A federal appeals court has ruled that Starbucks unlawfully fired union organizers. But while it upheld the National Labor Relations Board’s (NLRB) findings of unfair labor practices, it curtailed the board’s power to order broader employee compensation.
“Substantial evidence supports the Board’s unfair-labor-practice conclusions with respect to Nowakowska’s termination and reduction in hours and Bussiere’s termination,” the court’s opinion reads.
“Substantial evidence also supports the conclusion that Starbucks knew about the employees’ recording activity prior to their terminations; it cannot rely on that purportedly after-acquired evidence to avoid reinstatement and limit back pay,” the court added, referring to Starbucks’ argument that it was within its rights to terminate the workers for secretly recording conversations with colleagues and customers, a claim the court rejected because the company was already aware of the recordings before deciding to fire them.
However, the court declined part of the NLRB’s remedy. It vacated part of the NLRB’s order requiring Starbucks to compensate the workers for all “direct or foreseeable pecuniary harms,” such as job search costs and medical expenses, ruling that such damages fall outside the board’s authority. The court stated that under the NLRA, the NLRB’s remedial powers are limited to equitable relief, such as reinstatement and back pay, and cannot extend to compensatory damages for broader financial losses.
“That portion exceeds the Board’s authority under the NLRA,” the opinion states. “We thus remand for further proceedings consistent with this opinion.”
The court sent the case back to the NLRB for reconsideration in line with the court’s interpretation of its statutory authority.
This decision limits the NLRB’s ability to impose “make-whole” remedies in certain cases, clarifying that the board cannot order employers to compensate employees for indirect harms stemming from labor law violations. While the ruling upheld the NLRB’s findings of unlawful actions by Starbucks, it set boundaries on how far the board can go in addressing the consequences of those actions.
The case marked the first time a federal appeals court considered broader challenges to the NLRB’s enforcement powers, including a constitutional argument over whether its administrative law judges (ALJs) are improperly shielded from presidential removal.
In June 2021, an ALJ who heard the case ordered Starbucks to offer reinstatement to Nowakowska and Bussiere and to make them whole for any loss of earnings and benefits. He also ordered Starbucks to compensate them for search-for-work and interim employment expenses. In February 2023, the NLRB adopted the ALJ’s findings and conclusions and additionally ordered Starbucks to compensate the pair for any “direct or foreseeable pecuniary harms incurred as a result of the unlawful and adverse actions against them.”
Starbucks filed exceptions to the ALJ’s decision related to the broader employee compensation while also mounting a challenge to “layered ALJ removal protections.” The company argued that these protections violate Article II of the Constitution by creating layers of insulation that undermine executive control over ALJs. However, Judge Thomas Ambro wrote in the opinion that the Third Circuit lacked jurisdiction to consider the constitutional challenge to layered ALJ removal protections and that Starbucks had failed to demonstrate any harm resulting from the protections.
The Epoch Times has reached out to the NLRB with a request for comment on the ruling and its implications for the NLRB’s enforcement powers.
