Key Points
- The 6th Circuit has invalidated the Biden-era NLRB bargaining order standard, holding in a 2-1 decision that the Board exceeded its adjudicatory authority — ruling that the standard was a regulation masked as an adjudication.
- The Board, which has two Republicans members and a Democrat, will likely continue applying the standard for now. Even assuming the two Republicans wish to overrule the standard, they have said in other cases that they adhere to the three-vote tradition to overrule precedent.
- General Counsel Crystal Carey could consider independent action. Although Carey could consider directing regional offices not to seek bargaining orders based on the court’s rationale, that would be an unusual exercise of her prosecutorial discretion.
A recent U.S. Court of Appeals for the 6th Circuit decision struck down the National Labor Relations Board’s (NLRB or Board) union-friendly bargaining standard in a 2-1 ruling. The court found the agency exceeded its authority by issuing what amounted to a regulation without proper rulemaking procedures.
The Decision
This case arose from a union organizing campaign at a Kentucky company. After workers contacted a union — and before an election was held — the company announced several changes to employees’ working conditions, including a $4-per-hour raise and expanded benefits. The union later lost the election 14 to 45 and filed unfair labor practice (ULP) charges.
The Biden-era National Labor Relations Board sustained the ULP charges, set aside the election and issued a bargaining order relying on the groundbreaking union-friendly bargaining standard it established in 2023. (We previously wrote about this standard here.)
The company appealed to the U.S. Court of Appeals for the 6th Circuit, which upheld the Board’s findings that the company committed several ULPs. However, the court also found that the Board’s bargaining order standard was improperly promulgated and remanded the case for the Board to analyze the issues within its statutory authority.
In holding that the standard improperly created a rule of general applicability without notice-and-comment rulemaking, the court explained that the Board failed to rely on case-specific facts in deriving the standard and failed to establish the standard to resolve the parties’ dispute. The court stated that the Board acknowledged its new standard did not provide “any additional violation of the Act [or] any additional remedial obligation.” The court concluded that the standard was therefore designed to deter future misconduct — which is typically the province of rulemaking, not adjudication.
The 6th Circuit declared pointedly that the Board’s bargaining standard “cannot serve as the basis for future orders” and “has no precedential value.”
One judge dissented, arguing that the Board has broad statutory discretion to select rulemaking or adjudication, and that the Board’s standard bore “all the hallmarks of a proper adjudication.”
What Happens Next?
This is a 6th Circuit decision, generally binding on other federal courts only within that circuit. However, the court’s reasoning and declaration that the bargaining standard lacks precedential value could carry persuasive weight in other tribunals. Notably, at least one other appeal challenging the Board’s standard is pending in the 9th Circuit.
For its part, the Board is bound by the 6th Circuit’s decision as the law of the case and, therefore, on remand, must apply the court’s instructions to the parties in that matter. However, for now at least, the Board will likely continue to recognize the Biden-era bargaining standard as legitimate precedent in other cases, notwithstanding the court’s decision. Under the Board’s longstanding non-acquiescence policy, the agency typically declines to follow — or acquiesce in — the decision of a single circuit court, unless it is willing to overrule the precedent at issue.
On that score, the two newly appointed Republican Board Members have not yet signaled whether they wish to overrule the standard, although one may suspect that they would like to do so. Assuming they wish to overrule the standard, they are unlikely to take that step any time soon. They have said in other cases that they adhere to the tradition of requiring three members to overrule precedent, and currently, the third Board Member is a Democratic holdover.
The Board could conceivably overrule the bargaining standard on the grounds that its hands are tied by the 6th Circuit — particularly given the court’s strong language that the standard lacks precedential value. However, this outcome is unlikely because the new members have said, at least in other cases, that they would not overrule precedent without three votes.
What happens on the General Counsel (GC) side of the agency will also be important to watch. Newly installed GC Crystal Carey has independent prosecutorial discretion. She could find the 6th Circuit’s rationale persuasive and issue internal guidance directing the regional offices not to seek bargaining orders in complaints without headquarters’ approval — or not seek them at all. This approach would effectively limit the standard’s application while the Board awaits a third member to formally overturn it. However, this would be a novel and unlikely approach, given that the GC usually adheres to Board precedent until it is overruled.
On the flip side, the 6th Circuit’s opinion could provide a roadmap for a future Democratic Board to pursue the bargaining order standard through formal notice-and-comment rulemaking.
For now, the Biden-era standard remains the law the Board will follow, but it has been dealt a serious blow. Employers should monitor the 9th Circuit appeal and any Board or General Counsel action on the bargaining standard’s status.
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