Fifth Circuit slashes employer damages but upholds worker retaliation protections

But the real headline from the decision involves money. The NLRB had ordered the company to pay Cruz not just back wages and job search costs, but also compensation for any direct or foreseeable financial harm from the firing. That could mean covering late fees on credit cards, penalties from early retirement withdrawals, medical expenses, higher childcare or transportation costs, even losses if Cruz couldn’t make her car or mortgage payments. 

The appeals court said no. Writing for a three-judge panel, Circuit Judge Jerry Smith ruled that federal labor law only allows the NLRB to order what courts have traditionally called equitable relief: things like reinstatement and back pay. The statute doesn’t permit the kind of open-ended consequential damages the Board tried to impose here. 

The court pointed to the law’s text, which lets the NLRB order companies to stop unfair practices and take affirmative action including rehiring workers with or without back pay. Those are the tools equity courts have always used, the panel said, not the compensatory damages you see in regular lawsuits. 

The NLRB’s own examples of what it planned to cover under the new remedy didn’t help its case. The Board had suggested paying for credit card interest, retirement penalties, lost homes or cars, and medical bills. The court said that list looked like something from a personal injury case, not a labor dispute. 

The NLRB continues to apply this remedy, known as the Thryv standard after a 2022 Board decision, but the Fifth Circuit ruled it lacks authority to award such damages. The Ninth Circuit went the other way last year, upholding the remedy. The split means companies operating in multiple states face different outcomes depending on which federal circuit hears their case.