The National Labor Relations Board and Nonprofit Charitable, Educational, and Religious Institutions
The N ational Labor Relations Board and Nonprofit Charitable, Educational, and Religious Institutions
James A. Serritella 0
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Act-popularly known as the "Wagner Act." This Act with one major
amendment in 1947 known as the "Taft-Hartley Act" has set the pattern
for the federal regulation of collective bargaining. Some salient features of
the Wagner and Taft-Hartley Acts are worth noting by way of
First,a three-man National Labor Relations Board was established to
administer the new law. The Board's membership was increased to five in
Second, section 9 of the Act established procedures whereby the Board
would conduct elections among groups of employees to ascertain whether
or not they wished to be represented by a union for collective bargaining
purposes, and if so, to determine whom they wished to represent them. In
order to invoke these election procedures, a labor organization has to
demonstrate to the NLRB that at least thirty per cent of the employees in the
proposed bargaining unit wish to be organized. This demonstration is
commonly referred to as a "showing of interest."
If at least 30 percent of the employees in the proposed unit show
interest in having a union, the Board will entertain a petition for election.
The employer can then either consent to the Board's jurisdiction or
challenge it. If the employer consents to jurisdiction, there will be a
determination-including, if necessary, a hearing-as to what constitutes an
appropriate unit or units for collective bargaining. If the employer does not
consent to an election, there will be a determination-including, if
necessary, a hearing-on whether or not the National Labor Relations Act has
granted the NLRB jurisdiction over the employer in question; and if the
Board has statutory jurisdiction, whether or not as a matter of policy, it
will exercise that jurisdiction over this particular employer.
After it has been established that the NLRB will exercise jurisdiction
over a given employer and after the appropriate collective bargaining unit
has been defined, the Board will supervise an election among employees
in that unit to ascertain their desires on unionization.
The National Labor Relations Act exempts certain employers from the
NLRB's jurisdiction-for example, all units of government. In addition,
within the context of the Act, the Board has established certain standards
of its own to guide its assertion of jurisdiction (or refusal to do so) among
those classes of employers which are not statutorily exempt. The majority
of these standards relate to the gross revenues of the employer and the level
of its purchases and sales from out of state. Certain of these standards
relate to the nonprofit or other special status of the employer. We will
further discuss some of these standards in this paper. At this point,
however, we should note that the overall jurisdiction of the Board is
circumscribed by the constitutional restrictions on the federal government's
power to regulate commerce.
Third, section 8 of the Wagner Act defined certain employer activity
as being "unfair labor practices." In 1947 the Taft-Hartley Act went a step
further and defined certain union activity as unfair labor practices. Section
10 of the Act lays down the procedure for adjudicating disputes over unfair
In sum, the NLRB is a quasi-judicial body which administers the
NLRA principally by adjudicating disputes between employers and
employees. On rare occasions, the Board also promulgates rules on related
issues. Since the NLRB is a quasi-judicial body and not a court, it is not
strictly bound by court doctrines, such as stare decisis and res judicata
which to some extent ensure the consistency of court decisions. And while
the Board is subject to limited judicial review pursuant to section 10 of the
Act, it is cumbersome to obtain such review and it seldom results in the
overturning of Board decisions.
THE NLRB AND NONPROFIT CHARITABLE, EDUCATIONAL, AND RELIGIOUS
We now turn to a discussion of the NLRB's role vis-a-vis charitable,
educational and religious organizations. As I noted earlier, the statutory
grant of jurisdiction to the NRLB relates to all disputes "affecting
commerce."' Nonetheless, the Board has never exercised the full breadth of its
jurisdiction. One of the classes of employers over which it has traditionally
declined jurisdiction is that of nonprofit charitable, religious, and
In justifying this policy regarding such employers, the Board has cited
the legislative history of the 1947 amendments to section 2(2) of the Act.
This history warrants a brief word.
