Recently, the National Labor Relations Board (NLRB) issued its decision in Pacific Lutheran University and Services Employees International Union (Pacific Lutheran). In a ruling that could expand union formation among faculty at private institutions, the Board concentrated on the standards for determining:

  1. whether it has jurisdiction over faculty members at religiously affiliated colleges and universities, and
  2. when faculty members at any private higher education institution are considered managerial employees, whose rights to engage in collective bargaining are not protected by the National Labor Relations Act (NLRA or the Act).

The Board implemented new standards for deciding both issues, a drastic departure from the 30-plus years of precedent set by the U.S. Supreme Court.

Religious Exemption

The Supreme Court held in NLRB v. Catholic Bishop of Chicago (Catholic Bishop) that religious educational institutions are exempt from the Board’s jurisdiction. The exemption applies because of the potential for the Board to infringe upon the First Amendment rights of such institutions by intrusively inquiring into the character or sincerity of the institution’s religious beliefs. Adhering to the ruling in Catholic Bishop, the federal appellate courts developed a three-part test for determining whether an institution was religious, examining whether the institution (1) holds itself out to students, faculty, and the community as providing a religious educational environment; (2) is organized as a nonprofit; and (3) is in some way affiliated with a recognized religious organization. If the three prongs were satisfied, the institution was found to be religious, the judicial inquiry stopped, and the institution was found to be exempt from the NLRA. If the institution did not meet this three-part test, the Board could exercise jurisdiction under the NLRA.

In Pacific Lutheran, however, the Board refused to adopt the appellate courts’ standard and instead articulated a new, two-prong test for determining whether it has jurisdiction over certain employees of a religious educational institution. First, the institution must show that “it holds itself out to students, faculty and community as providing a religious educational environment.” Second, the college or university “must hold petitioned-for faculty members out as performing a religious function in furtherance of its religious mission.” The Board asserts that this two-prong test is consistent with the Supreme Court’s holding in Catholic Bishop because the Board will not “intrusively inquire” into the sincerity of the institution’s beliefs by seeking to prove that: (1) the university actually carries out its religious mission, or (2) the faculty members actually perform some specific role in the religious educational environment. Instead, the Board has indicated that it will confine its examination to materials that are made public such as promotional materials, employee handbooks, and statements to parents, students, and prospective or current faculty members.

While the new test includes fewer elements, the second prong of the newly announced test drastically limits the number of employees that will fall under the exemption, potentially allowing the Board to assert jurisdiction over employees whose duties do not specifically involve religious education even though the employer itself is exempt. Moreover, the second prong of the test arguably involves an inquiry into the good faith of the position asserted by the institution with regard to the jurisdictional issue and the relationship of that position to the school’s religious mission, which the Court in Catholic Bishop declared unlawful. The Board will apply its decision retroactively in all other pending cases, except those in which an election was held and the ballots have been opened and counted.

Non-Tenured Full-Time Faculty Members as Managerial Employees

The Board also addressed whether non-tenured, full-time faculty members at private colleges or universities should be considered managerial employees under the NLRA, and, thus, exempt from the Act’s coverage. Recognizing that faculty members at colleges and universities had a considerable amount of influence in formulating the institution’s management policies, the Supreme Court in NLRB v. Yeshiva found that faculty members were managerial employees and exempt from the Act. The Court observed that the relevant consideration was whether the faculty members have effective recommendation authority or control over the institution’s employment policies.

Acknowledging that the decisions following Yeshiva failed to provide a clear framework for determining whether faculty members at private institutions have effective control or recommendation authority, the Board in Pacific Lutheran proposed an analytical framework for determining faculty members’ managerial status. The Board expressed the view that in the 30-plus years since Yeshiva was decided, the administrative structure of colleges and universities has become more traditional, including decision-making hierarchies. The Board concluded, therefore, that today’s faculty members could no longer be classified as managerial employees by virtue of their full-time status. Thus, the Board’s framework analyzes various areas of decision-making to determine the actual control and effective recommendations of the faculty members. These areas include academic programs, enrollment management, finances, academic policy, and personnel policy and decisions, with the first three areas given more weight.

The new framework articulated by the Board requires higher education institutions to prove that their full-time faculty members have either actual control over the above-named areas or make effective recommendations in those areas. To do so, institutions will be required to provide specific evidence regarding how often faculty decisions or recommendations are implemented. Under these new standards, employers should expect that the number of faculty found to be managerial employees will significantly decrease.

Insights for Higher Education Employers

In its decision in Pacific Lutheran, the NLRB has significantly altered the framework for analyzing whether private college and university faculty members are protected under the Act. By creating a requirement that faculty members must actually perform some specific role in the religious educational environment in order to be exempt, the Board has moved to narrow the circumstances under which it will recognize the religious exemption. This creates a situation in which the Board could find that a college or university is exempt with respect to certain faculty but not exempt with respect to others. Moreover, the Board has altered the framework for determining whether full-time non-tenured faculty at private colleges and universities are protected by the Act even though such employees have long been considered to be part of management and, thus, exempt from the reach of the NLRA. As a result, private higher education institutions can expect to see renewed focus on the reach of the NLRA at both religious and non-religious institutions alike.