place.” 

By this logic, an adverse ALJ or Board decision would have the very same effect on the parties.  It is ironic that an NLRB that permits an ALJ to determine what constitutes “good faith” bargaining, will no longer permit ALJs to weigh in on whether the charging party or the General Counsel is simply being an impediment to a logical conclusion achieved in an expedient manner.

In a statement, Board Chairman McFerran said: “Because consent orders do not represent a real agreement between opposing parties to resolve a case, they do not promote labor peace in the same manner as a true settlement, [. . . . ] Our decision in Hospital Metropolitano preserves the benefits of true settlements, while eliminating a practice that has no foundation in the Act or our regulations.”  It bears repeating that this practice has existed for more than 50 years.

Member Kaplan’s Dissent

In his dissent, Member Kaplan admonished the majority:

The Board’s responsibility is for enforcing the Act in the best interests of the public, and especially those employees whose rights have been violated. When the General Counsel acts in a manner that is contrary to protecting the interests of employees seeking to vindicate their rights under the Act, simply to pursue her own agenda, the Board not only has the authority but it has the duty to use its authority to protect the rights of the public over the interests of the General Counsel. Put simply, I do not believe that my colleagues have acted in the best interests of the public by allowing the significant delay in either the case at issue or the other cases that have been “held” pending this decision.

The dissent notes that the consent order at issue in this case was reasonable under both Independent Stave and UPMC.  Member Kaplan explained that the Union and General Counsel’s argument that the consent order should have been rejected because it lacked a non-admission clause was not compelling because there was nothing to suggest that a non-admission clause was necessary to remedy the violation at issue in the case.  Member Kaplan explained that, ultimately, the majority’s decision to overturn 50 years of Board law does not promote the purposes of the Act and will require:

resources to be spent on needlessly litigating cases where the [r]espondent offered to provide either an eminently reasonable settlement, or, even, a full remedy.  Worse, the misallocation of resources that is the unavoidable result of [the majority decision here] needlessly reduces the amount of available resources for the Board to use actually protecting American workers.

Impact

The ruling in Hospital Metropolitano should be particularly concerning to employers because it eliminates the last best method for resolving ULPs once a complaint issues.  This decision eliminates the option of holding the General Counsel or the charging party to a reasonable standard.  In a world where the General Counsel refuses to accept any settlement proposal that includes non-admission language or without default language, it is a commonly held belief that employers simply cannot reach reasonable bilateral settlement agreements.  Consent orders were one of the last tools available to employers to resolve ULPs short of litigating through trial.  The goal is capitulation.

Only time will tell how much impact Hospital Metropolitano will have on ULP litigation, but ultimately, employers will be faced with the options of agreeing to less favorable settlement terms or litigating ULPs through trial. The result reveals the Board’s ultimate strategy to vest nearly unchecked power in the hands of the General Counsel – take it or litigate it.  Given the Board’s lack of resources, this approach may create even more backlog in ULP investigations and litigation.

Employers with questions or concerns should reach out to Seyfarth’s team of experienced labor attorneys to help guide them through these issues.

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Authors: Michael D. Berkheimer and Jennifer L. Mora

On June 28, 2024, the United States Supreme Court, in Loper Bright Enterprises v. Raimondo ended four decades of deference to federal agency action under Chevron and ushered in a new era of administrative law. What Loper Bright means for National Labor Relations Board (NLRB) decisions, however, is not fully clear because – as discussed below – federal courts of appeal rarely rely upon Chevron in granting deference to the NLRB. Moreover, before the Supreme Court’s Chevron decision in 1984, appellate courts had given some deference, although not to the level of Chevron, to the NLRB based on the view that it was uniquely qualified to develop labor policy. While the Supreme Court’s reasoning in overruling Chevron could apply to precedent granting deference to the NLRB, it remains to be seen the impact that Loper Bright will have on continued deference to NLRB decisions. What is certain, however, is that deference to the NLRB is no longer a given and employers may be in a better position to challenge the agency’s decisions.

The Chevron Doctrine

The Supreme Court announced the Chevron doctrine as a legal standard to determine when courts must defer to a federal agency’s interpretation of a statute enforced by that agency. Traditionally, judges exercised independence when interpreting statutes. The courts could – and did – look to the interpretations of executive agencies for guidance but did not grant those interpretations deference. This is because, as Chief Justice John Marshall wrote in 1803, it is “emphatically the province and duty of the judicial department to say what the law is.”

Chevron departed from judicial tradition by requiring courts to defer to a federal agency’s statutory interpretation if the court determined that the statute is silent or ambiguous on the matter at issue. If such a finding was made, Chevron required the court to defer to a “permissible” construction of the statute, even if the reviewing court would have interpreted the statutory language differently than the agency. The doctrine was largely premised on the belief that federal agencies are subject matter experts and, as part of the Executive Branch, political actors better situated to develop and implement policy.

Deference to NLRB Decisions and Rulemaking Before Loper Bright

Before Chevron, the Supreme Court had granted some deference to the NLRB, although not to the level of Chevron. In 1944, the Supreme Court in NLRB v. Hearst Publications, Inc. deferred to the NLRB’s interpretation of the National Labor Relations Act’s definition of “employee” because the agency’s determination was supported by the factual record and had a reasonable basis in law. That same year, in Skidmore v. Swift and Co., the Supreme Court developed a lesser standard of deference that looked to several factors to determine how much weight an agency’s determination should be granted, but did not grant controlling deference to the agency’s decision. In the late 1970s, the Supreme Court issued a pair of decisions, NLRB v. Iron Workers Local 103 and Ford Motor Co. v. NLRB, that granted the NLRB “considerable deference” because the Court majority believed Congress had given the NLRB primary responsibility for interpreting the Act and effectuating national labor policy.   

