United States: NLRB Decides Charter Schools Are Private Corporations Despite Public Influence

In two separate cases decided on August 24, 2016, a divided National Labor Relations Board concluded that charter schools in Pennsylvania and New York are not political subdivisions within the meaning of Section 2(2) of the National Labor Relations Act and are subject to the Board's jurisdiction. The practical effect of these decisions is that teachers at both schools may now unionize and enjoy the protections of the Act. The Board's decision will certainly be revisited and challenged, however, as the Board explicitly stated that it was not announcing a bright line rule for all charter schools. Consequently, whether a particular charter school is subject to Board jurisdiction will be decided on a case-by-case basis going forward.  

In The Pennsylvania Virtual Charter School, 364 NLRB No. 87 (2016), the NLRB decided the issue of whether it had jurisdiction over a nonprofit corporation that operates a charter school in Pennsylvania. The Pennsylvania Virtual School Association filed a petition to represent full-time and part-time teachers at the Pennsylvania Virtual Charter School. The school argued that it was a political subdivision of the Commonwealth of Pennsylvania, and therefore not within the jurisdiction of the NLRB.

In reaching its decision, the NLRB reaffirmed and applied its longstanding test for determining whether an entity is a political subdivision as announced in NLRB v. National Gas Utility District of Hawkins County, 402 U.S. 600 (1971). To establish whether an entity is a political subdivision of the state under the Hawkins County test, the Board determines whether: (1) the entity was created directly by the state through a government entity, legislative act, or public official; and (2) the entity was created to constitute a department or administrative arm of the government. If both criteria are met, the entity is a political subdivision and exempt from the jurisdiction of the NLRB.

Analogizing the school to a government contractor, the NLRB concluded that the school did not share the key characteristics of political subdivisions. The school was established by private individuals, despite the fact that its charter was signed by Pennsylvania's Secretary of the Department of Education. Accordingly, it was not directly created by the Commonwealth.

With respect to the second prong of the analysis, the NLRB found that none of the school's board members were responsible to public officials or the general electorate, and none of the members could be selected or removed by public officials under the school's bylaws. Therefore, the school was not a department or an administrative arm of government and did not qualify as a political subdivision. Concluding that it had jurisdiction, the NLRB indicated that policy considerations of providing school employees with the protections of the Act favored its assertion of jurisdiction.  

The NLRB also found a second charter school subject to its jurisdiction the same day. In Hyde Leadership Charter School, 364 NLRB No. 88 (2016), the United Federation of Teachers, Local 2, AFT filed a petition with the New York State Public Employment Relations Board (PERB) in an attempt to represent the teachers of the Hyde Leadership Charter School in Brooklyn, New York. On the same day, the school filed a petition with the NLRB seeking an election for the same unit of teachers. After the Board's Regional Director concluded that the school was not exempt from the Board's jurisdiction, the union sought review of the decision from the Board.

The NLRB again relied on the test established in Hawkins County and concluded that the charter school was established by private individuals as a nonprofit organization. Although the Board of Regents had to approve the charter, the NLRB found that the Board of Regent's involvement was not enough to demonstrate that the school was created directly by the state. According to the Board, the school was not created by a New York government entity, special statute, legislation, or public official.

The Board next considered the issue of whether a majority of individuals who administer the entity are appointed by or subject to removal by government officials. In the case of this school, the governing board members were privately appointed and removed, without the input of public officials.  In addition, the selection of the school's governing board is based on the school's bylaws and not any governmental regulation. Moreover, the bylaws provide that the appointment and removal of members may only be made by sitting members of the board, and members of the board alone have the authority to remove the executive director. Finding no compelling reason to decline to exercise jurisdiction over charter schools, the NLRB concluded that it had jurisdiction.

These two decisions are certainly not the final word on whether all charter schools are subject to the Board's jurisdiction. In fact, the Board explicitly stated that the Pennsylvania Charter decision was "based on the facts of this case" and did not create a "bright-line rule asserting jurisdiction over charter schools nationwide." Board Member Philip Miscimarra issued thorough dissents in both the Pennsylvania Virtual and the Hyde Leadership decisions, arguing that even if the Board can exercise its jurisdiction over certain charter schools, it should still decline to exercise jurisdiction over all charter schools in order to foster "uniformity in the exercise of Board jurisdiction over charter schools." Member Miscimarra argued that the Board's involvement in charter school cases "is destined to be self-defeating: the Board cannot possibly achieve 'stability of labor relations'" because "it is impossible to reliably determine in advance whether the Board actually has statutory jurisdiction over any particular charter school."

As is clear from the Board's pronouncements, whether a specific charter school is subject to the Board's jurisdiction is fact specific and, as stated by Member Miscimarra, likely cannot be determined in advance. Accordingly, any charter school facing a union organizing campaign under the National Labor Relations Act should consult with experienced counsel. 

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.

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