Court Rules Certain Job Protections for NLRB Judges Unconstitutional: What Employers Need to Know
In a recent decision, a federal judge held that the removal procedures for the National Labor Relations Board’s (NLRB) administrative law judges (ALJ) are unconstitutional. One of many pending challenges to the NLRB’s structure, this ruling could impact how employers navigate employment issues before the board.
On Dec. 10, Judge Trevor McFadden of the U.S. District Court for the District of Columbia held that the NLRB’s ALJs must be removable at will by the NLRB. It ordered the provision of the Administrative Procedure Act protecting ALJs from removal stricken from the act.
The court ruled in favor of an employer in VHS Acquisition Subsidiary Number 7 v. National Labor Relations Board, a Massachusetts hospital, after it sued the NLRB. The employer argued that NLRB ALJs are unconstitutionally tenured because they have at least two layers of job protection, insulating them from presidential oversight.
In his decision, Judge McFadden relied heavily on Free Enterprise Fund v. Public Company Accounting Oversight Board. In this case, the Supreme Court held that dual-layered job protections unconstitutionally shielded members of the Securities and Exchange Commission’s Public Company Accounting Oversight Board from removal. There, the Supreme Court found that such a structure contravened the Constitution’s separation of powers. Judge McFadden wrote that the Supreme Court in Free Enterprise Fund was “clear in its admonition: Officers of the United States cannot be insulated from the removal power by two or more levels of decisionmakers who themselves enjoy job protection.”
Under the current procedural scheme, ALJs are only removable by the NLRB “for good cause” as established by the Merit Systems Protection Board (MSPB). MSPB officers, in turn, can only be dismissed by the president for “inefficiency, neglect of duty, or malfeasance in office,” and NLRB members can only be let go “for neglect of duty or malfeasance in office, but for no other cause.” Judge McFadden found this multilayered protection, which includes the NLRB and the MSPB, hindered the president’s ability to remove an ALJ and violated Article II’s grant of power to the executive.
This decision aligns with the Fifth Circuit's stance on the issue of ALJ tenure protections. But it clashes with the view of the Sixth, Ninth, and Tenth Circuits, which have upheld similar dual-layered protections.
The court’s ruling is limited to declaratory relief that NLRB ALJ job protections are unconstitutional. The court refused to issue a temporary restraining order and found that it did not have jurisdiction under the NLRA to issue injunctive relief. The case is also subject to appeal. As a result, the effect of the ruling remains largely uncertain. The court’s decision, however, underscores a growing judicial scrutiny regarding the constitutional concerns posed by insulation of executive officers within the administrative arm of the executive branch from presidential oversight.
Please contact Sarah Smith-Clevenger or any member of the Phelps labor and employment team if you have questions or need advice or guidance.
