The Supreme Court's retreat from agency deference just landed on the shop floor
A federal appeals court has thrown out an NLRB rule that forced new business owners to bargain with an inherited union, even without majority support.
On July 21, 2026, the US Court of Appeals for the District of Columbia Circuit ruled that the National Labor Relations Board's "successor bar" is inconsistent with federal labor law. The rule forced a company that buys a business to recognize and bargain with the existing union for up to a year - even if most workers no longer backed it. The court found the Board had no authority to impose it.
The case involved a hospital that became a successor employer in 2017. The incumbent union claimed to represent staff across five bargaining units. Two of those units had never had a contract, and the deals covering the other three had expired more than four years before the sale. But the hospital said it later obtained evidence that a majority of employees in each unit - and everyone in one unit - had rejected the union. It refused to bargain and withdrew recognition.
The Board then charged the hospital with unfair labor practices. An administrative law judge applied the bar and refused to weigh the hospital's evidence that the union had lost majority support. A divided Board panel agreed and ordered the hospital to bargain.
The dispute reached the appeals court once before. In 2024, the court upheld the rule by deferring to the Board. Then the Supreme Court decided Loper Bright, which overruled the long-standing Chevron doctrine and told judges to interpret statutes themselves, not defer to agencies. The justices sent the case back for another look.
This time, the court reached the opposite result. Reviewing the challenge without deference, it found the bar clashes with two core protections in the National Labor Relations Act: employees' right to choose whether and how to bargain, and the requirement that a union have majority support. The Act, the court noted, quoting earlier precedent, "confers rights only on employees, not on unions."
For HR leaders, the signal is practical. In this circuit, a company acquiring a business may have more room to test whether an inherited union still holds majority backing, rather than being locked into a year of bargaining.
One judge dissented, arguing the majority misread the earlier ruling and that the Board's policymaking power survived Loper Bright ruling. The First Circuit has upheld the successor bar, leaving the two courts split. The ruling is a slip opinion and could still face further proceedings.
