SpaceX, the NLRB, and the Future of U.S. Labor Law

On January 4, 2024, SpaceX issued a legal filing arguing that the structure of the National Labor Relations Board is unconstitutional. Trader Joe’s and Amazon both filed legal briefs in support of Space X’s argument [1]. The unfolding legal case represents the greatest challenge the NLRB has faced in its 90-year history. The move comes amid a recent surge in labor union activity [2], with public support for labor unions at a 60-year high [3]. SpaceX’s legal brief is also contextualized by an NLRB complaint against SpaceX alleging the wrongful termination of eight workers for criticizing Elon Musk [4] and a separate complaint against Tesla alleging that the company retaliated against unionizing workers in violation of federal labor law[5]. If the district court endorses SpaceX’s arguments, these complaints could be thrown into limbo.

SpaceX argues that the NLRB’s administrative judges and board members violate the separation of powers doctrine [6] because of their insulation from removal by the President, barring just cause. SpaceX also claimed that the NLRB’s adjudication process violates its right to due process and a jury trial under the Fifth and Seventh Amendments, respectively [7]. Much of SpaceX’s case depends on the outcome of Securities and Exchange Commission v. Jarkesy [8], a pending Supreme Court case concerning the power of federal agencies to examine claims independent of federal court and the constitutionality of the removal protections administrative judges rely on to make their judgments. 

In Jarkesy, respondents make three central claims: (a) that the SEC’s application of civil penalties violates the Seventh Amendment, (b) that the ability of the SEC to adjudicate claims in an intra-agency process instead of district court allows an authority within the executive branch to assume a judicial function, in violation of the nondelegation doctrine and (c) that the removal protections enjoyed by administrative law judges restricts the President’s authority to recruit and manage personnel in violation of the Appointments Clause[ 9]. During oral arguments, Justices Thomas and Gorsuch honed in on the first point, arguing that the SEC’s ability to initiate an agency proceeding instead of a jury trial “take[s] away a person’s right to be heard before his peers” [10]. Justice Kagan argued the opposite, asserting that “[Atlas Roofing] could not have been clearer; the Seventh Amendment is no bar to the creation of new rights or to their enforcement outside the regular courts of law.”[11]. Justice Sotomayor and Justice Jackson largely agreed with Kagan’s line of questioning. The final outcome of the case is likely to rest with Justice Barrett, Justice Kavanaugh, and Chief Justice Roberts. If a majority of 5 or more are found against the SEC, many federal agencies, including the NLRB, could be negatively impacted.

Almost 90 years ago, the National Labor Relations Act was passed into law [12]. In a climate of increasing labor militancy and economic devastation, the legislation was meant to guarantee the right of workers to organize for better working conditions. The National Labor Relations Board was created to enforce these provisions, and its structure and prominence have persisted to this day. And while constitutional challenges to the NLRB were rejected at the time of its creation [13], the Supreme Court’s increasingly conservative tilt [14] offers little comfort to its defenders.

Several months ago, at the New York Times DealBook Summit, Elon Musk remarked that he “disagrees [d] with the idea of unions” as they create “a lords and peasants sort of thing” [15]. The irony of Musk’s comment is that unions, time and time again, have been shown to contribute to higher wages, higher benefits, and reduced inequality within the workplace [16]. The NLRB was devised to protect unions and mitigate the kind of economic exploitation that Tesla, Amazon, and other large corporations are known for [17]. If anything, Musk’s unique blend of arrogance, close-mindedness, and ruthlessness is the economic model most reminiscent of the feudal system. The courts hearing SpaceX’s lawsuit have a decision to make. Curiously, it’s the same decision facing the Supreme Court in its deliberation over SEC v. Jarkesy. Should the courts embrace the law as it is and preserve agencies like the NLRB? Or should it revert to some of the darker periods of the Court’s history [18], ushering in a period of administrative chaos? Hopefully, the courts make the right decision.

[1] Hadero, Haleluya. 2024. “Amazon argues that national labor board is unconstitutional, joining SpaceX and Trader Joe's.” AP News. https://apnews.com/article/amazon-nlrb-unconstitutional-union-labor-459331e9b77f5be0e5202c147654993e.

