It was not until the Supreme Court upheld the constitutionality of the statute in 1937 in National Labor Relations Board v. Jones & Laughlin Steel Corporation that the Wagner Act became law in practical terms as well. That was a surprising decision, issued as the controversy over Roosevelt’s “court packing plan” was still hot, marking a fundamental change in United States constitutional law and in the power of the federal government.
The Supreme Court, for its part, generally upheld the NLRB's interpretation of the Wagner Act in those early years, but imposed two major limitations on it. The Court held in NLRB v. Mackay Radio & Telegraph Co.. in 1938 that, while employers could not fire workers for going out on strike, they could permanently replace them — a seemingly semantic distinction that, in practice, sharply limited workers' right to strike. The Court later held in National Labor Relations Board v. Virginia Electric & Power Co. that the First Amendment to the Constitution barred the NLRB from making it illegal for employers to express their opposition to unionism, so long as they did not try to coerce or threaten workers with reprisals for exercising their rights.
The act was immediately controversial. The American Federation of Labor and some employers accused the NLRB of favoring the Congress of Industrial Organizations, particularly when determining whether to hold union elections in plantwide, or wall-to-wall, units, which the CIO usually sought, or to hold separate elections in separate craft units, which the craft unions in the AFL favored. While the NLRB initially favored plant-wide units, which tacitly favored the CIO's industrial unionism, it retreated to a compromise position several years later under pressure from Congress that allowed craft unions to seek separate representation of smaller groups of workers at the same time that another union was seeking a wall-to-wall unit.
Employers and their allies in Congress also criticized the NLRB for its expansive definition of "employee" and for allowing supervisors and plant guards to form unions, sometimes affiliated with the unions that represented the employees whom they were supposed to supervise or police. Many accused the NLRB of a general pro-union and anti-employer bias, pointing to the Board's controversial decisions in such areas as employer free speech and "mixed motive" cases, in which the NLRB held that an employer violated the Act by firing an employee for anti-union reasons, even if the employee had engaged in misconduct. In addition, employers campaigned over the years to outlaw a number of union practices such as closed shops, secondary boycotts, jurisdictional strikes, mass picketing, strikes in violation of contractual no-strike clauses, pension and health and welfare plans sponsored by unions and multi-employer bargaining.