The Supreme Court’s opinion in Loper Bright Enterprises v. Raimondo was not exactly something most workers were likely to discuss in the break room.  Every time I’ve tried to explain it to non-lawyers, I find myself struggling to explain the concept of “deference,” and what it means in the real world for courts to apply less deference to an agency’s interpretation of a statute.  But now, in Hudson Institute of Process Research Inc. v. NLRB, the Fifth Circuit has provided a good illustration of how Loper Bright has given right-wing judges a green light to take rights away from workers.

The issue in Hudson Institute was whether a group of individuals should be considered “employees” with the right to organize under the National Labor Relations Act (NLRA) or “supervisors,” with no rights under the Act.  Hudson Institute is a law firm providing immigration services.  The staff at the firm, including both lawyers and non-professionals, sought to organize together.  Hudson Institute argued that some of the workers were supervisors, forcing a four-day hearing that delayed the election by five months.  Despite the delay, the workers voted 87 to 1 in favor of unionizing.  Hudson Institute then refused to bargain with its employees’ union.  After the union election, Hudson moved its headquarters from Ann Arbor, Michigan to Dallas, Texas, which enabled it to ask the Fifth Circuit Court of Appeals to review the NLRB’s decision.

A Fifth Circuit panel consisting of two George W. Bush appointees and one Trump appointee found that two groups of workers – Team Leads and Team Lead Assistants – were supervisors based on their authority to assign work and to reward employees.  The relevant statutory provision provides that individuals are supervisors if they have the authority to do any of the following:  hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward or discipline other employees or responsibly to direct them or to adjust their grievances, provided the exercise of the authority is not “routine or clerical,” but requires the use of independent judgment.

The NLRB Regional Director found that any authority the Team Leads had to assign work did not make them supervisors because they did not need to exercise independent judgment in making assignments.  Approximately one month before the NLRB hearing, Hudson implemented a new software program called PMS that was largely responsible for making assignments.  The Regional Director found that while the Team Leads could, theoretically, override the assignments made by the software, there was no evidence that such reassignments had ever occurred.  The Fifth Circuit decided that in light of Loper Bright, they did not need to give any deference to NLRB’s expertise on this issue.  The judges ruled that the NLRB erred by focusing on the absence of evidence that the Team Leads had ever overridden assignments made by the software.  The Fifth Circuit panel decided that the Board should have relied on testimony that the Team Leads possessed the authority to override the software, and that it was not surprising that there were no examples of the Team Leads exercising this authority because the software had only been in use for one month.  The judges also somehow decided that even though no Team Lead had ever departed from the software’s recommendations, they exercised independent judgment in choosing to adhere to the recommendations.

The Fifth Circuit judges additionally found that the NLRB Regional Director was wrong in concluding that the Team Leads alleged authority to reward did not make them supervisors.  The Team Leads and their Assistants fill out project feedback forms for other employees that affect each worker’s quarterly bonus, but the Regional Director found that completing these forms did not require the exercise of independent judgment because the forms provide detailed instructions, including a comprehensive list of potential errors, and direction about which errors count as minor errors and which ones are considered major errors.  The Regional Director further ruled that Hudson Institute had failed to carry its burden of establishing how the feedback forms affected workers’ raises or bonuses.  Instead the Regional Director faulted the employer for providing only cursory testimony on this point, concluding that “[i]t is unclear whether there is a direct correlation between the project feedback forms and raises, salaries and promotions, or even whether there are some other numbers/factors in this [evaluation] system impacting raises and bonuses.”  Once again, the Republican judges rushed to the employer’s rescue.  The judges decided that the Team Leads did exercise independent judgment in completing the feedback forms because they had authority to “count minor errors ‘more heavily’ if they are repeated after feedback.”  The judges further ruled that once the Regional Director credited testimony that the forms had some impact on quarterly bonuses, it was irrelevant how much impact they had.

Before the Fifth Circuit was overtaken by extremists, the court recognized back in 1975 that the NLRB “has a duty to employees to be alert not to construe supervisory status too broadly because the employee who is deemed a supervisor is denied employee rights which the act is intended to protect.”  At that time, the Fifth Circuit also acknowledged that “[p]articular deference must be given to the NLRB’s findings concerning the infinite and subtle gradations of authority which determine who, as a practical matter, falls within the statutory definition of supervisor.”  Congress hasn’t amended the NLRA since 1975, so there’s no good reason why three unelected judges should now disregard both of these principles.  But, of course, this is exactly the approach that the Supreme Court’s decision in Loper Bright  has encouraged.  Never mind that in Loper Bright, the Court acknowledged the continuing validity of its 1944 ruling in NLRB v. Hearst Publications, where it recognized that Congress had “assigned primarily” to the NLRB “the task of marking a definitive limitation around the term ‘employee.’”  The larger message from the Court’s Republican appointees was that it’s now open season for judges to second-guess agencies whenever agencies depart from the judge’s preferred outcome.

While Hudson Institute is just a single case involving a few dozen workers, the Fifth Circuit’s ruling has far wider implications.  There are huge numbers of workers across the country who are close to the line between “supervisor” and “employee.”  The vast majority of workplaces have individuals who are on this cusp – these individuals tend to have more longevity at the workplace and are often highly respected.  A union that includes leadpersons is typically more powerful than one that is limited to lower-level workers.  If the Fifth Circuit is going to impose its expansive notion of supervisory status in every case, then unions will have little choice but to exclude borderline supervisors from any organizing drive where the employer does business in Texas, Louisiana, or Mississippi.  As a result, not only will leadpersons across the country lose the protections of the NLRA, but all rank-and-file workers will lose the strength that comes from organizing with co-workers who are more highly valued by their employer.  We’re just beginning to see the impact of Loper Bright; the Fifth Circuit has given us a glimpse of what lies ahead.