The United States Circuit Court of Appeals for the Sixth Circuit (Sixth Circuit) recently ruled that the National Labor Relations Board (NLRB) exceeded its authority when it issued its decision in Cemex Construction Materials Pacific LLC. As a result, at least within the Sixth Circuit’s jurisdiction (Tennessee, Kentucky, Ohio, and Michigan), the Cemex decision has been invalidated, and its onerous remedies will not be available for the NLRB to impose upon employers in those states.

As readers may recall, and as detailed here, in 2023, the NLRB made several monumental, pro-union holdings, including a relaxed standard for bargaining orders, in Cemex Construction Materials Pacific LLC. Traditionally, under prior precedent, the NLRB issued a bargaining order as a remedy for serious and material employer misconduct during a union organizing campaign. In these instances, the NLRB would determine whether its traditional remedy – ordering a new election – was sufficient or whether the employer’s unfair labor practices were so serious that they destroyed chances for a fair election. Cemex dramatically relaxed the standard used by the NLRB to issue a bargaining order; in essence, under Cemex, the NLRB could issue a bargaining order based on less significant unfair labor practices by the employer during the election period before a union vote.

In the case at hand, an administrative law judge (ALJ) determined that the employer had committed unfair labor practices during the election period by giving $4-per-hour wage increases and free bottles of bourbon, making it easier for new employees to qualify for annual pay boosts, and rescinding a policy requiring workers to use vacation days during an annual end-of-the-year shutdown. The ALJ recommended issuing a bargaining order under both Cemex and Gissel (the former standard from a 1969 Supreme Court decision authorizing a bargaining order only if the employer engaged in egregious unfair labor practices). The NLRB adopted the ALJ’s factual findings and recommended remedy, but the NLRB modified the reasoning. Rather than consider whether a new election could be held by applying the more relaxed Gissel standard, the NLRB relied solely on the standard articulated in Cemex. The employer appealed.

On appeal, the Sixth Circuit held that while the employer committed unfair labor practices, the NLRB’s remedy under Cemex was invalid. Specifically, the Sixth Circuit held that the Cemex standard was created through an unlawful exercise of adjudicatory authority, meaning that the NLRB acted outside of its authority by engaging in rulemaking through a case decision rather than following the statutory rulemaking process. “[The NLRB] created a new standard for issuing future bargaining orders that was neither derived from the case-specific facts nor in furtherance of fashioning a remedy that resolved the parties’ dispute.” The Sixth Circuit then sent the case back to the NLRB to reconsider its ruling in light of the court’s decision.  

It is not clear whether the NLRB will appeal the decision of the appellate court. Notably, the Cemex decision is currently on appeal, pending before the Ninth Circuit Court of Appeals. However, the current NLRB, with a Republican majority, is expected to overrule Cemex sometime soon, so it would certainly be a surprise if the NLRB were to appeal the decision.

If you have any questions about how this decision may impact your business, please contact the authors.