Fifth Circuit Decision Puts NLRB’s Constitutional Structure in Doubt

The U.S. Court of Appeals for the Fifth Circuit has issued a major constitutional ruling that could reshape the National Labor Relations Board’s (“NLRB” or “Board”) authority and the limits of executive oversight. In an August 19, 2025 opinion, the court affirmed injunctions preventing the NLRB from pursuing unfair labor practice actions against SpaceX and two other employers, concluding that key aspects of the Board’s structure likely violate Article II of the U.S. Constitution.

A Constitutional Showdown Over Executive Authority

In Space Exploration Tech. Corp. v. NLRB, the Fifth Circuit found that statutory restrictions on the President’s ability to remove NLRB members and administrative law judges (“ALJs”) unlawfully insulate those officials from executive control. Under the National Labor Relations Act, Board members can be dismissed only for “neglect of duty or malfeasance in office,” and ALJs only for “good cause” as determined by the independent Merit Systems Protection Board (“MSPB”). According to the panel, those protections create multiple layers of tenure security that prevent the President from ensuring that individuals exercising executive power remain accountable to the executive branch.

The Fifth Circuit grounded its analysis in separation-of-powers principles, referencing its own prior ruling in Jarkesy v. SEC, later affirmed by the Supreme Court, where it struck down comparable tenure protections for administrative law judges at the Securities and Exchange Commission.  The court reasoned that the modern NLRB no longer functions as the quasi-legislative and quasi-judicial body the Supreme Court once described, with today’s Board members wielding substantial executive authority to enforce labor law, oversee union elections, and pursue litigation in federal court. Those powers, the Fifth Circuit reasoned, place the NLRB firmly within the executive branch and beyond the constitutional protections afforded to independent agencies.

Injunctions Upheld: “Irreparable Harm” from Unlawful Proceedings

Upholding the lower courts’ injunctions, the Fifth Circuit held that the employers would suffer irreparable harm by being forced to participate in proceedings before an unconstitutionally structured agency. The court reasoned that the injury occurs at the moment the proceeding begins, not after it concludes—meaning employers need not endure potentially invalid litigation merely to preserve their right to challenge the NLRB’s authority later.

Broader Implications for Employers and Administrative Law

The Fifth Circuit’s ruling places the NLRB in a period of operational uncertainty. Since the removal of former Board Member Gwynne Wilcox earlier this year, the five-member panel has lacked a quorum, preventing it from issuing decisions or advancing new enforcement actions. That standstill, combined with the Fifth Circuit’s constitutional findings, has effectively stalled much of the Board’s activity and fueled debate over the legitimacy of its current structure.

The Supreme Court’s upcoming decisions in other cases may determine whether the NLRB—and other similarly structured independent agencies—can continue to operate with statutory protections that limit the President’s removal power. The outcome could reshape the boundaries between executive oversight and agency independence across the administrative state.

Key Takeaway

The Fifth Circuit’s opinion represents an important moment in the ongoing debate over the scope of executive authority and the independence of administrative agencies. Its reasoning reflects growing judicial skepticism toward long-standing structural protections for independent boards such as the NLRB. The decision could significantly alter the balance between the presidency and regulatory boards, reshaping the way federal labor law is enforced.

For now, employers facing pending or threatened unfair labor practice proceedings, particularly within the Fifth Circuit, may wish to evaluate whether similar constitutional arguments could justify requests for injunctive relief. Employers should approach NLRB investigations with caution and seek experienced labor counsel to navigate developing constitutional and procedural challenges. For further guidance, please contact one of Honigman’s Labor and Employment Attorneys here.