SpaceX Scores Legal Victory as Labor Board Drops Engineer Termination Case

SpaceX has secured a major legal victory after the National Labor Relations Board (NLRB) officially dismissed a two-year-old case accusing the company of illegally firing eight engineers who criticized CEO Elon Musk in an open letter. The decision marks a significant shift in the regulatory landscape for one of America's most prominent aerospace companies and represents a notable win for Musk amid ongoing scrutiny of his business practices.

In a letter to the attorneys representing the former employees, NLRB regional director Danielle Pierce stated that the agency was dismissing the charges after determining it lacked jurisdiction over SpaceX. "Accordingly, the National Labor Relations Board lacks jurisdiction over the Employer and, therefore, I am dismissing your charge," Pierce wrote, citing a recent opinion from the National Mediation Board (NMB).

The case originated in 2022 when eight SpaceX engineers were terminated after circulating an internal letter that accused Musk of various forms of misconduct, including sexism and creating a hostile work environment. The letter called on company executives to distance the aerospace firm from Musk's public statements and behavior. SpaceX maintained that the employees were fired for violating company policies and creating disruption, not for their criticism of Musk.

The NLRB issued a formal complaint against SpaceX in early 2024, alleging the terminations violated federal labor laws protecting workers' rights to collective action. However, SpaceX immediately challenged the agency's authority, filing a lawsuit that questioned the constitutionality of the NLRB's structure. The company argued that the board's administrative judges and members were improperly insulated from presidential oversight, violating the separation of powers.

The jurisdictional dispute centers on a nuanced distinction in federal labor law. The NLRB typically oversees most private-sector employers, including major manufacturers like Boeing. However, the National Mediation Board has authority over railroad and airline companies. In a recent opinion, the NMB determined that SpaceX falls under its jurisdiction because "space transport includes air travel" to reach outer space—a reasoning that the NLRB has now accepted.

This jurisdictional shift carries significant implications for SpaceX employees. Under NLRB jurisdiction, workers have broad rights to participate in collective action aimed at improving working conditions, with or without union representation. The National Mediation Board operates under different statutory authority that labor advocates say provides fewer protections for workers seeking to organize or challenge management decisions.

The dismissal comes after months of legal maneuvering that saw SpaceX secure a temporary block on the NLRB case from the U.S. Court of Appeals for the Fifth Circuit. In May 2024, a three-judge panel barred the NLRB from proceeding with administrative hearings while SpaceX pursued its constitutional challenge. That decision followed the company's successful argument that the NLRB's structure was likely unlawful under recent Supreme Court precedents limiting the independence of administrative agencies.

SpaceX is not alone in challenging the NLRB's authority. Since the aerospace company filed its initial lawsuit, other major corporations including Amazon, Starbucks, and Trader Joe's have raised similar constitutional arguments in pending labor board cases. These challenges reflect a broader corporate strategy to limit the reach of federal labor regulators amid an uptick in union organizing activity across the technology and service sectors.

The case also highlights the unique position of Silicon Valley companies navigating traditional labor frameworks. SpaceX, valued at approximately $1.25 trillion following its acquisition of artificial intelligence startup xAI, operates in a regulatory gray area that blends aerospace, telecommunications, and technology. As the commercial space industry continues to expand, questions about which federal agencies have oversight authority are likely to become more frequent.

For the former SpaceX engineers, the NLRB's dismissal represents a setback in their efforts to challenge their terminations. The workers had argued that SpaceX should not fall under the National Mediation Board's jurisdiction because the company offers services only to "hand-picked customers" rather than operating as a common carrier like traditional airlines. The NMB rejected this argument, noting that anyone can contact SpaceX to secure its launch services.

The dismissal also follows leadership changes at the NLRB. Jennifer Abruzzo, the agency's general counsel under the Biden administration, had rejected SpaceX's constitutional claims. However, following her termination after the change in administration, SpaceX requested that the board reconsider its position—a request that has now resulted in the case's dismissal.

Legal experts say the case could have broader implications for how federal labor law applies to emerging industries. "This decision creates a precedent that could affect how other commercial space companies are regulated," said labor law scholars monitoring the case. "As more companies enter the space sector, the distinction between NLRB and NMB jurisdiction will become increasingly important."

SpaceX has not publicly commented on the dismissal, and the National Mediation Board did not immediately respond to requests for comment. The former employees' attorneys have not indicated whether they plan to pursue their claims through the NMB or in federal court.

The resolution of this case comes as SpaceX continues to expand its operations and prepare for a potential initial public offering later this year. With the regulatory cloud lifted, the company can focus on its ambitious plans for Mars colonization and satellite internet expansion through its Starlink subsidiary—though the jurisdictional questions raised by this case may yet resurface as the commercial space industry grows.