National Labor Relations Board Exercises Jurisdiction Over Nonprofit Providing Management Services and Employees to Charter School
On March 8, 2013, a three-Member panel of the National Labor Relations Board found, contrary to the Regional Director’s preliminary decision, that a nonprofit corporation employing a public charter school’s teachers, was not a political subdivision of the State of Illinois. Therefore, the entity providing management services to the school was deemed an “employer” within the meaning of Section 2(2) of the National Labor Relations Act, and subject to the jurisdiction of the Board. The Board called its analysis in this case, Pilsen Wellness Center, 359 NLRB No. 72 (Mar. 8, 2013), “one step removed” from its December 2012 decision in Chicago Mathematics & Science Academy Charter School, Inc., 359 NLRB No. 41 (Chicago Mathematics).
In Chicago Mathematics, the Board ruled that a Chicago charter school was an "employer" pursuant to the National Labor Relations Act. In so doing, the Board analyzed the question under the standard set forth by the Supreme Court in NLRB v. Natural Gas Utility District of Hawkins County, 402 U.S. 600 (1971). Under that test, an employer may be an exempt political subdivision if it is:
created directly by the state so as to constitute a department or administrative arm of the government, or
administered by individuals who are responsible to public officials or to the general electorate.
In Pilsen, there was no dispute that the employer was not a political subdivision under the first prong of the Hawkins County/Chicago Mathematics standard. The Board’s decision was instead driven by its analysis of the second factor:
Our sole focus is on the composition of Pilsen’s board of directors and to whom the directors are accountable. This is the “critical and determinative factor in a second-prong analysis.” Id., slip op. at 9. There is no dispute that the members of Pilsen’s board of directors are appointed and subject to removal only by sitting members of the board, and not by public officials. The method of selection of Pilsen’s board members is dictated by its bylaws, and not by any State law, statute, or governmental regulation. Given these undisputed facts, we find that Pilsen’s directors are not responsible to public officials in their capacity as board members, and therefore that Pilsen is not administered by individuals who are responsible to public officials or the general electorate. Accordingly, “our analysis properly ends”...
Thus, the Board has now employed as brief and determinative an analysis under the second prong as it foreshadowed in Chicago Mathematics.
The decision and its reasoning are instructive – subject to a number of caveats. Like all other actions of this Board, the long term viability of this decision and Chicago Mathematics depends somewhat on resolution of legal challenges which question whether the Board has a quorum. Two of the three members participating in the decision were recess appointed by the President under circumstances challenged by the Circuit Court decision in Noel Canning, a Division of the Noel Corporation v. NLRB, No. 12-1115 (D.C. Cir. Jan. 25, 2013). The Board is currently seeking review. Whether or not these specific Board decisions survive, they clearly spell out the current Board's rationale. Ultimately, any Board properly seated during President Obama's term is likely to have a similar legal philosophy. Finally, notwithstanding its concise and definitive analysis in these decisions, in Chicago Mathematics, the Board expressly left open the issues of cession, deferral, or even alternate findings on different facts. In any event, parties responsible for crafting authorizing legislation or establishing charter schools thereunder must consider the Board decision in Pilsen and Chicago Mathematics in their efforts to do so.