Labor & Employment Law Daily Wrap Up, REMEDIES, DAMAGES—5th Cir.: NLRB lacks statutory authority to award full compensatory damages, (Nov 3, 2025)

By Ronald Miller, J.D.

The Fifth Circuit agreed with the employer that the most important issue raised by this appeal was that the NLRB lacked statutory authority to order direct or foreseeable compensatory damages.

The NLRB violated the NLRA by ordering that an employer reimburse all foreseeable costs incurred by discharged employees, ruled the Fifth Circuit. The employer had discharged the employees after they went on strike. Thereafter, the Board determined that the employer violated Section 8(a)(1) and awarded the eight employees full compensatory damages. Section 10(c) of the NLRA authorizes the Board to issue orders, but this provision limits it to awarding only equitable remedies, not legal damages. Agreeing with the Third Circuit’s analysis in NLRB v. Starbucks Corp., which concluded that the remedy in Thryv, Inc., goes beyond the text of the NLRA, the Fifth Circuit held that the NLRB lacked statutory authority to award full compensatory damages. The appeals court concluded, however, that because the employer did not timely raise its supervisory status defense, it waived that affirmative defense (Hiran Management, Inc. dba Hungry Like the Wolf v. NLRB, No. 24-60608 (5th Cir. Oct. 31, 2025)).

In July 2022, the employer purchased a struggling restaurant. It operated as a small nonunion business that employed about 20 workers. A manager was hired to oversee its eight “front of house” employees, who served as hosts, bartenders, servers, and bussers.

Employee strike. Soon after the employer hired the manager, employees began complaining about his management style. To resolve the complaints, the manager scheduled a meeting with the employees for September 18, 2022. Seven front of house staff attended the meeting, along with the bar supervisor. After a heated exchange, the employees walked out of the meeting. They later decided to go on strike and formulated a list of demands.

A few days later, the restaurant’s lawyer, invited the employees to meet on September 29 to discuss their demands. The meeting was unsuccessful. One week later, on October 6, the lawyer notified the striking employees that they were no longer employees of the restaurant.

NLRB complaint. After the strikers were terminated, counsel for the NLRB filed an administrative complaint, alleging that the employer violated Section 8(a)(1) of the NLRA. The NLRB argued that the employer fired the employees for engaging in concerted activity and to discourage such future conduct. An administrative law judge ruled in favor of the Board, and the Board adopted the ALJ’s rulings and conclusions with minor adjustments.

The Board’s order mandated that the employer cease and desist from its unfair labor practices, reinstate the discharged employees, and make the employees whole “for any loss of earnings and other benefits, and for any other direct or foreseeable pecuniary harms suffered as a result” of the unfair labor practices. The employer filed a petition for review and the Board filed a cross-application for enforcement.

On appeal, the employer asserted that the NLRA did not apply to four of the discharged employees because they were “supervisors,” rather than “employees.” Further, it contended that the Board lacked statutory authorization to order damages for all “direct and foreseeable” harms stemming from the employees’ discharge. Third, the employer contended that the NLRB’s determination violated the Constitution’s Article III, the Seventh Amendment, and the Due Process clause, as well as the major questions and nondelegation doctrines.

Supervisors versus employees. Supervisors do not benefit from the protections of the NLRA. “Supervisor” means any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, provided the individual uses independent judgment.

The Board treats supervisory status as an affirmative defense that must be raised in the employer’s answer to an unfair labor practice complaint. Here, the employer did not draw attention to the individuals’ alleged supervisory status until after the administrative hearing. Rather, it first discussed the issue in its post-hearing brief to the ALJ. Because the employer did not timely argue the supervisory status defense, the Board concluded that the argument was waived. Thus, the employer waived its affirmative defense by untimeliness.

