NLRB: Limited in Imposing Damages
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APPLIES TO All Employers with Employees in KY, LA, MI, MS, OH, TN, and TX |
EFFECTIVE As Indicated |
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Quick Look
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Discussion
The Fifth and Sixth Circuit Courts of Appeals each recently addressed the type of damages the National Labor Relations Board (NLRB) has authority to dispense under the National Labor Relations Act (NLRA). Specifically, the NLRA says violations may result in the equitable remedies of reinstatement and back pay. The previous Board took the position that it could impose a broad range of consequential damages for NLRA violations. The Third and Ninth Circuits previously created a split on this issue. Recent decisions have widened that split.
Fifth Circuit Ruling
On October 31, 2025, in Hiran Management v. NLRB, the Fifth Circuit Court of Appeals said the NLRB “lacks statutory authority to award full compensatory damages.” There, employees were terminated after going on strike in violation of the employees’ right to engage in “concerted activities for the purpose of collective bargaining.” The Board ordered the employer to make the employees whole “for any loss of earnings and other benefits, and for any other direct or foreseeable pecuniary harms suffered as a result” of the unfair labor practices. The Fifth Circuit followed a strict interpretation of the NLRA and rejected the Board’s award of damages.
Sixth Circuit Ruling
On November 5, 2025, in NLRB v. Starbucks, the Sixth Circuit Court of Appeals said that the NLRB lacked authority to award “direct or foreseeable pecuniary harms.” There, an employee led a unionizing movement and was subsequently terminated for allegedly leaving an employee alone for 30 minutes. The Board ordered the employer to compensate the employee as a result of the NLRA violation. The Sixth Circuit said that the NLRA’s authority to take “affirmative action” was intended as a “phrase of art,” rather than a “literal phrase encompassing all types of relief.”
The split in Circuits is likely to lead to review by the U.S. Supreme Court. The NLRB may also choose to change position on its authority to award remedies once the NLRB achieves a quorum status. Continue to look for updates on this issue.
Action Items
- Review NLRB claims and awards with legal counsel for compliance with these rulings.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase