Sixth Circuit Rejects NLRB’s Expanded Thryv Remedies

This month, the U.S. Court of Appeals for the Sixth Circuit issued a significant decision limiting the kinds of financial remedies that the National Labor Relations Board (“NLRB” or the “Board”) can pursue on behalf of employees.  In NLRB v. Starbucks Corp., the Sixth Circuit found that the Board exceeded its authority when it sought to require employers to cover broader financial consequences connected to an allegedly unlawful termination.  In doing so, the Sixth Circuit aligned itself with the Third and Fifth Circuits, which have also rejected the NLRB’s push for expanded monetary remedies.

For employers, the ruling restores a more predictable framework for potential liability under the National Labor Relations Act (“NLRA”).  The Board’s 2022 Thryv decision attempted to expand “make-whole” relief beyond the NLRA’s traditional remedies, but the Sixth Circuit reaffirmed that only longstanding equitable measures such as reinstatement and back pay are permitted.  Additional financial awards, including childcare costs, housing-related fees, or other personal expenses an employee might incur following an alleged unfair labor practice, fall outside the Board’s authority.  As a result, employers within the Sixth Circuit are now shielded from the broader categories of monetary relief.

1. Background: The NLRB’s Attempt to Broaden “Make-Whole” Relief

In Thryv, the NLRB announced that its traditional remedies (back pay, reinstatement, and interest) no longer went far enough to fully compensate employees harmed by unfair labor practices.  The NLRB relied on Section 10(c), which authorizes the Board to order “affirmative action,” and interpreted that phrase broadly to include additional forms of financial relief beyond traditional remedies.  Based on that interpretation, the NLRB asserted that it could require employers to cover any direct or foreseeable pecuniary harm stemming from an unlawful discharge.  Under Thryv, employees could seek recovery for expenses such as:

• Credit card interest or late fees
• Penalties incurred from early retirement account withdrawals
• Out-of-pocket medical costs
• Fees associated with eviction defense
• Other financial consequences flowing from the unlawful termination

The Board characterized these measures as equitable “make-whole” relief.  Employers quickly challenged the expansion, however, arguing that these awards were legal damages that the NLRA does not authorize the agency to impose.

2. Sixth Circuit’s Decision: Monetary Harm = Legal Relief, Not Equity

In the Sixth Circuit case, although the court agreed that Starbucks violated the NLRA by firing the lead union organizer at one of its Michigan locations, it refused to enforce the portion of the Board’s order requiring Starbucks to reimburse the employee for incidental financial losses.  The Sixth Circuit explained that the NLRB went further than the law allows when it tried to require employers to cover additional financial losses tied to an allegedly unlawful termination.  In the Court’s view, the NLRA only permits the Board to order traditional remedies such as reinstatement and back pay, not new categories of monetary awards that function like damages.  The Court also noted that nothing in the statute suggests Congress intended the NLRB to impose these added financial obligations on employers.  In addition, the Court expressed concern that the Board’s expanded approach would effectively allow an agency to award legal damages without a jury, which raises constitutional issues.  Finally, the Court made clear that it would not simply defer to the NLRB’s interpretation of the statute, especially where multiple other federal courts have already disagreed with the Board’s reading of its authority.

3. A Growing Circuit Split

The Sixth Circuit’s decision adds to a clear divide among the federal appellate courts:

Third, Fifth, & Sixth Circuits: These appeals courts rejected Thryv and held that the Board may not award consequential monetary damages, reinforcing the position that the NLRB exceeded its statutory and constitutional authority.

Ninth Circuit: The Ninth Circuit is the lone appellate court to uphold Thryv, concluding that expanded make-whole remedies are sufficiently analogous to back pay and serve the Act’s remedial purposes.

With four circuits weighing in, and a split that now spans both statutory interpretation and constitutional analysis, the Supreme Court is increasingly likely to step in.  A future Board majority may also choose to revisit or withdraw the Thryv doctrine, although such action would require a formally constituted Board.

4. Looking Ahead

The patchwork landscape creates compliance challenges for multi-state employers. Depending on the jurisdiction, a Board order may be upheld or rejected, which makes careful planning and early assessment of potential risks even more important.  Staying updated on these developments is essential as courts and the NLRB continue to define the limits of administrative authority.  For guidance on responding to NLRB charges, evaluating exposure, or developing compliance strategies across multiple jurisdictions, please contact Honigman’s Labor and Employment team here.