Merits. Even apart from waiver, the employer’s assertions on the merits were unpersuasive. The employer contended that four of the fired individuals were supervisors. While the four employees sometimes worked as shift supervisors, and two sometimes opened or closed the restaurant, the employer did not demonstrate that they exercised the requirement of independent judgment. Further, although they sometimes assisted the restaurant manager with scheduling, the manager corrected and finalized the schedules himself. Again, the employer failed to show that the employees exercised independent judgment when assisting with scheduling. Accordingly, all eight fired employees were covered by the NLRA.

Foreseeable compensatory damages. The Fifth Circuit agreed with the employer that the most important issue raised by this appeal was that the NLRB lacked statutory authority to order direct or foreseeable compensatory damages.

Board remedies. Section 10(c) of the NLRA authorizes the Board to issue orders requiring an employer “to cease and desist from [an] unfair labor practice, and to take such affirmative action including reinstatement of employees with or without back pay, as will effectuate the policies of this subchapter.” 29 U.S.C. § 160(c). The employer contended that this provision limits the Board to awarding only equitable remedies, not legal damages.

Circuit split. A circuit split has developed following the Board’s 2022 announcement in Thryv, Inc., 372 NLRB No. 22 (2022), that it would begin to order damages for “all foreseeable harms” resulting from unfair labor practices. The Fifth Circuit sided with the Third Circuit.

Equitable versus legal relief. The NLRA limits the NLRB to ordering certain equitable remedies. That the Board may order an employer to “cease and desist” or “take affirmative action” amounts to permission to grant equitable remedies. Reinstatement and backpay, the two types of affirmative action expressly mentioned in the statute, are forms of equitable relief. Moreover, the Supreme Court has explained that the NLRB’s “power to order affirmative relief” does not include a “general scheme authorizing the Board to award full compensatory damages for injuries caused by wrongful conduct.” UAW-CIO v. Russell, 356 U.S. 634, 642—43, 78 S. Ct. 932, 937 (1958). According to this uniform authority, the NLRA permits the NLRB to award only equitable, not legal, relief.

Although the Board suggested that it has “frequently” ordered monetary relief for a range of harms resulting from unfair labor practice, the appeals court noted that the Third Circuit observed that these cases involved providing “workers with the benefits of their employment contracts in a way that likely fell under the umbrella of a backpay award.” Thus, these cases confirmed that the NLRB is limited to providing equitable remedies that resemble backpay.

Compensatory damages. Adhering to Thryv, Inc., the NLRB awarded the eight discharged employees full compensatory damages. In Thryv, the Board broke new ground, as it decided that “in all cases in which [its] standard remedy would include an order for make-whole relief, the Board will expressly order that the respondent compensate affected employees for all direct or foreseeable pecuniary harms suffered as a result of the respondent’s unfair labor practice.”

The articulation of “foreseeable pecuniary harms” in Thryv is a form of legal damages. Legal damages may be compensatory or consequential. Damages for many of the harms listed in Thryv are classic examples of consequential damages. Because the Board’s remedy aims to redress concrete losses to the employees wholly apart from backpay and pay-related costs, it covers harms typically dealt with in tort suits for compensatory damages, and it operates as a compensatory damages order.

Accordingly, the Fifth Circuit agreed with the Third Circuit’s analysis in NLRB v. Starbucks Corp., 125 F.4th 78, 97 (3d Cir. 2024), which concluded that the Thryv remedy goes beyond the text of the NLRA. Thus, the Fifth Circuit concluded that Thryv exceeds the NLRB’s authority under the NLRA.

Accordingly, the employer’s petition for review was granted in part; the NLRB’s cross-petition for enforcement was denied in part; and the case remanded for further proceedings.

The case is No. 24-60608.

Judge: Jones, E.

Attorneys: Oliver J. Dunford (Pacific Legal Foundation) for Hiran Management, Inc. dba Hungry Like the Wolf. Ruth E. Burdick for NLRB.

Companies: Hiran Management, Inc.; Hungry Like the Wolf

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