Prior to 1947 there was no statutory exemption whatsoever for
nonprofit employers. In 1947 there was a move to grant a legislative exemption
[A]ny corporation, community chest, fund, or foundation organized and
operated exclusively for religious, charitable, scientific, literary, or
educational purposes, or for the prevention of cruelty to children or animals, no
part of the net earnings of which inures to the benefit of any private
shareholder or individual, and no substantial part of the activities of which is
carrying on propaganda, or otherwise attempting to influence legislation. 2
This move ultimately failed and instead an exemption from NLRB
jurisdiction was granted only to nonprofit hospitals. The House Minority
Report regarding this exemption has been used by the Board as a
justification for its declining jurisdiction over other nonprofit entities. The relevant
portion of this Report reads:
National Labor Relations Act §§ 9(c)(1), 10(a), 29 U.S.C. §§ 159(c)(1), 160(a) (1970).
H.R. REP. No. 245, 80th Cong., 1st Sess. 47 (1947).
The other nonprofit organizations excluded under the House Bill are not
specifically excluded in the Conference agreement, for only in exceptional
circumstances and in connection with purely commercial activities of such
organizations have any of the activities of such organizations or of their
employees been considered as affecting commerce so as to bring them within
the scope of the National Labor Relations Act.'
Although the accuracy of the Minority Report's description of Board
action prior to 1947 is subject to substantial doubt,4 since that time the
Board has used the Report as authority for declining jurisdiction over a
number of nonprofit charitable, religious, and educational institutions.
Thus, in a landmark decision handed down in 1951, the Board declined
jurisdiction over private universities (Columbia University, 97 N.L.R.B.
424, 427 (1951)); in doing so, the Board said:
Under all the circumstances, we do not believe that it would effectuate the
policies of the Act for the Board to assert its jurisdiction over a nonprofit,
educational institution where the activities involved are noncommercial in
nature and intimately connected with the charitable purposes and
educational activities of the institution.
Following Columbia, it declined jurisdiction over a church operated radio
station in 1954 (Lutheran Church, Missouri Synod, 109 NLRB 859 (1954));
over the YMCA (YMCA of Portland, 146 N.L.R.B. 20 (1964)) and a
research institute in 1964 (University of Miami, Instituteof Marine Science
Division, 146 N.L.R.B. 1448 (1964)); and over a nonprofit book exchange
in 1967 (U.S. Book Exchange, 167 N.L.R.B. 1028 (1967)).
During the same period the Board did assert jurisdiction over some
nonprofit organizations. 5 The distinguishing principle purportedly was
that the activities of these organizations were commercial in character,
whereas the activities of the entities over which it declined jurisdiction
were not. That line, however, is very difficult to perceive.
This history was disrupted in 1971 when the Board reversed its
decision in Columbia University and asserted jurisdiction over Cornell and
Syracuse Universities. (Cornell University, 183 N.L.R.B. 324 (1970));
subsequently, the Board adopted a rule, pursuant to which it would assert
jurisdiction over private universities that had annual gross revenues in
excess of $1 million. (29 C.F.R. § 103.1). This $1 million standard was also
applied to private secondary schools by Board decision. (Shattuck School,
189 N.L.R.B. 886 (1971); Windsor School Inc., 200 N.L.R.B. No. 163
H. CONF. REP. No. 510, 80th Cong., 1st Sess. 32 (1947).
Sherman &Black, The Labor Boardand the PrivateNonprofit Employer:A
CriticalExamination of the Board's Worthy Cause Exemption, 83 HARV. L. REv. 1323 (1970).
' See, e.g., Sunday School Board of the Southern Baptist Convention, 92 N.L.R.B. 801
(1950); Woods Hole Oceanographic Institution, 143 N.L.R.B. 568 (1963).
After Cornell the Board's relatively consistent prior policy of declining
jurisdiction over nonprofit entities began to fade. A few of the post-Cornell
cases warrant special mention.
In 1971 the Board asserted jurisdiction over two childrens' homes.
