Court limits NLRB's reach on damages after Houston restaurant fires striking workers
A federal appeals court has limited the NLRB’s authority to award full compensatory damages in unfair labor practice cases involving employee terminations.
On October 31, 2025, the United States Court of Appeals for the Fifth Circuit ruled on a dispute between Hiran Management, doing business as Hungry Like the Wolf, and the National Labor Relations Board (NLRB). The case arose after Hiran Management, a small Houston karaoke restaurant, terminated eight front-of-house employees who had gone on strike following disagreements over management practices and compensation.
The employees, who worked as hosts, bartenders, servers, and bussers, raised concerns about being assigned extra duties without increased pay and about inconsistent compensation for “shift supervisor” responsibilities. After a contentious meeting with the restaurant’s manager, Paul Peters, the employees walked out and decided to strike, later presenting a list of demands to management. Most of the employees did not return to work, and after an unsuccessful attempt to resolve the dispute, Hiran Management notified the striking employees that their employment had ended.
The NLRB filed a complaint, alleging that Hiran Management violated section 8(a)(1) of the National Labor Relations Act by interfering with employees’ rights to engage in concerted activities. An administrative law judge ruled in favor of the NLRB, ordering Hiran Management to reinstate the employees and compensate them for any loss of earnings, benefits, and other direct or foreseeable pecuniary harms resulting from the terminations.
Hiran Management challenged the NLRB’s authority to award full compensatory damages. The Fifth Circuit agreed with Hiran Management, holding that the NLRB does not have statutory authority to grant full compensatory damages for all foreseeable harms. The court determined that the NLRB’s remedial powers are limited to equitable remedies, such as reinstatement and backpay, as specified in the National Labor Relations Act. The court found that awarding broader compensatory damages, including those for indirect or consequential losses, exceeded the Board’s authority.
The court’s decision means that while the NLRB can require employers to reinstate employees and provide backpay, it cannot order compensation for all types of financial harm unless Congress amends the law. The case was remanded for further proceedings consistent with this opinion.
This decision clarifies the extent of potential remedies in unfair labor practice cases. Employers remain responsible for reinstatement and backpay in cases of unlawful terminations related to protected concerted activity, but the risk of broader compensatory damages is not currently supported by statute.
The case remains active, as it has been sent back to the lower proceedings, and further legal developments may follow. For now, the Fifth Circuit’s ruling sets a clear boundary on the NLRB’s authority in awarding damages for unfair labor practices.
