It is not often that the National Labor Relations Board (the “Board”) gives employers a heads-up before it makes broad, and often burdensome, changes, but a recently issued ALJ decision might be the exception to the rule. Earlier this year, an Administrative Law Judge issued a decision in Saint Leo University, Inc., 12-CA-275612 (2023) reinforcing how the National Labor Relations Act (the “Act”) is applied to religious educational institutions, however, the briefing in the case indicated how that application might change in the near future.
Whether the Board has jurisdiction over religious educational institutions requires a balancing between the religious freedom accorded religious institutions under the First Amendment and the rights afforded to employees under the Act. See, N.L.R.B. v. Catholic Bishop of Chicago, 440 U.S. 490 (1979). For decades, the Board has decided whether a religious educational institution has a ‘substantial religious character’ and whether it is subject to the Board’s jurisdiction, and therefore to the requirements of the Act, on a case-by-case basis. Univ. of Great Falls, 331 N.L.R.B. No. 188, at 2 (2000). Over the years, the Board has gone through several iterations of this standard. The current standard seems to have struck a balance between the employee’s rights under the Act and the religious freedoms afforded to these institutions, however, that is likely about to change.
In 2002, the United States Court of Appeals for the D.C. Circuit (the “D.C. Circuit”) decided University of Great Falls v. NLRB, 278 F.3d 1335, in which it explained that the Board should not have jurisdiction over an institution if the institution “(a) holds itself out to students, faculty and community” as providing a religious educational environment; (b) is organized as a “nonprofit”; and (c) is affiliated with, or owned, operated, or controlled, directly or indirectly, by a recognized religious organization, or with an entity, membership of which is determined, at least in part, with reference to religion. Great Falls, 278 F.3d at 1343-44.
In Pacific Lutheran University, 361 NLRB 1404 (2014), the Board refused to apply the D.C. Circuit’s test from Great Falls and instead, adopted a new standard that made it easier for the Board to assert jurisdiction over religious educational institutions and for those institutions’ employees to unionize. Under the Pacific Lutheran standard, the Board would assert jurisdiction over a religious educational institution unless that institution held itself out as providing a religious educational environment, and its faculty performed a specific role in creating or maintaining the institution’s religious educational environment. In other words, under Pacific Lutheran, an institution would have to show not only that it is a religious institution, but that faculty actually performs religious functions in order to be exempt.
In 2020, the D.C. Circuit unequivocally rejected the Board’s standard in Pacific Lutheran, in Duquesne University of the Holy Spirit v. N.L.R.B., 947 F.3d 824 and concluded that the less burdensome standard that it developed in Great Falls should be applied to determine whether the Board has jurisdiction over a religious educational institution.
In Bethany College, 369 NLRB No. 98 (2020), the Board overruled the previous standard adopted in Pacific Lutheran and adopted the D.C. Circuit’s test from Great Falls. In Bethany College, the Board acknowledged that it must decline to exercise jurisdiction over any institution that is a nonprofit organization that holds itself out to students, faculty, and the community as providing a religious educational environment and that is affiliated with, or owned, operated, or controlled directly or indirectly by a recognized religious organization.
The standard in Bethany College proved to be a much less intensive consideration of the religious functions of the faculty and students at the institution and thus was less likely to violate the institution’s First Amendment rights than its predecessor standard. The Bethany College standard is the current test for whether the Board has jurisdiction over a religious educational institution. But this may be changing soon.
The Saint Leo Decision
In Saint Leo, the ALJ found that Saint Leo University meets the test to be exempt from Board jurisdiction as a religious institution under the Bethany College standard, however, the post-hearing briefs in the case give an indication of General Counsel Abruzzo’s plans for the religious institution exemption. The post-hearing brief for the General Counsel urged the Board to “return to the jurisdictional standard articulated in Pacific Lutheran with a minor modification.” The General Counsel’s idea of a “minor modification” was for the Board to consider all “marketing representations made by an institution to students, faculty, and the community at large in examining whether the institution consistently holds itself out as providing a religious educational environment.” Counsel for the General Counsel’s Brief to the Administrative Law Judge, Saint Leo University Inc., 12-CA-275612, et. al., at 3-4. Far from a “minor modification” this proposed, and even likely, change would make it even more difficult for religious educational institutions to successfully argue exemption from the Board’s jurisdiction and would tilt the balance towards infringing on the First Amendment rights of religious educational institutions. This decision is important because it gives religious institutions a sneak peek into what may happen if, and when, this issue goes before the full Board.
Religious educational institutions must be aware that although the Bethany College standard is currently binding, it is fairly likely that the religious exemption standard will be reconsidered by the full Board in the near future. Both the post-hearing brief for the General Counsel in Saint Leo and GC Abruzzo’s “Mandatory Submissions to Advice” General Counsel Memo from Aug 12, 2021, indicate a clear intent on GC Abruzzo’s part to abandon the Bethany College standard and not only return to the Pacific Lutheran standard but to go even farther than that and make it more difficult for religious institutions to successfully claim an exemption from Board jurisdiction. This change would mean that more religious institutions would fall under the Board’s jurisdiction, and as a result, the institution’s employees would be able to unionize. Religious institutions are encouraged to plan for this potential change by reaching out to counsel for advice and assistance with organizational trainings on union issues.
If you would like assistance with organizational trainings or advice on next steps in anticipation of this potential change to the religious exemption standard, please reach out to Terry Potter, Quinn Stigers, or your Husch Blackwell Labor attorney.