These homes were not orphanages in the classical sense, but institutions
for emotionally disturbed children. At least some of the children had
parents who could pay for part of the services they received; the majority of
the children were supported by public funds. (The Children's Village, Inc.,
186 N.L.R.B. 953 (1970); Jewish Orphan's Home of Southern California,
(191 N.L.R.B. 32 (1971)). The Board held that notwithstanding the fact
that these institutions were nonprofit, their revenues were substantial and
to effectuate the purposes of the NLRA it had to assert jurisdiction over
Three years later the Board expressly overruled these cases and
declined jurisdiction over a substantially similar institution (Ming Quong
Children's Center, 210 N.L.R.B. No. 125 (1974)). In this case the Board
Upon further reflection, therefore, we have concluded that we erroneously
departed, in Children's Village and Jewish OrphansHome, from our
congressionally approved general practice of declining jurisdiction over nonprofit
charitable organizations without having had the special kind of justification
relied upon in Cornell. Applying the Frankfurterian philosophy to which we
have had previous occasion to refer that "Wisdom too often never comes, and
so one ought not to reject it merely because it comes late," we recognize the
error in this departure from previous practices and shall act to correct it
Thus, on May 24, 1974 the matter appeared to be definitively settled
once again-the NLRB would not assert jurisdiction over nonprofit
organizations unless they had a massive impact on commerce similar to that of
large private universities. Indeed, the Board repeatedly reaffirmed this
return to its former consistent policy in the days and months following
On May 29, 1974, five days after Ming Quong, the Board declined
jurisdiction over two Jewish religious schools. (Boardof Jewish Education
of Greater Washington, D.C., 210 N.L.R.B. No. 150 (1974); Association of
Hebrew Teachers of MetropolitanDetroit, 210 N.L.R.B. No. 132 (1974)).
On June 19, it declined jurisdiction over a nonprofit institution for
treatment of emotionally disturbed children. (West Oakland Home, Inc., 211
N.L.R.B. No. 118 (1974)). On July 11, it declined jurisdiction over a
nonprofit institution for treatment of multi-handicapped children. (Crotched
Mountain Foundation, 212 N.L.R.B. No. 58 (1974)). On August 13, it
declined jurisdiction over a nonprofit orphanage. (Mission of Our Lady of
Mercy, 212 N.L.R.B. No. 131 (1974)). On September 25, it declined
jurisdiction over a nonprofit school for the deaf and blind. (Overbrook School
for the Blind, 213 N.L.R.B. No. 82 (1974)).
At the same time the Board also seemed to be reevaluating its
decisions in Cornell, Shattuck School, and Windsor School with respect to
private educational institutions generally, for on June 10 it declined
jurisdiction over Howard University. (Howard University, 211 N.L.R.B. No. 11
(1974)). Howard University received at least half its funds from the federal
government (the Department of Health, Education and Welfare), which
also exercised general control over the University's labor relations. The
Board reasoned that, as a result, Howard's employees were very much like
government employees who were exempt from its jurisdiction; and this
made it virtually impossible for the Board to control Howard's labor
relations without coming into conflict with the Department of Health,
Education and Welfare.
Later, on September 23, the Board promulgated a proposed rule which
would have exempted all private secondary elementary and preschools
from its jurisdiction.' Astute observers of Board activity opined that the
rule would certainly be adopted because the Board seldom adopted rules
apart from the decision of cases and would not have promulgated the rule
had it not already decided to adopt it.
As we all know, on December 13, 1964, the Board declined to adopt
the rule exempting private schools from its jurisdiction and there began
an inexplicable reversal in the trend which sprang from Ming Quong.
