Two recent appellate arguments underscore the heightened judicial scrutiny facing the National Labor Relations Board (“NLRB”) following the Supreme Court’s decision last summer, Loper Bright Enterprises Inc v. Raimondo. While courts previously granted administrative agencies such as the NLRB deference in their decision making, also known as Chevron deference, under Loper Bright, that deference is no longer guaranteed.  Since the decision, employers have been patiently waiting to see what impact, if any, that ruling will have on the actions of the NLRB.   

Last week, two circuits heard arguments that may reshape employer obligations and highlight the new era of judicial scrutiny of NLRB action. 

Fifth Circuit Questions NLRB “Menu of Remedies”

On September 4, 2025, the Fifth Circuit heard oral arguments in Hiran Management v. National Labor Relations Board, a case where a restaurant owner challenged the NLRB’s authority to impose broad compensatory damages beyond standard back pay and reinstatement.

Traditionally, when an employer committed an unfair labor practice the NLRB could order “make-whole” remedies such as reinstating the employees and paying back wages for lost earnings. In December of 2022, following the decision in Thryv, Inc., 372 NLRB No. 22, the NLRB greatly expanded available “make whole” remedies to include all “direct or foreseeable pecuniary harm” suffered as a result of the unfair labor practices. This meant an employer could, in theory, be held liable for a seemingly limitless array of make whole relief if those losses were arguably a “direct and foreseeable” result of the unfair labor practice. 

On appeal, Hiran Management argued that these compensatory damages are not authorized under the NLRA and therefore the NLRB had overstepped its statutory authority. 

At oral argument, the Fifth Circuit questioned NLRB counsel as to what statutory authority empowers the NLRB to award consequential, tort-like damages. Tellingly, one judge asked directly whether the “NLRB’s purpose [is] to put companies out of business with damage claims.” The panel also questioned whether the expansion into consequential damages implicates the employers’ Seventh Amendment right to a jury trial. In response, the NLRB maintained that consequential damages remained equitable in nature intended only to restore employees to the position they would have been in absent the unlawful discharge. 

Moving Forward

Ultimately, if the Fifth Circuit refuses to apply the Thryv standard and limits the NLRB’s remedial power to equitable relief it would deepen the existing circuit split on the issue. With the Ninth Circuit having upheld the Thryv remedies, while the Third Circuit has rejected such approach, the Fifth Circuit decision likely paving the way for Supreme Court review. 

D.C. Circuit Reconsiders the “Successor Bar” 

The NLRB’s “successor bar” doctrine requires employers acquiring a unionized business to recognize and bargain with the incumbent union for a period of time, even if the union’s majority support is in doubt. In the case of Hospital Menonita de Guayama v. NLRB, the hospital withdrew recognition from several unions five months after acquisition, arguing that there was no longer majority support. The NLRB held that this violated the successor bar, and the D.C. Circuit initially upheld the order in February 2024, deferring to the NLRB’s decision under the Chevron deference doctrine. 

In light of the Loper Bright decision, in December 2024, the U.S. Supreme Court vacated and remanded the Hospital Menonita de Guayama case back to the D.C. Circuit for reconsideration. 

On September 4, 2025, at oral argument, the D.C. Circuit challenged the NLRB to identify the statutory authority for its “successor bar”, as Judge Rao opined that “what the successor bar does here is prevent employees from exercising [S]ection 7 and 9A [rights] for a period of time after there’s a successor employer.” 

NLRB counsel defended the rule as promoting labor stability consistent with the purpose of the NLRA, citing Section 10 of the Act and analogies to other NLRB created bars previously upheld by the Supreme Court. The reliance on Supreme Court precedent was met with skepticism as the Court noted that much of it was intertwined with the now overruled Chevron deference.  

Moving Forward

The pending decision from the D.C. Circuit will answer the question as to whether the NLRB’s “successor bar” will be maintained and whether unions are protected following change in employers. Moreover, in light of Loper Bright, this decision may open the door to broader challenges of NLRB policies, particularly those that have historically been upheld through courts deferential review of agency policy.