NLRB Sets New Jurisdiction Test for Religious Universities, Managerial Test for University Faculty Members | Practical Law

NLRB Sets New Jurisdiction Test for Religious Universities, Managerial Test for University Faculty Members | Practical Law

In Pacific Lutheran University, the National Labor Relations Board (NLRB) revised the standard it applies when determining whether to exercise jurisdiction over employees of religious educational institutions and the managerial test it applies to determine whether college and university faculty members are employees with collective bargaining rights under the National Labor Relations Act (NLRA).

NLRB Sets New Jurisdiction Test for Religious Universities, Managerial Test for University Faculty Members

by Practical Law Labor & Employment
Law stated as of 11 Jun 2020 • USA (National/Federal)
In Pacific Lutheran University, the National Labor Relations Board (NLRB) revised the standard it applies when determining whether to exercise jurisdiction over employees of religious educational institutions and the managerial test it applies to determine whether college and university faculty members are employees with collective bargaining rights under the National Labor Relations Act (NLRA).
On December 16, 2014, in Pacific Lutheran University, the panel (Board) heading the NLRB's judicial and election functions revised the standard the NLRB applies when determining whether to exercise jurisdiction over employees of religious educational institutions and the managerial test it applies to determine whether college and university faculty members are employees with collective bargaining rights under the NLRA. (361 N.L.R.B. slip op. 157 (Dec. 16, 2014).)

Background

A local union of the Service Employees International Union (SEIU) filed a petition to represent a bargaining unit of faculty members at Pacific Lutheran University (PLU). PLU challenged the petition, arguing that:
  • It was exempt from the Board's jurisdiction since it was a church-operated institution.
  • Even if it were subject to the NLRB's jurisdiction, PLU's full-time contingent non-tenure eligible faculty members are managerial employees who must be excluded from the unit.
An NLRB regional director issued a decision rejecting PLU's arguments and:
  • Recommending the Board exercise jurisdiction over PLU.
  • Determining that the full-time contingent non-tenure faculty are not managerial employees.
  • Directing an election in a 176-member unit that included the full-time contingent non-tenure eligible faculty members.
PLU petitioned for review of the regional director's decision and the Board granted review and invited the parties and amici curiae to file briefs to aid the Board re-evaluate its jurisdictional test for religious schools and its managerial test for college and university faculty (see Legal Update, NLRB Invites Briefs on Whether It Can Exercise Jurisdiction Over Religiously-affiliated Universities and Certain University Faculty).

Outcome

The five member Board panel unanimously voted that the Board abandon its "substantial religious character" jurisdictional test for religious educational institutions. However, only a three-member majority (Chairman Pearce and Members Hirozawa and Schiffer):
  • Approved of the Board's new jurisdictional test for religious educational institutions.
  • Applied that new test to exercise jurisdiction over PLU.
  • Set out the Board's new managerial status test for university faculty.
  • Applied that managerial test to find PLU's full-time contingent non-tenured faculty are non-managerial employees eligible to vote in the election.

