NLRB’s Remedial Authority
Under Section 10(c) of the National Labor Relations Act (NLRA), the National Labor Relations Board (NLRB) may order employers to cease unfair labor practices and take “affirmative action” to remedy said violations. This has traditionally included reinstatement and back pay. However, in its Thryv, Inc. (2022) decision, the NLRB expanded its remedial power to include compensation for all direct or foreseeable pecuniary harms, which could include compensation for non-wage losses (such as missed rent, credit card interest, medical expenses, and other financial losses attributed to job loss).
Hiran Management v. National Labor Relations Board
Hiran Management, Inc., operating a small Houston karaoke restaurant called Hungry Like the Wolf, faced a labor dispute in 2022 when non-unionized employees walked out of a heated meeting with their manager and subsequently went on strike and did not return to work. The employees had raised concerns about being assigned extra duties without additional pay and broken promises regarding compensation for “shift supervisor” responsibilities. Hiran’s attorney met with the employees to discuss their demands, but the talks were unsuccessful. A week later, Hiran’s lawyer informed the employees they were no longer employed.
Counsel for the NLRB filed an administrative complaint against Hiran, claiming it violated Section 8(a)(1) of the NLRA, which protects employees’ rights to engage in concerted activities when it terminated the striking employees. Ultimately, the NLRB found that Hiran violated Section 8(a)(1). It ordered traditional remedies—reinstatement and back pay—but also awarded full compensatory damages for all “direct or foreseeable pecuniary harms,” including medical expenses, credit card interest, and other financial losses. This remedy was based on the Board’s 2022 decision in Thryv, Inc.
The employer appealed the NLRB’s decision. The Fifth Circuit rejected the NLRB’s expanded interpretation of its remedial powers under Section 10(c) of the NLRA. The Court found that:
The NLRA authorizes only equitable relief, such as reinstatement and back pay.
The Board lacks statutory authority to award tort-style or consequential damages.
The Thryv-based remedy constituted legal damages, which are not permissible under the NLRA.
The court emphasized that Section 10(c)’s language—“affirmative action, including reinstatement with or without back pay”—does not support compensating employees for every financial harm resulting from an unfair labor practice. The decision aligns the Fifth Circuit with the Third Circuit’s restrictive view and directly conflicts with the Ninth Circuit’s broader interpretation, which is in line with Board’s 2022 decision in Thryv, Inc.
Takeaways
For employers operating in the Fifth Circuit (Texas, Louisiana, and Mississippi) the Hiran decision acts as another win limiting the NLRB’s power. As previously discussed, the Fifth Circuit recently ruled the NLRB’s structure unconstitutional. With the Hiran decision, it now holds the NLRB lacks statutory authority to award full compensatory damages in unfair labor charges, meaning employers will not have to face expansive monetary remedies for unfair labor practices. The Hiran decision is also another blow to the NLRB, which has faced significant hurdles this year. The constant challenges by the Fifth Circuit (and other US courts of appeals) targeting core issues related to the NLRA and the NLRB’s existence have created the perfect storm to allow the US Supreme Court to issue seismic rulings. As they say on tv, stay tuned!
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