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Court of Appeals Limits NLRB Jurisdiction Over Religious-Affiliated Schools

April 2, 2009

On March 13, 2009, the U.S. Court of Appeals for the District of Columbia held, in Carroll College Inc, v. NLRB, that academic institutions, which have religious affiliations with recognized religious organizations, are exempt from the jurisdiction of the National Labor Relations Board ("the Board"). Hence, the Board has no authority to order religious-affiliated schools to recognize and/or bargain with a faculty unions over labor agreements.

Factual Background: Carroll College and Its Refusal to Bargain with the UAW

In 2004, the UAW filed a petition with the Board seeking certification as the collective bargaining representative for the faculty at Carroll College, a private college in Wisconsin. The College challenged the Board's jurisdiction based on the College's affiliation with the Presbyterian Church. It argued, amongst other things, that it was not required to bargain with the union under the National Labor Relations Act (NLRA), because doing so would substantially burden its free exercise rights under the Religious Freedom Restoration Act (RFRA).

Despite the College's objections, the Board ordered the College to recognize and bargain with the union. The College refused and eventually sought a review of the Board's decision from the Court of Appeals. Before the Court of Appeals, the College withdrew its arguments related to the RFRA, and instead asserted that it was exempt from the Board's jurisdiction because an order to bargain would substantially burden its free exercise rights under the First Amendment.

Legal Foundation: Religious-Affiliated School Exemption under the NLRA

 

The United States Supreme Court first held that church-operated schools were exempt from the National Labor Relations Act (NLRA) in NLRB v. Catholic Bishop of Chicago. In that case, the Supreme Court held that, because the NLRA requires a party to bargain in good faith, it would inevitably require the Board to inquire "into the good faith of the position asserted by the clergy-administrators and its relationship to the school's religious mission." However, the very process of such an inquiry, not just the conclusions reached by the Board, is impermissible under the First Amendment of the United States Constitution. As a result, the Board could not assert jurisdiction over church-operated schools.

Unfortunately, Catholic Bishop did not establish a test for determining whether a school was church-operated. As a result, the Board established its own analytical framework in which it examined whether a school had a "substantial religious character" sufficient to constitute a church-operated school. In applying this test, the Board was free to consider any aspects of a religious school's organization that it deemed relevant to exercising its jurisdiction.

The Board's "substantial religious character" test was subsequently rejected by the D.C. Circuit Court of Appeals in University of Great Falls v. NLRB. In that case, the Court held that the Board's test was exactly the sort of inquiry that Catholic Bishop sought to avoid, because the Board trolled through the beliefs of schools, and made determinations about the school's religious mission and that mission's centrality to the primary purpose of the school. The Court then substituted the "substantial religious character" test for a bright-line test that did not delve into religious motives and doctrines. According to the Court, a school was exempt from the NLRA if: (1) it held itself out to students, faculty and the community as providing a religious educational environment; (2) it was organized as a non-profit; and (3) it was affiliated with, or owned by, a recognized religious organization, or with an entity, membership of which is determined, at least in part, with reference to religion.

The Board Fails to Adopt the Great Falls Test

 

The Court of Appeals decided Great Falls in 2002, two years prior to the UAW's request for certification as the exclusive bargaining representative for Carroll College faculty. However, the Regional Director of the Board had yet to adopt to the Great Falls test when it initially asserted jurisdiction over Carroll College, and the Board subsequently adopted the Regional Director's analysis when it ordered the College to recognize and bargain with the UAW in 2007. Applying the "substantial religious character" test, the Board conducted a skeptical inquiry into whether the Church actually influenced the College and subsequently concluded that the College was not exempt from the NLRA.

Carroll College Met the Great Falls Test

 

On review, the Court of Appeals rejected the Board's application of the "substantial religious character" test to Carroll College and stated: "Not only does this heighted standard require a showing of religious influence far beyond what we found necessary in Great Falls, but it involves the type of inquiry Catholic Bishop forbids."

According to the Court, Carroll College "easily satisfies the Great Falls test." First, multiple documents demonstrated that the College held itself out to provide a religious educational environment. Second, the College was a non-profit entity. Third, the College was affiliated with a religious group, as demonstrated by: its articles of incorporation, which described its relationship with the Presbyterian Church; an agreement with the Church that recognized and affirmed the College's origin and heritage in the concern of the Church for the intellectual and spiritual growth of its students, faculty, administration and staff; and its course catalogue, which reaffirmed that the College was affiliated with the Presbyterian Church. The Court further stated: "From the Board's own review of Carroll's publicly available documents . . . it should have known immediately that the college was entitled to a Catholic Bishop exemption from the NLRA's collective bargaining requirements."

The Impact of Carroll College

Unless Carroll College is overturned by the United States Supreme Court, the decision may be used by religious-affiliated schools to avoid union organizational efforts, because it provides a relaxed burden on which schools may rely in order to escape the jurisdiction of the Board. Any religious-affiliated schools who think they may qualify for this exemption should seriously consider reviewing their charters, mission statements and other relevant material to determine whether they meet the three-part test established by the D.C. Circuit Court of Appeals.

If you are interested in learning more about the information presented in this article, please do not hesitate to contact an attorney in Varnum's Labor and Employment practice group.

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