New Jurisdictional Test for Religious Educational Institutions

The Board majority:
  • Noted that:
    • the Supreme Court rejected a prior NLRB jurisdictional test for lay teachers at religious educational institutions as potentially conflicting with the Free Exercise Clause and Establishment Clause of the First Amendment to the Constitution. In that test, the NLRB inquired about the religious character of a school and the relation of the lay teacher's job functions to that religious character (NLRB v. Catholic Bishop of Chicago, 440 U.S. 490 (1979));
    • the US Court of Appeals for the District of Columbia Circuit rejected the later (and the current test until this decision) "substantial religious character" NLRB jurisdictional test for lay teachers at religious educational institutions. The DC Circuit endorsed a new test, suggesting that the NLRB not attempt to exercise jurisdiction over a religious educational institution if the institution holds itself out to students, faculty and the community as providing a religious educational environment and is organized as a nonprofit and affiliated with the institution is affiliated with a recognized religious organization (Univ. of Great Falls v. NLRB, 278 F.3d 1335, 1343 (D.C. Cir. 2002));
    • in Great Falls, the DC Circuit suggested, but did not rule, that the Board alternatively consider in the third prong whether the entity is owned, operated, or controlled, directly or indirectly by a recognized religious organization or affiliated with an entity, membership of which is determined partly with reference to religion (278 F.3d at 1343-44, 1347 n.2);
    • PLU and some amici urged the Board to adopt the Great Falls test; and
    • the SEIU and other amici urged the Board to adopt a test focusing on whether teachers in the proposed unit play a substantial role in promoting the school's religious faith (teacher religious function test).
  • Found that:
    • the Great Falls test could deny NLRA rights to faculty members who teach in a nonreligious educational environment and subordinates their NLRA rights to the institution's constitutional rights;
    • the teacher religious function test does not address teacher functions to sustain a religious environment and could lead to intrusive religious inquiries barred by Catholic Bishop; and
    • it could avoid conflicts with religious institution's First Amendment rights and preserve lay teacher's NLRA rights if it inquired only how the institution holds out its lay faculty members rather than to what degree the teachers contributed to the religious environment.
  • Abandoned the Board's roundly-rejected substantial religious character test.
  • Held that the Board would assert jurisdiction over faculty members of a college or university that identifies itself as a religious institution unless that institution demonstrates that it holds:
    • itself out as providing a religious educational environment (the threshold requirement) through evidence, such as handbooks, press releases and corporate documents. Contemporary status documents hold more weight than historical status documents, such as a charter; and
    • out that each of the specific faculty members perform religious functions.
  • Asserted jurisdiction over PLU's faculty, finding that PLU:
    • met the (not rigorous) threshold requirement of holding itself out as creating a religious educational environment; and
    • did not hold out the petitioned-for faculty members as performing religious functions that support the religious environment. Nothing in PLU's governing documents, website or published materials suggested that the contingent non-tenure faculty members at issue perform religious functions.

New Managerial Status Test for College and University Faculty

The Board majority:
  • Noted that:
    • in NLRB v. Yeshiva University, the Supreme Court determined that faculty are managerial employees if they formulate and effectuate management policies by exercising discretion within or independently of established management policies and are aligned with management (444 U.S. 672, 682, 690 (1980));
    • under Yeshiva, a faculty member is aligned with management if she takes or effectively recommends discretionary actions or controls employer policy but she needs not have final authority about policy. However, faculty cannot be excluded from NLRA coverage just because they perform their assigned routine duties such as determining their own course content, evaluating their students and supervising their own research (444 U.S. at 690); and
    • since Yeshiva, the Board has issued decisions concerning managerial status of university faculty, but has been criticized for not specifying a predictable standard (for example, see Lemoyne-Owen Coll. v. NLRB, 357 F.3d 55 (D.C. Cir. 2004)).
  • Found that under Yeshiva the Board's managerial test for faculty should:
    • tend to find that faculty members who determine the educational product are managerial; and
    • find that faculty who deal only with their own academic affairs are not managerial.
  • Held that faculty are managerial if:
    • they participate in decision-making about academic programs (such as the university's curricular offerings and requirements for graduation), enrollment management, finances, academic policy (such as university grading policy) and personnel policy and decisions, with the Board giving greater weight to the first three areas;
    • they actually control (have authority to decide matters and evidence shows they in fact exercise it) or make effective recommendations (the university administration almost always follows their recommendations) over these areas;
    • the faculty members fit in the university's structure as decision-makers rather than, for example, members of a committee that makes recommendations not followed by university administrators; and
    • the faculty have relatively high standing at the university, for example they are tenured or tenure-eligible rather than nontenured and contingent.
  • Concluded that the PLU full-time contingent faculty at issue were non-managerial employees because the evidence showed that they:
    • participated little in decision-making in the critical areas;
    • did not have actual control over decisions in the critical areas; and
    • did not effectively control matters in the critical areas because there was little evidence of university administration acting on their recommendations.

