Appeals Court Greenlights Presidential Removal of NLRB Officers: 3 Steps For Employers

The President has the authority to remove National Labor Relations Board (NLRB) Members at will, a federal appeals court just affirmed, tossing aside the removal protections in the National Labor Relations Act that has shielded members for decades. Friday’s decision in Wilcox v. Trump from the US Court of Appeals for the D.C. Circuit is the latest expansion of power the office of the President has wielded over “independent” federal agencies following the unprecedented termination of NLRB member Gwynne Wilcox in January. And it’s the latest step in President Trump’s goal of reshaping the federal bureaucracy that will likely ultimately be decided by the Supreme Court. Here’s what you need to know about the decision and three steps you can take in response.

Breaking Down the Ruling

Under recent Supreme Court precedent, the President must retain full control over executive officers who wield meaningful enforcement and policymaking authority. The court found that the NLRB’s authority to write rules, litigate, create policy through adjudication, and impose remedies, goes well beyond the “quasi-judicial” functions of officials that SCOTUS recognized should be shielded with “for cause” termination protection.

• Substantive Rulemaking = Executive Power. The court emphasized that the NLRB possesses “broad rulemaking authority,” a tool the FTC did not meaningfully wield when SCOTUS decided Humphrey’s Executor in 1935, a case that involved similar “for cause” termination protection for FTC Commissioners. The panel noted that an agency’s decision to use its rulemaking power infrequently does not diminish the constitutional significance of possessing it.
• Policymaking Through Adjudication. The NLRB’s practice of creating new labor-relations rules through adjudication, often shifting with political composition, was central to the court’s reasoning. According to the panel, agency adjudication that formulates policy, rather than neutrally applying law like a federal court, falls squarely within the executive sphere.
• Broad Remedial Power. Unlike the limited cease-and-desist authority the FTC had in 1935, the NLRB may impose affirmative obligations, award backpay, and craft legal and equitable remedies aimed at “effectuating national labor policy.” These are executive enforcement tools, according to the court, not quasi-judicial functions.
• Independent Litigation Authority. The NLRB’s ability to pursue enforcement actions in its own name, independent of the Department of Justice, further demonstrated that its officers execute federal law and must therefore remain accountable to the President.

Together, the court concluded these powers pushed the NLRB well beyond the narrow confines of Humphrey’s Executor and into the realm where the President must maintain unfettered removal authority. While the ruling may be appealed, SCOTUS has already agreed to consider Trump v. Slaughter, a case that could clear up questions around the reach of Humphrey’s Executor.

How Will This Change Labor Policy?

A Board More Susceptible to Rapid Change

If NLRB Members serve at the pleasure of the President, future administrations may rapidly remake the Board. Employers have long navigated oscillating labor policy, but the pace of swings will accelerate if the makeup of the Board can be immediately reshaped at the beginning of each Presidential term. Employers may begin to see more immediate shifts following elections, reducing the multi-year lag between political changes and Board action. Businesses can also expect more direct alignment between White House policy and the NLRB’s enforcement posture, on a much faster timeline.

More Litigation Challenging Agency Structure

This case is part of a broader trend of structural challenges to administrative agencies, especially those exercising adjudicatory functions. The decision also signals that courts may be increasingly skeptical of expansive exercises of agency power without clear congressional authorization. Employers engaged in high-stakes matters may find constitutional arguments having more traction in the courts.

Long-Term Implications: More Politicized, but Stable Policy?

The decision may offer employers some long-sought predictability in how quickly policy will change at the Board. For decades, employers operated under a model where agency direction frequently swung, but legal doctrines such as Humphrey’s Executor insulated Board Members from immediate removal, causing prolonged, slow-moving transitions between majorities.

Three Steps Employers Can Do to Respond:  1. Evaluate ongoing NLRB matters: take stock of pending cases and scheduled proceeding to understand how changes in leadership and policy at the NLRB may affect strategy. 2. Get ready for rapid regulatory and adjudicatory swings following future presidential transitions. Employers with multi-year strategic plans should incorporate these election cycles into their risk assessments. 3. Prepare for a narrower view of agency authority. Courts may become more receptive to challenges involving rulemaking limits, overbroad remedies, or adjudicatory overreach. Federal agencies may adjust their regulatory and enforcement strategies as a result.

Conclusion

Fisher Phillips will continue to monitor workplace law developments and provide additional insights as needed. Make sure you are subscribed to Fisher Phillips’ Insight System to get the most up-to-date information and invitations to our webinars. If you have further questions, contact your Fisher Phillips attorney, the author of this Insight, or any attorney in our Labor Relations Group.