Since Chevron, federal courts of appeal have rarely applied it when reviewing NLRB decisions. For example, the United States Court of Appeals for the District of Columbia – the most important circuit court for the development of administrative law – has heard approximately 1,150 post-Chevron cases in which the NLRB has been a party, but has relied upon Chevron only 40 times in granting deference to the NLRB. And the majority of these 40 cases did not conduct a full Chevron analysis, but only cited to the case for the general proposition that courts grant deference to agency decisions.

Further, the courts of appeal have relied upon Iron Workers Local 103 and Ford Motor Co. even less often than Chevron in granting the NLRB deference. The D.C. Circuit has cited to Iron Workers Local 103 in 24 cases and to Ford Motor Co. in 38 cases in which the NLRB was a party. In the thousands of NLRB cases reviewed by the D.C. Circuit since the 1944 Hearst decision, that court has cited to it a total of 71 times and only 6 times since the turn of the century. Likewise, courts of appeal have cited to Skidmore less than 10 times in cases involving the NLRB in the last 80 years.

What precedent do courts of appeal look to when granting deference to NLRB decisions and rulemaking? Typically, their own precedent that formulates the applicable deference in similar but different terms. Recent decisions have described deference as being appropriate “unless . . . the Board acted arbitrarily or otherwise erred in applying established law to the facts” (D.C. Circuit), if the Board’s interpretation of the Act is “rational and consistent” (Third Circuit), or if the Board’s decision is a “reasonably defensible interpretation of the Act” (Ninth Circuit).

Loper Bright Tosses Out Chevron Deference

The Loper Bright majority ended Chevron deference because it was counter to the long-standing prerogative of judges to independently interpret statutes and violated the Administrative Procedure Act’s directive that courts are to determine “all relevant questions of law” when reviewing administrative action. As such, courts should independently review all legal determinations made by federal agencies unless a specific statutory directive instructs otherwise. The Supreme Court noted that courts routinely interpret ambiguous statutes and there is nothing unique about statutory interpretation when reviewing agency determinations.

The government argued that Chevron should survive because (1) administrative agencies are subject matter experts on the statute they administer, (2) deference promotes uniform construction of federal law, and (3) agencies are better policy makers than courts. The Court rejected the government’s first argument on the grounds that it is the courts and not administrative agencies who are experts in statutory interpretation. Next, it rejected the government’s second argument because an examination of Chevron decisions showed that it did not in fact promote uniform construction of federal law. Finally, the Court rejected the third argument because resolution of statutory ambiguities is the proper domain of the judicial branch and courts should exercise this role free from politics.

The Court recognized that courts have and should continue to respect administrative interpretations of the law, especially when issued contemporaneously with the enactment of a statute and consistent over time. In this vein, the Court seemingly left in place Skidmore deference because it instructs courts to consider the persuasiveness of the agency’s rationale rather than to grant deference even if the court would have decided otherwise. The Court also seemed to approve of the deference granted in Hearst, but noted that such deference was consistent with traditional judicial powers because the issue in that case “was sufficiently intertwined with the agency’s factfinding.” Lastly, the Court did not disturb court deference to an agency’s factual findings when supported by sufficient evidence in the record. 

What Happens Next?

The Loper Bright decision expressly overruled Chevron, which as discussed above was rarely relied upon by courts of appeal in granting deference to NLRB decisions. But the Supreme Court’s rationale for doing so makes clear that it is the provenance of courts, and not administrative agencies, to interpret statutes and that the APA requires courts (and not agencies) to decide questions of law and perform statutory interpretations.

Going forward, deference to the NLRB is no longer a given. And now that the NLRB has lost one weapon in its arsenal for upholding its action, we can expect more litigation as employers have gained a weapon to challenge NLRB decisions. Courts will likely review NLRB decisions without granting them anything more than Skidmore deference, which grants the NLRB the “power to persuade” but not displace independent court judgment.

The NLRB had previously stated publicly that it should receive deference under Ford Motor Co., even if Chevron were to be overruled. This is not surprising from an agency who just argued (and lost) a case before the Supreme Court on the premise it should be held to a lesser standard than others when seeking a preliminary injunction and whose Solicitor recently published a 64-page law review article describing why the agency should be exempt from recent Supreme Court precedent because its ability to unilaterally direct labor policy will be compromised. Employers can therefore expect the NLRB to continue to argue for “considerable deference” to its decisions and regulations in courts of appeal.

It is possible that the NLRB will continue to receive deference as it did in Hearst, where the interpretation at issue is primarily based upon factual rather than legal considerations. This may be problematic for the NLRB because, as the Court noted, this limited deference is especially warranted when an agency’s determination was issued near the time of its enactment and remained consistent over time. Any post-Loper Bright deference available to the NLRB may therefore be limited because of its notorious flip-flopping and because the Act was enacted nearly nine decades ago. This would particularly apply to the current General Counsel and Democrat-controlled Board who have no qualms about overturning precedent and continuously finding new meaning and authority in the 90-year-old text of the Act. In any case, Loper Bright may provide employers strong ammunition to challenge highly controversial NLRB decisions relating to demands for recognition, workplace policies, and joint employment standards, among others. Whether and to what extent courts of appeal will grant deference to the NLRB remains to be seen.

Employers with questions or concerns should reach out to Seyfarth’s team of experienced labor attorneys to help guide them through these issues.