The Dissenting Opinions

Members Miscimarra and Johnson in separate dissenting opinions, among other things, asserted that:
  • The majority should have adopted the Great Falls test.
  • There should be no balancing between the First Amendment and the NLRA and that the premise underlying the majority's new standard was incorrect.
  • The majority's new standard failed to avoid the constitutional concerns identified in Catholic Bishop.
  • The flaws of the new jurisdictional standard were highlighted by the majority's need to subjectively review of religiousness of the faculty members' jobs and the educational environment to apply it.
  • They would not have exercised jurisdiction over PLU even under the majority's new jurisdictional test since PLU held out in its public documents that its faculty had an important role in creating and maintaining religious educational environment.
  • The majority's new managerial standard was more predictable than past versions but was flawed because it:
    • did not adequately explain why the five areas of primary and secondary decision-making importance should be weighed as they were relative to each other and other areas of decision-making;
    • was too onerous, especially in the evidentiary burdens it set for demonstrating authority, control and effective recommendation;
    • discounted documentary evidence about faculty member's authority;
    • improperly required faculty exercise authority or that their recommendations are almost always followed; and
    • was too inflexible, for example by not considering a sliding scale for faculty that exhibit extensive control over one of the tested areas but no control over the others.
  • While not formally ruling on the majority's application of its new managerial standard or the managerial status of the faculty at issue in this case, noted that the record evidence would have been insufficient to show that the faculty at issue in this case were managerial.

Practical Implications

In Pacific Lutheran, the Board abandons the substantial religious character test, which has been panned by reviewing courts as requiring reviewing courts to evaluate whether the Board has infringed on First Amendment rights in nearly all of its decisions. The new standard sounds like it would not implicate religious educational institutions. However, as the dissenting members point out, when the majority applied the new standard to the available evidence, it worked in the margins of testing the religiousness of the faculty member's jobs rather than simply evaluating how PLU held out those faculty members roles. Employers should not be surprised that the current Board majority exercised jurisdiction in an expansive way.
The majority's new managerial test for faculty similarly will expand the NLRA's coverage to more college and university faculty, whether or not the institution is religious. The new standard provides more guidance than earlier post-Yeshiva Board decisions about the factors that the Board will consider. However, it requires colleges and universities to show that their faculty exercise a great deal of decision-making authority over several institutional concerns before the Board will find those faculty meet the managerial employee exclusion from the NLRA's bargaining rights. The decision also suggests that the Board will find most non-tenure track and/or contingent faculty employees with NLRA rights.

UPDATE:

On March 12, 2019, the US Court of Appeals for the DC Circuit generally upheld the Pacific Lutheran framework for determining when university and college faculty members have managerial status, but invalidated the Board's extension of the bright-line majority status rule to specific faculty subgroups seeking recognition (Univ. of S. Cal. v. NLRB, (D.C. Cir. Mar. 12, 2019); for more information, see Legal Update, DC Circuit Largely Defers to NLRB's Managerial Test for University Faculty Members; Questions Test's Application to Subgroups).

UPDATE:

On January 28, 2020, the US Court of Appeals for the DC Circuit rejected the Pacific Lutheran framework for determining whether the Board had jurisdiction over adjunct faculty at a religious college or university (Duquesne Univ. of the Holy Spirit v. NLRB, (D.C. Cir. Jan. 28, 2020); for more information, see Legal Update, Divided DC Circuit Panel Rejects NLRB's Jurisdiction Test for Religious Schools' Adjunct Faculty.

UPDATE

On June 10, 2020, the Board overruled in part Pacific Lutheran, and adopted the three-pronged jurisdictional test outlined by the DC Circuit in Great Falls for determining whether the NLRB may exercise jurisdiction over teachers or faculty at religious schools, including colleges and universities. The Board did not review the Pacific Lutheran managerial status test because the issue was not raised, but noted that the managerial status issue will be mooted in any case where a religiously affiliated school is deemed exempt from NLRB jurisdiction under the newly adopted Great Falls standard. (Bethany Coll., 369 N.L.R.B. No. 98 (June 10, 2020); for more information, see Legal Update, NLRB Adopts New Jurisdictional Standard for Faculty at Religious Colleges and Universities.)