On August 19, 2025, the Fifth Circuit Court of Appeals sided with Elon Musk’s SpaceX and two other companies by barring the NLRB from prosecuting unfair labor practice cases on the grounds that the Board’s structure likely violates the United States Constitution.
The NLRB operates with two distinct branches: the Administrative Law Judges (ALJs) and a five-member adjudicatory board. Traditionally, ALJs may only be removed by the Merit Systems Protection Board, an independent agency separate from the NLRB, and board members can only be removed by the President for neglect of duty or malfeasance. The Fifth Circuit held that these protections from presidential removal undermine executive authority. In the majority opinion, the court drew parallels to the dual-layer protections for SEC ALJs that were found unconstitutional in Jarkesy v. Securities & Exchange Commission.
Implications for North Carolina Employers
Although this decision is not binding on North Carolina courts, it will likely embolden companies to contest NLRB proceedings on structural grounds and increase litigation over the agency’s authority.
North Carolina employers should:
- Continue to comply with NLRB directives and maintain best practices in labor relations.
- Monitor legal developments closely and consult counsel if faced with NLRB enforcement actions.
- Review labor policies and procedures and consider whether any pending or future NLRB matters may be affected.
The NLRB is expected to challenge the ruling, potentially escalating the matter to the Supreme Court. If the Supreme Court ultimately affirms the Fifth Circuit’s decision, the impact would be nationwide, potentially reshaping how labor disputes are resolved and how the NLRB operates.
