The 5th Circuit and 6th Circuit Courts of Appeals each ruled recently that the National Labor Relations Board (NLRB) does not have authority to order employers to pay consequential damages for unfair labor practices. The rulings widen a split among the circuit courts, increasing the likelihood of the NLRB’s remedial power being reviewed by the Supreme Court.
In 2022, the NLRB held in Thryv, Inc., that it could order employers to compensate employees for all direct or foreseeable pecuniary harms resulting from the employer’s violations of the National Labor Relations Act (NLRA). Prior to Thryv, Inc., NLRB remedies were typically limited to reinstatement and back pay.
On October 31, the 5th Circuit ruled against the NLRB’s expanded remedies in Hiran Management v. NLRB, holding that “the Thryv remedy goes beyond the text of the NLRA.” The Court explained that the NLRA permits only equitable relief (such as reinstatement and back pay) and not legal relief (such as compensatory, consequential or punitive damages).
Then the 6th Circuit weighed in by vacating the NLRB’s award of consequential damages in NLRB v. Starbucks, ruling that the NLRB exceeded its statutory authority when it awarded “direct and foreseeable monetary damages” beyond back pay. Such compensable damages would include a “myriad” of components, such as “interest and late fees on credit cards, penalties on early withdrawals from retirement accounts, and the loss of a car or home from missed loan or mortgage payments,” the Court explained in limiting the Board to traditional relief.
The rulings expand a Circuit Court split over the NLRB’s claimed remedial authority in Thyrv, Inc. In December, 2024, the 3rd Circuit held that the NLRB exceeded its statutory authority by ordering consequential remedies, while in January, 2025, the 9th Circuit upheld Thryv remedies because they “further the policy of the NLRA,” are “directly targeted” at unlawful conduct and are “aimed at restoring the economic strength that is necessary to ensure a return to the status quo ante.”
