Contrary to Union's Argument, NLRB Finds Jurisdiction Over Nonprofit Corporation Operating Charter School in Chicago

by Littler

In Chicago Mathematics & Science Academy Charter School, Inc., 359 NLRB No. 41 (Dec. 14, 2012), the National Labor Relations Board ("the Board" or "NLRB") rejected the position of a teachers' union and found that it had jurisdiction over an Illinois nonprofit corporation that operates a public charter school in Chicago. The Board majority concluded that the nonprofit was not the sort of government entity exempt from the National Labor Relations Act ("the Act"), and there was no reason for the Board to decline jurisdiction. This recent ruling falls in line with other decisions from the Obama Board favoring expansive NLRB jurisdiction, but it runs counter to the position of labor unions, which often favor card check organizing in charter schools rather than NLRB-run secret ballot elections. 

Factual Background

The Chicago Mathematics and Science Academy Charter School, Inc. (CMSA) is a private, nonprofit corporation established under the Illinois General Not-for-Profit Corporation Act of 1986 for the purpose of operating a charter school. CMSA's affairs are conducted by a board of directors, which selects its members, and no public officials or government entities are involved in the selection or removal of members of the board of directors.

Pursuant to the Illinois Charter Schools Law, following its incorporation, CMSA submitted a proposal to and was granted a charter by the Chicago Public Schools, a division of the Board of Education of the City of Chicago (Chicago Board). The charter agreement set forth the guidelines and expectations for CMSA and the manner in which it would be held accountable during the five-year term of its agreement. The agreement provided that the charter could be revoked by the Chicago Board for material violation of any of its terms. CMSA's receives approximately 80% of its budget from the Chicago Public Schools. However, although the Chicago Public Schools reviews the budget, it has never rejected a budget proposed by CMSA and it does not advise CMSA on the allocation of its resources. Moreover, CMSA's board of directors has the ultimate authority to approve the budget. CMSA employs the school's teachers and most of its administrative, secretarial, and custodial employees.

In June 2010, the Chicago Alliance of Charter Teachers and Staff, IFT, AFT, AFL-CIO ("the Union") filed a petition with the Illinois Educational Labor Relations Board seeking to represent teachers employed by CMSA. CMSA, in turn, filed an election petition with the NLRB. The NLRB Acting Regional Director dismissed CMSA's petition, finding that the school is a political subdivision and, as such, exempt from jurisdiction of the Board pursuant to Section 2(2) of the Act. The Board granted CMSA's petition to review the decision.   

NLRB Decision

In analyzing the case, the Board applied the U.S. Supreme Court's decision in NLRB v. Natural Gas Utility District of Hawkins County, 402 U.S. 600 (1971), which set forth a disjunctive test governing whether an entity is a political subdivision and thereby exempt from Section 2(2) of the Act's definition of "employer." Under the Hawkins County test, an entity may be considered a political subdivision if it is either: "(1) created directly by the state, so as to constitute departments or administrative arms of the government, or (2) administered by individuals who are responsible to public officials or to the general electorate." The NLRB also considered its decision in Research Foundation of the City University of New York, 337 NLRB 965 (2002), which held that private entities acting as government contractors are not exempt from NLRA jurisdiction under Section 2(2). Applying the test set forth in Hawkins County, the Board determined that CMSA was not "created directly by the State" nor was it "administered by individuals who are responsible to public officials or the general electorate." Specifically, the Board found that CMSA was created by private individuals, not by a government entity, special legislative act, or public official. Further, the Board noted that an entity is not exempt from NLRA jurisdiction simply because it receives public funding or operates pursuant to a contract with a governmental entity. The Board also noted that pursuant to the Charter Schools Law, a charter school must be organized by a nonprofit corporation or other discrete, legal nonprofit entity authorized by Illinois law. Neither the Charter Schools Law, nor any other Illinois statute directs that charter schools be created, or creates charter schools. On the contrary, the Board concluded that Illinois law authorized only private corporations to establish and operate charter schools, with the Charter Schools Law simply providing the "framework" in which the private entities would operate the schools. The Board considered the fact that Illinois characterized charter schools as being "within the public school system," but did not find this controlling because there was nothing in the Charter Schools Law suggesting that the legislature intended the state to operate the schools.

Analyzing the second prong of the Hawkins County test, the Board examined whether the individuals responsible for administration of the school were appointed by or subject to removal by public officials. "Given the undisputed method of appointment and removal of CMSA's board members," the Board concluded, "we find that none of them are responsible to public officials in their capacity as board members, and that, therefore, CMSA is not 'administered' by individuals who are responsible to public officials or the general electorate." Having determined that CMSA was not a political subdivision, the Board concluded that it was an "employer" within the meaning of Section 2(2) of the Act, because it controlled most, if not all, matters relating to the employment relationship with the teachers, including hiring, firing, pay, and most benefits. 

Finally, the Board rejected the view of Member Hayes, who concurred that CMSA was not a political subdivision exempt from the Board's jurisdiction but argued that the Board should decline to exercise jurisdiction for policy reasons. Based on the circumstances of this case and the record before it, the Board concluded there were no policy reasons to decline jurisdiction. 

Effect on Charter Schools Nationally

The Board majority (with agreement by the dissent) was careful to point out that this decision was specific to the facts of this case and did not establish a "bright-line rule" that the NLRB has jurisdiction over all entities that operate charter schools without regard to location and the legal framework governing their relationships with state and local governments. Despite this caveat, this decision potentially subjects a number of charter school employers to NLRB jurisdiction and may open the door to further expansion of the Board's jurisdiction. While the nonprofit corporation in the instant case favored NLRB jurisdiction, in other circumstances NLRB jurisdiction may not be favorable for charter school employers seeking to maintain their nonunion status. 

Depending on the applicable law that authorizes and governs charter schools, as well as the role of the state or local government in regard to such schools, charter school employers may be at risk of falling within NLRB jurisdiction. In some cases, such as with CMSA, coverage may be helpful to an employer. In other instances, coverage may not be helpful. Charter schools that may be targeted by a union should work with experienced labor counsel to determine their most effective actions and strategies given this new development.

Tanja Thompson is a Shareholder, and Brenda Canale is an Associate, in Littler Mendelson's Memphis office. If you would like further information, please contact your Littler attorney at 1.888.Littler or, Ms. Thompson at, or Ms. Canale at

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Littler | Attorney Advertising

Written by:


Littler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.