National Labor Relations Board Reverses Obama-Era Decision Regarding Standard for Asserting Jurisdiction Over Faculty Members at Religious Institutions

June 17, 2020

By: Mary E. Aldridge

On June 10, 2020, the National Labor Relations Board (the NLRB or the Board) issued a decision that reversed a 2014 Board decision regarding the test for exercising jurisdiction over faculty members at religious institutions.  In Bethany College, the Board held that the test for exercising such jurisdiction that was established by the Board in Pacific Lutheran University was inconsistent with U.S. Supreme Court and D.C. Circuit Court of Appeals precedent, and restored the test established by the D.C. Circuit Court of Appeals in University of Great Falls v. NLRB.

The Origin of the Newly Restored Great Falls Standard

In 1979, the U.S. Supreme Court considered the issue of the NLRB's jurisdiction over church-operated schools and their teachers in NLRB v. Catholic Bishop of Chicago.  The Supreme Court rejected the Board's decision to exercise jurisdiction over separate bargaining units of lay teachers at two groups of Catholic high schools, holding that there would be a substantial risk that such an exercise of jurisdiction would result in an infringement of rights guaranteed under the Religion Clauses of the First Amendment to the U.S. Constitution.

After the Supreme Court's decision in Catholic Bishop, the Board began to analyze on a case-by-case basis whether a religiously-affiliated institution had a "substantial religious character," but the Board's effort to exercise jurisdiction over institutions that it believed did not meet that standard were often met with judicial disapproval.  In one particular case in 2002, University of Great Falls v. NLRB, the D.C. Circuit Court of Appeals rejected the Board's attempt to exercise jurisdiction over the faculty members at a private Roman Catholic university, and articulated an objective three-part test to determine whether the Board is prohibited from exercising jurisdiction.  Under the Great Falls test, the Board "must decline to exercise jurisdiction" over an institution that:  (1) holds itself out to students, faculty, and the community as providing a religious educational environment; (2) is organized as a non-profit; and (3) is affiliated with, or owned, operated, or controlled, directly or indirectly, by a recognized religious organization or with an entity whose membership is determined at least in part based on religion.

The Overruled Pacific Lutheran Standard

In 2014, in its Pacific Lutheran decision, the Board established a new standard for exercising jurisdiction over faculty members at religious institutions that deviated from the objective Great Falls test.  The two-part test articulated in Pacific Lutheran was:  (1) whether the institution holds itself out as providing a religious educational environment (this portion of the test is consistent with the first prong of the Great Falls test); and (2) whether the institution holds its faculty members out as "performing a specific role in creating or maintaining the school's religious educational environment" (which is inconsistent with the Great Falls test).

The Bethany College Decision

In its recent Bethany College decision, the Board explicitly overruled the Pacific Lutheran standard for exercising jurisdiction over faculty members at religious institutions, stating that the standard is "inherently inconsistent with the binding rationale of the Supreme Court in Catholic Bishop."  The Board stated that the Pacific Lutheran test is "fatally flawed" because "its required analysis, at step two, of whether faculty members at religiously affiliated institutions of higher learning are held out as performing a specific religious function entails an impermissible inquiry into what does and what does not constitute a religious function." (emphasis in original decision).

The Board adopted the three-part Great Falls test, finding that the application of that test "will remove any subjective judgments about the nature of the institutions' activities or those of its faculty members and limit the Board to making jurisdictional determinations based on objective evidence."  In applying the Great Falls test, the Board reversed the determination of the administrative law judge and held that the Board could not exercise jurisdiction over the faculty members at Bethany College.