In a decision that sent shockwaves through the landscape of American labor law, the Fifth Circuit Court of Appeals ruled in August 2025 that the structure of the National Labor Relations Board (NLRB) is unconstitutional. This landmark judgment, which emerged from the SpaceX v. NLRB case, has not only paralyzed the agency’s ability to enforce federal labor laws in Texas, Louisiana, and Mississippi, but also cast doubt on the legitimacy of similar federal agencies, including the Occupational Safety and Health Review Commission (OSHRC).
The case at the heart of the ruling reads almost like a parable of modern corporate power: Elon Musk’s SpaceX, along with Energy Transfer and Findhelp, challenged the NLRB’s enforcement actions against them for alleged anti-union activities. The companies argued that the NLRB’s structure, which shields its five-member board and administrative law judges (ALJs) from being fired at will by the president, violates the separation of powers outlined in Article II of the U.S. Constitution. According to Reuters, this was the first appellate court decision to find that the law protecting NLRB members and judges from at-will removal by the president is likely illegal.
Judge Don Willett, writing for the three-judge panel (which included two Trump appointees), was unequivocal: The Employers have made their case and should not have to choose between compliance and constitutionality, he wrote. When an agency's structure violates the separation of powers, the harm is immediateand the remedy must be, too. (The Week).
The ruling immediately barred the NLRB from pursuing cases against the plaintiffs, effectively halting the agencys ability to resolve labor-management disputes and enforce federal labor laws in the Fifth Circuita region encompassing millions of workers. According to Bloomberg, this decision has broad regional implications for labor rights enforcement in the affected states.
At the heart of the courts reasoning lies the structure of the NLRB, established by the National Labor Relations Act of 1935, a signature achievement of the New Deal. The Act created an independent agency whose board members could only be removed for neglect of duty or malfeasance in office, but for no other cause, and whose ALJs could only be removed for good cause after a hearing before the Merit Systems Protection Board (MSPB). The Fifth Circuit found that these dual layers of for-cause removal protection unduly insulate ALJs from presidential oversight and violate the separation of powers.
The courts decision builds on a series of recent Supreme Court rulings that have steadily narrowed the scope of permissible independence for federal agencies. As The New Republic reports, the conservative legal establishment has long sought to maximize executive power, often citing the 1926 Myers v. United States decision, which strengthened the presidents removal authority. In contrast, the 1935 Humphreys Executor v. United States decision allowed Congress to enact for-cause removal protections for the heads of independent agenciesa precedent that had stood for nearly 90 years.
But the Supreme Court has shifted. In Selia Law v. Consumer Financial Protection Bureau (2020), the Court struck down for-cause removal protections for the director of the CFPB, and in Collins v. Yellin, it ruled that the director of the Federal Housing Finance Agency must also be removable at will. In both cases, the Court allowed the agencies to continue operating, simply severing the offending removal protections from the statutes.
The Fifth Circuit, however, went further. Rather than merely severing the removal protections, it blocked the NLRB from operating against the plaintiffs at the preliminary injunction stage. Judge Willett justified this by noting that, unlike prior Supreme Court cases, this one was still in its early phases and that the full severability analysis would have to wait. In his words, If the Employers later prevail on the merits, we may then consider whether severance is appropriate. At this stage, however, the severability inquiry is premature and belongs to the merits phase, when the court considers final relief. (The New Republic).
This approach effectively neutralizes the NLRBat least for the companies involved. The Supreme Court had recently stayed an injunction that blocked President Trump from removing Democratic NLRB member Gwynne Wilcox, despite statutory protections, suggesting that the high court is likely to side with the Fifth Circuits reasoning. In an unsigned opinion, the justices wrote, The stay reflects our judgment that the Government is likely to show that both the NLRB and MSPB exercise considerable executive power.
The implications of the ruling extend beyond the NLRB. The Fifth Circuits logic applies with equal force to the Occupational Safety and Health Review Commission (OSHRC), whose ALJs are subject to the same dual for-cause removal protections. According to Ogletree Deakins, this makes those protections likely unconstitutional as well. OSHRC commissioners are removable by the president only for cause, but the constitutionality of those protections is less clear and may hinge on whether OSHRC is sufficiently similar to the Federal Trade Commission, as described in Humphreys Executor. If not, their removal protections could also be vulnerable to challenge.
The ruling affirms that district courts have jurisdiction to enjoin ongoing agency proceedings on constitutional grounds and that being subjected to an unconstitutional proceeding constitutes irreparable harm. This means that parties before OSHRCand potentially other agencies structured like the NLRBmay now have a viable path to challenge the agencys structure in federal court, potentially halting ongoing proceedings.
For American workers and labor advocates, the decision is a major setback. As The New Republic notes, it represents a partial negation of the New Deal and 90 years of legal precedent, weakening the ability of workers to organize without fear of retaliation from employers. For the conservative legal movement, it marks a significant victory in their campaign to increase presidential control over the federal bureaucracy.
Employers and practitioners are now advised to closely monitor further developments and consider the potential for constitutional challenges in ongoing and future matters before OSHRC and other similarly structured agencies. The NLRB, for its part, is undoubtedly likely to challenge the Fifth Circuits ruling, according to TechCrunch, and the Supreme Court is expected to have the final word.
As the dust settles, the Fifth Circuits decision has left federal labor law in a state of uncertainty, with the fate of the NLRB, OSHRC, and other independent agencies hanging in the balance. The coming months will reveal whether the courts will continue to unravel the web of protections that have defined the relationship between workers, employers, and the government for nearly a century.
