Under the Biden Administration, the National Labor Relations Board (“NLRB”) was aggressive in expanding remedies available to those allegedly impacted by unfair labor practice charges. On October 31, 2025, the Fifth Circuit Court of Appeals held that certain damages ordered by the NLRB exceeded the scope of the NLRB’s statutory authority. The NLRB had ordered an employer to compensate workers for “direct or foreseeable pecuniary harms” stemming from a National Labor Relations Act (“NLRA”) violation. The NLRB has taken the position that it has the power to redress harms related to various “costs simply to make ends meet” such as interest and late fees on credit cards, penalties for early withdrawals from retirement accounts, loan or mortgage payments, and transportation or childcare costs. The court held that such damages constitute “compensatory” or “legal” damages, whereas the NLRA provides only “equitable remedies” such as back pay or reinstatement.
The Fifth Circuit decision aligns with recent rulings by the Third and Tenth Circuits that the NLRB cannot not award this type of remedy. The Ninth Circuit has taken the opposite position. It remains to be seen whether the United States Supreme Court will resolve the circuit split, as well as whether the new presidential administration will continue to seek compensatory damages. Based on this uncertainty, employers face a difficult task in evaluating the potential liability stemming from an unfair labor practice charge.