NLRB’s in-house tribunal undermines fairness and rule of law

Nick Hiran is living the American Dream—or at least he’s been trying to. His family immigrated to the U.S. from Thailand when he was 16. After settling in Portland, OR, and serving in the U.S. Air Force, Nick moved to Houston, TX, to join other relatives. There, he earned an accounting degree and launched his career as a business consultant. He developed an affinity for restoring and revitalizing troubled restaurants and eventually started his own firm, Hiran Management.

In July 2022, he bought the 1980s-themed Hungry Like the Wolf diner in Houston, at its landlord’s urging, after learning the eatery was on the verge of closing down. Nick, already a fan of 1980s music and culture, looked forward to transforming Hungry Like the Wolf into a thriving workplace and dining destination.

Nick knew he had a long road to save the struggling business and the jobs of its employees. But before he even really had a chance, Nick found himself in the crosshairs of the National Labor Relations Board (NLRB) and its in-house tribunal system—where the agency serves as prosecutor, judge, jury, and appellate court all at once.

The trouble began shortly after Nick took over ownership and hired a new manager for the restaurant and its 15 employees. Relations between the manager and some staff quickly became strained over workplace responsibilities, tip distribution, and management style. The situation came to a head when the manager convened an in-person mandatory meeting to resolve the conflict. Some of the employees attended, but instead of hashing out their differences, tensions flared, and they walked out. The next day, one employee texted the manager a list of demands and invoked workers’ rights under the National Labor Relations Act (NLRA).

The NLRB’s General Counsel quickly filed charges, claiming that the restaurant terminated the employees in retaliation for “protected union activities.”

Nick felt he’d followed proper procedure and compiled thorough evidence to support his case. But none of it mattered. The NLRB doesn’t have to prosecute its allegations in a proper court of law. In fact, it doesn’t even have to go beyond its own walls. The agency’s general counsel filed the case in-house, applied the NLRB’s own rules (that toss aside standard rules of evidence), and held a hearing in front of an NLRB-employed administrative law judge (ALJ) at the NLRB’s offices. Any appeal of the ALJ’s decision goes to the NLRB itself.

Unsurprisingly, the ALJ in Nick’s case ruled against the restaurant and ordered it to rehire the eight employees with backpay. The NLRB affirmed the ALJ’s decision, including her order to Hiran Management to compensate the employees for any “foreseeable” harm that purportedly resulted from the terminations. These so-called “compensatory damages” are not authorized under the National Labor Relations Act. But the NLRB “discovered” this authority in December 2022—90 years after the labor act was adopted.

The Constitution guarantees fundamental principles of fairness, including the right to a fair trial before an impartial judge and jury. This means disputes should be heard in a real court of law, not an in-house proceeding where normal due process protections don’t apply. Labor disputes are no exception. Nor can the NLRB claim authority it doesn’t have to add compensatory damages and take further advantage of these disputes to expand its own power.

Yet in NLRB proceedings, the deck is stacked against business owners like Nick from the get-go. Even in cases that reach a federal court for review, judges must give “double deference” to the NLRB’s findings and interpretations of law—an abdication of judicial power that denies the accused their right to a fair and unbiased judicial process.

Represented free of charge by Pacific Legal Foundation, Nick and Hiran Management are now fighting back with a federal appeal of both the NLRB’s final decision and the agency’s unconstitutional exercise of judicial power through its in-house tribunal system.