Thirty-nine comments were filed on the proposed rule. Organized labor
was against it, the private schools were for it; but that could not have come
as a surprise to the Board. Among the private schools, the Catholics'
comments were most strongly in evidence. But that could not have come as a
surprise because the Catholic schools' statistical majority and financial
plight were also well known. The Board gave no reason for its not adopting
Then, on February 10, 1975, the Board asserted jurisdiction over the
Headstart and day care centers operated by the Lutheran Welfare Services
of Illinois, (Lutheran Welfare Services of Illinois, 216 N.L.R.B. No. 96
(1975)). This was a perfect case for application of the governmental nexus
rule enunciated in Howard University, for the Headstart and day care
centers were fully funded by the federal government. The Lutheran
Welfare Services was reimbursed by the government in accordance with
strictly prescribed rates and the program was operated in accordance with
detailed federal guidelines. The Lutheran Welfare Services merely
contributed its expertise and voluntary assistance. As a matter of law, it could
not turn a profit; and this was enforced by periodic audits. Signally, while
the NLRB could exercise some control over the Lutheran Welfare Services,
it could not control the congressional appropriation which funded the
program or HEW's guidelines. Thus, increased labor costs generated by union
activity would result in either an unexpected financial burden to the
nonprofit employer or discontinuance of the program if that burden could not
be shouldered. In addition, conflict over HEW guidelines seems inevitable.
It is noteworthy that in reaching its decision in Lutheran Welfare
Services the Board brushed aside an "all fours" February 21, 1974 decision
in which it declined jurisdiction over day care centers for preschool
children operated by the Urban League in Pittsburgh. (PennsylvaniaLabor
Relations Board, 209 N.L.R.B. No. 33 (1974)). It is also noteworthy that
within days of the Lutheran Welfare Services decision petitions were filed
requesting that the Board assert jurisdiction and conduct elections among
the employees of virtually every other Headstart and day care center
operated by a nonprofit entity in the Chicago area.
Future NLRB action regarding private schools and nonprofit entities
that operate government programs was signaled in two decisions which
followed on the heels of Lutheran Welfare Services. The first of these cases
is well known to all of us-Roman Catholic Archdiocese of Baltimore,
Archdiocesan High Schools, 216 N.L.R.B. No. 54 (1975)-in which the
Board asserted jurisdiction over church-affiliated parochial high schools.
The second case was The Catholic Bishop of Chicago, a corporation
sole (Archdiocese of Chicago school lunch program), Case Nos.
13-RC13574 and 13-RC-13587, in which Region 13 asserted jurisdiction over a
lunch program administered by the Archdiocese of Chicago under the
National School Lunch Act. As in Lutheran Welfare Services, the lunch
program is virtually fully funded from governmental sources, is subject to
rigid guidelines promulgated by the Department of Agriculture and
various state education agencies and is by law forbidden to turn a profit.
At approximately the same time the Board applied the governmental
nexus rule enunciated in Howard-and which would have snugly fit the
facts in Lutheran Welfare Services and Archdiocese of Chicago school
lunch program-to decline jurisdiction in two other cases.
The first of these cases is Rural Fire Protection Company, 216
N.L.R.B. No. 95 (1975), which was handed down four days after Lutheran
Welfare Services. In Rural Fire Protection Company, the city of
Scottsdale, Arizona, contracted with an outside firm which provided "fire
suppression, fire prevention, fire investigation, security, first aid, rescue and
ambulance services" to municipalities, fire districts, businesses, and
individual subscribers in the state of Arizona. The Board declined jurisdiction
because of the close relation between the city of Scottsdale-an exempt
employer-and the outside contractor. Less than a month later, the Board
also declined jurisdiction over a nonprofit nursing service organization for
similar reasons. (Toledo DistrictNurseAssociation, 216 N.L.R.B. No. 130
It is difficult to explain the different treatment the Board has accorded
Lutheran Welfare Services on the one hand and Rural Fire Protection
Company and Toledo DistrictNurse Associationon the other. It is not even
clear whether Rural Fire Protection Company is a profit or nonprofit
entity. These last two cases, however, raise an important question.
