United States: Contrary To Union's Argument, NLRB Finds Jurisdiction Over Nonprofit Corporation Operating Charter School In Chicago

In Chicago Mathematics & Science Academy Charter School, Inc., 359 NLRB No. 41 (Dec. 14, 2012), the National Labor Relations Board ("the Board" or "NLRB") rejected the position of a teachers' union and found that it had jurisdiction over an Illinois nonprofit corporation that operates a public charter school in Chicago. The Board majority concluded that the nonprofit was not the sort of government entity exempt from the National Labor Relations Act ("the Act"), and there was no reason for the Board to decline jurisdiction. This recent ruling falls in line with other decisions from the Obama Board favoring expansive NLRB jurisdiction, but it runs counter to the position of labor unions, which often favor card check organizing in charter schools rather than NLRB-run secret ballot elections. 

Factual Background

The Chicago Mathematics and Science Academy Charter School, Inc. (CMSA) is a private, nonprofit corporation established under the Illinois General Not-for-Profit Corporation Act of 1986 for the purpose of operating a charter school. CMSA's affairs are conducted by a board of directors, which selects its members, and no public officials or government entities are involved in the selection or removal of members of the board of directors.

Pursuant to the Illinois Charter Schools Law, following its incorporation, CMSA submitted a proposal to and was granted a charter by the Chicago Public Schools, a division of the Board of Education of the City of Chicago (Chicago Board). The charter agreement set forth the guidelines and expectations for CMSA and the manner in which it would be held accountable during the five-year term of its agreement. The agreement provided that the charter could be revoked by the Chicago Board for material violation of any of its terms. CMSA's receives approximately 80% of its budget from the Chicago Public Schools. However, although the Chicago Public Schools reviews the budget, it has never rejected a budget proposed by CMSA and it does not advise CMSA on the allocation of its resources. Moreover, CMSA's board of directors has the ultimate authority to approve the budget. CMSA employs the school's teachers and most of its administrative, secretarial, and custodial employees.

In June 2010, the Chicago Alliance of Charter Teachers and Staff, IFT, AFT, AFL-CIO ("the Union") filed a petition with the Illinois Educational Labor Relations Board seeking to represent teachers employed by CMSA. CMSA, in turn, filed an election petition with the NLRB. The NLRB Acting Regional Director dismissed CMSA's petition, finding that the school is a political subdivision and, as such, exempt from jurisdiction of the Board pursuant to Section 2(2) of the Act. The Board granted CMSA's petition to review the decision.   

NLRB Decision

In analyzing the case, the Board applied the U.S. Supreme Court's decision in NLRB v. Natural Gas Utility District of Hawkins County, 402 U.S. 600 (1971), which set forth a disjunctive test governing whether an entity is a political subdivision and thereby exempt from Section 2(2) of the Act's definition of "employer." Under the Hawkins County test, an entity may be considered a political subdivision if it is either: "(1) created directly by the state, so as to constitute departments or administrative arms of the government, or (2) administered by individuals who are responsible to public officials or to the general electorate." The NLRB also considered its decision in Research Foundation of the City University of New York, 337 NLRB 965 (2002), which held that private entities acting as government contractors are not exempt from NLRA jurisdiction under Section 2(2). Applying the test set forth in Hawkins County, the Board determined that CMSA was not "created directly by the State" nor was it "administered by individuals who are responsible to public officials or the general electorate." Specifically, the Board found that CMSA was created by private individuals, not by a government entity, special legislative act, or public official. Further, the Board noted that an entity is not exempt from NLRA jurisdiction simply because it receives public funding or operates pursuant to a contract with a governmental entity. The Board also noted that pursuant to the Charter Schools Law, a charter school must be organized by a nonprofit corporation or other discrete, legal nonprofit entity authorized by Illinois law. Neither the Charter Schools Law, nor any other Illinois statute directs that charter schools be created, or creates charter schools. On the contrary, the Board concluded that Illinois law authorized only private corporations to establish and operate charter schools, with the Charter Schools Law simply providing the "framework" in which the private entities would operate the schools. The Board considered the fact that Illinois characterized charter schools as being "within the public school system," but did not find this controlling because there was nothing in the Charter Schools Law suggesting that the legislature intended the state to operate the schools.

Analyzing the second prong of the Hawkins County test, the Board examined whether the individuals responsible for administration of the school were appointed by or subject to removal by public officials. "Given the undisputed method of appointment and removal of CMSA's board members," the Board concluded, "we find that none of them are responsible to public officials in their capacity as board members, and that, therefore, CMSA is not 'administered' by individuals who are responsible to public officials or the general electorate." Having determined that CMSA was not a political subdivision, the Board concluded that it was an "employer" within the meaning of Section 2(2) of the Act, because it controlled most, if not all, matters relating to the employment relationship with the teachers, including hiring, firing, pay, and most benefits. 

Finally, the Board rejected the view of Member Hayes, who concurred that CMSA was not a political subdivision exempt from the Board's jurisdiction but argued that the Board should decline to exercise jurisdiction for policy reasons. Based on the circumstances of this case and the record before it, the Board concluded there were no policy reasons to decline jurisdiction. 

Effect on Charter Schools Nationally

The Board majority (with agreement by the dissent) was careful to point out that this decision was specific to the facts of this case and did not establish a "bright-line rule" that the NLRB has jurisdiction over all entities that operate charter schools without regard to location and the legal framework governing their relationships with state and local governments. Despite this caveat, this decision potentially subjects a number of charter school employers to NLRB jurisdiction and may open the door to further expansion of the Board's jurisdiction. While the nonprofit corporation in the instant case favored NLRB jurisdiction, in other circumstances NLRB jurisdiction may not be favorable for charter school employers seeking to maintain their nonunion status. 

Depending on the applicable law that authorizes and governs charter schools, as well as the role of the state or local government in regard to such schools, charter school employers may be at risk of falling within NLRB jurisdiction. In some cases, such as with CMSA, coverage may be helpful to an employer. In other instances, coverage may not be helpful. Charter schools that may be targeted by a union should work with experienced labor counsel to determine their most effective actions and strategies given this new development.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.