Workers are being affected first by the long-lasting impact of a recent decision made by the US Supreme Court. Starbucks, SpaceX, and Amazon.com are just a few of the companies that are testing whether a ruling against internal tribunals employed by securities regulators extends to a separate federal body responsible for enforcing labor laws. Should the companies win, it may mark the beginning of something bigger.
Corporate America has often objected to a power that government officials have over them: Corporate America has long objected to a power that government authorities have over them: the power to put some cases in front of their own administrative law judges. The decision in US Securities and Exchange Commission v. Jarkesy, rendered on June 27, establishes a significant new precedent that can be used to challenge these processes. The Supreme Court ruled that fraud cases should be heard in federal courts and that the agency could no longer try them. When using its own judges, the SEC normally achieves a success rate of about 90%, as opposed to approximately 70% in courtrooms.
As the judges of the National Labor Relations Board are granted special powers by Congress, the Jarkesy ruling does not directly threaten it in some ways. However, the agency has also gone beyond its jurisdictional bounds by enforcing remedies that are only available through court orders, like greater punitive damages for labor law breaches beyond simply restoring backpay and benefits. Those powers are most risky in the pending litigation. The retailer Macy's, for instance, is challenging the legitimacy of the NLRB's ruling that it was compelled to post warnings alerting employees of their rights and that it had illegally shut out certain construction engineers after a strike over unfinished contract negotiations.
Removing some of the NLRB's enforcement powers would be a blow to unions that have recently gained confidence under President Joe Biden. In his pursuit of becoming "the most pro-labor president in history," his administration has proven to be a valuable ally. In fact, in a competitive labor market, unions have won a number of noteworthy triumphs, such as new contracts that offer considerable wage increases and new work protections at automakers, airlines, and other businesses.
Although the Supreme Court did not completely stop administrative tribunals, it may have had that effect. Justice Sonia Sotomayor of the Supreme Court specifically cautioned in her dissent that the NLRB may be among the dozen agencies in jeopardy, and if she is right, businesses will simply continue to work their way down the list.