In a previous article, we emphasized the potential impact of the recent Supreme Court decisions in Loper and Jarkesy on the future landscape of labor and employment law: imagine a world in which administrative agencies can no longer pursue adjudication in their own administrative tribunals, and in which the agencies’ interpretation of the statues they enforce are no longer entitled to deference. As it happens, this impact is already being felt in the labor law world: in Starbucks v. McKinney, the Supreme Court held that the National Labor Relations Board doesn’t get any special privileges when it comes to seeking injunctions against employers.

Starbucks v. McKinney

Loper threw out the Court’s long-standing “Chevron deference” doctrine and Jarskesy, while applies only to the SEC and the particular enforcement proceeding at issue in that case, logically applies to any administrative proceeding before any federal agency empowered to issue fines. Starbucks v. McKinney takes this a step further. There, the Supreme Court clarified that the Board is subject to the same four-factor test used for any court ordered action when seeking injunctions under Section 10(j) of the National Labor Relations Act (NLRA).

After several Starbucks employees announced plans to unionize, they invited a news crew from a local television station to visit the store after hours to promote their unionizing effort. Starbucks fired multiple employees involved with the media event for violating company policy. The Board filed an administrative complaint against Starbucks alleging that it had engaged in unfair labor practices. The Board’s regional Director then filed a petition under Section 10(j) seeking a preliminary injunction for the duration of the administrative proceedings that would, among other things, require Starbucks to reinstate the fired employees. Applying a two-part test that asks only whether “there is reasonable cause to believe that unfair labor practices have occurred,” and whether injunctive relief is “just and proper,” the district court granted the injunction, and the Sixth Circuit affirmed.

The Supreme Court, resolving the Circuit split, held that district courts must apply the traditional four factor test when considering the Board’s requests for a preliminary injunction under §10(j)—that a plaintiff seeking a preliminary injunction must make a clear showing:

that he is likely to succeed on the merits,

that he is likely to suffer irreparable harm in the absence of Preliminary relief,

that the balance of equities tips in his favor, and

that an injunction is in the public interest.

The Supreme Court rejected the Board’s interpretation that Section 10(j) favors the two-factor test, stating that even though the NLRA grants the Board this injunctive power, it does not mean it is entitled to a more lenient standard than parties seeking injunctions in other contexts.

Effect of Starbucks v. McKinney

Starbucks v. McKinney again calls into question how much district courts should defer to an agency’s interpretation of the very federal statute it is empowered to enforce. Employers may now have an easier path to challenge the Board’s rulemaking ability - such as the Board’s 2023 joint-employer rule (which was vacated by a Texas district court in March) and the Board’s new rule rolling back Trump-era changes to union election procedures, restoring policies against blocking union representation, and loosening the bar for voluntary recognition (likely to take effect September 30, 2024).

One case to monitor post Loper, Jarkesy, and Starbucks is Cemex Construction Materials Pacific, which is currently being challenged in the Ninth Circuit. Cemex involved alleged unfair labor practices (ULPs) by the employer before, during, and after the critical period of an election campaign, when the union had signed authorization cards from a majority of the bargaining unit. There, the Board lowered the threshold for the Board to issue a bargaining order rather than re-run the election when it finds the employer committed ULPs during the critical period.

Following Loper, Jarkesy, and Starbucks decisions, the district court may more freely overrule the Board’s Cemex framework. To be clear, an employer is not (now or ever) free to violate workers’ rights during a union campaign. But, if an employer is being forced to bargain with a union following baseless or unproven violations, it is prudent to seek guidance on how to best utilize the decisions against administrative agency deference in such labor proceedings.

We continue to see a shift in the judicial enforcement of labor relations. For questions and guidance about the impact of Loper, Jarkesy, Starbucks, and Cemex or administrative proceedings in federal labor and employment law, please contact a member of Kelley Drye’s Labor and Employment team.

How Recent Changes to Administrative Law May Alter Labor and Employment Law as We Know It: NLRB