[2] Goldberg, Natalie R. 2024. “Unions, with power, popularity rising, are still losing a big battle.” CNBC. https://www.cnbc.com/2024/01/28/unions-with-power-popularity-rising-are-still-losing-a-big-battle.html.

[3] McCarthy, Justin. 2022. “U.S. Approval of Labor Unions at Highest Point Since 1965.” Gallup News. https://news.gallup.com/poll/398303/approval-labor-unions-highest-point-1965.aspx.

[4] Scheiber, Noam. 2024. “SpaceX Illegally Fired Workers Critical of Musk, Federal Agency Says.” The New York Times. https://www.nytimes.com/2024/01/03/business/spacex-elon-musk-nlrb-workers.html.

[5] Langford, Cameron. 2024. “Tesla fights feds' union-busting accusations at Fifth Circuit.” Courthouse News Service. https://www.courthousenews.com/tesla-fights-feds-union-busting-accusations-at-fifth-circuit/.

[6] Wiessner, Daniel. 2024. “SpaceX sues US agency that accused it of firing workers critical of Elon Musk.” Reuters. https://www.reuters.com/technology/space/spacex-sues-us-agency-that-accused-it-firing-workers-critical-elon-musk-2024-01-04/.

[7] Giorno, Taylor, and Julia Shapero. 2024. “Corporate giants aim to hobble National Labor Relations Board.” The Hill. https://thehill.com/business/4491063-corporate-giants-aim-to-hobble-national-labor-relations-board/.

[8] "Securities and Exchange Commission v. Jarkesy." Oyez, www.oyez.org/cases/2023/22-859. Accessed 31 Mar. 2024.

[9] Slattery, Elizabeth. 2023. “U.S. Securities and Exchange Commission v. Jarkesy.” American Bar Association. https://www.americanbar.org/groups/public_education/publications/preview_home/us-securities-exchange-commission-v-jarkesy/.

[10] Mann, Ronald. 2023. “Justices divided over SEC’s ability to impose fines in administrative proceedings.” SCOTUSblog. https://www.scotusblog.com/2023/11/justices-divided-over-secs-ability-to-impose-fines-in-administrative-proceedings/.

[11] “Supreme Court of the United States, SEC v. Jarkesy.” 2023. SUPREME COURT OF THE UNITED STATES. https://www.supremecourt.gov/oral_arguments/argument_transcripts/2023/22-859_n758.pdf.

[12] “National Labor Relations Act (1935).” n.d. National Archives. Accessed March 31, 2024. https://www.archives.gov/milestone-documents/national-labor-relations-act.

[13] "National Labor Relations Board v. Jones & Laughlin Steel Corporation." Oyez. Accessed March 31, 2024. https://www.oyez.org/cases/1900-1940/301us1.

[14] Totenberg, Nina. 2022. “The Supreme Court is the most conservative in 90 years.” NPR. https://www.npr.org/2022/07/05/1109444617/the-supreme-court-conservative.

[15] Greenhouse, Steven. 2023. “Elon Musk says letting workers unionize creates 'lords and peasants'. What? | Steven Greenhouse.” The Guardian. https://www.theguardian.com/commentisfree/2023/dec/20/elon-musk-unions-tesla.

[16] Banerjee, Asha, Margaret Poydock, Celine McNicholas, Ihna Mangundayao, and Ali Sait. 2021. “Unions are not only good for workers, they're good for communities and for democracy: High unionization levels are associated with positive outcomes across multiple indicators of economic, personal, and democratic well-being.” Economic Policy Institute. https://www.epi.org/publication/unions-and-well-being/.

[17] Villarreal, Alexandra. 2022. “Tesla's construction workers at Texas gigafactory allege labor violations.” The Guardian. https://www.theguardian.com/technology/2022/nov/14/tesla-texas-construction-workers-gigafactory-lawsuit-labor-violations.

[18] “Lochner era | Wex | US Law | LII / Legal Information Institute.” n.d. Legal Information Institute. Accessed March 31, 2024. https://www.law.cornell.edu/wex/lochner_era.