On August 25, 1974, the statutory exemption for nonprofit hospitals
was eliminated.7 As I noted earlier, the statutory history for the nonprofit
hospital exemption is one of the chief authorities used by the Board to
decline jurisdiction over nonprofit entities. Now that this statutory
exemption has been eliminated, one might ask whether the impact of this
authority has also been eliminated. For the present, Toledo District Nurse
Association seems to have answered this question in the negative.
THE RELIGIOUS FACTOR
As was the case with nonprofit employers generally, prior to the 1970's
the Board asserted jurisdiction only over those portions of church activities
which were commercial in character. (Sunday School Board of the
Southern Baptist Convention, 92 N.L.R.B. 801 (1950)). In Southern Baptist, for
example, the Board asserted jurisdiction over bookstores operated by the
Southern Baptist Church.
Later, in First Church of Christ Scientist, 194 N.L.R.B. No. 174
(1972), the Board asserted jurisdiction over that portion of the Christian
Science Church which operated the Christian Science Monitor. The
Church had contended that the assertion of jurisdiction would violate first
amendment proscriptions against entanglement between the government
and religion. The Board brushed aside this contention and reverted to
Board doctrine-as opposed to court made constitutional doctrine-as
authority for its assertion of jurisdiction:
Although it is the Board's general practice to decline jurisdiction over
nonprofit religious organizations, the Board does assert jurisdiction over those
operations of such organizations which are, in the generally accepted sense,
commercial in nature. . . . [W]e conclude that the Employer is engaged in
substantial enterprises which are in the normally accepted sense commercial
and that these operations are in commerce and affect commerce.
Thus, the Board has yet to recognize the entanglement tests of Walz and
The history of the Board's treatment of church activities has reflected
the same turmoil in more recent years as that of its treatment of nonprofit
institutions generally. For example, the Lutheran Welfare Services is a
religious organization and the Headstart and day care centers operated by
it were nonprofit and noncommercial in character, yet the Board asserted
' Pub. L. No. 93-360 (July 26, 1974).
' Walz v. Tax Commission, 397 U.S. 664 (1970).
1 Lemon v. Kurtzman, 403 U.S. 602 (1971).
its jurisdiction over them invoking the often forgotten nostrum that if the
Board asserts jurisdiction over employers involved in a certain activity,'"
it will not discriminate among those employers on the basis of whether or
not they are nonprofit. (Drexel Home, Inc., 182 N.L.R.B. 1045 (1970)).
The Archdiocese of Baltimore case raises this and a far more
important question in the religion area. In response to the Archdiocese's
contention that its high schools were religious in character and therefore should
not be subject to the Board's jurisdiction, the Board responded:
[T]he Board's policy in the past has been to decline jurisdiction over similar
institutions only when they are completely religious, not just religiously
associated and the Archdiocese concedes that instruction is not limited to
religious subjects. That the Archdiocese seeks to provide an education based on
Christian principles does not lead to a contrary conclusion. Most religiously
associated institutions seek to operate in conformity with their religious
This characterization, of course, is a bit inconsistent with Supreme Court
holdings that parochial schools are too religious to be the recipients of
The holding that religious institutions must be "completely religious"
to be exempt is likewise inconsistent with Board precedent.
The two most recent Board decisions to which it could have been
referring as authority for this rather casual approach to the religion issue
are Board of Jewish Educationof GreaterWashington,D.C., 210 N.L.R.B.
No. 150 (1974) and Association of Hebrew Teachers of Metropolitan
Detroit, 210 N.L.R.B. No. 132 (1974). Both of these organizations were
involved in Jewish studies, but they taught Jewish language and culture
as well as religion. Thus, the Board was really breaking new ground and
departing from earlier precedents in Archdiocese of Baltimore. This in turn
casts doubt on the current vitality of the line of cases in which the Board
has declined jurisdiction over the noncommercial aspects of religious
There is one area in which the NLRB may retain some consistency in
its treatment of the religious factor-the religious cemetery. Only one
religious cemetery case has come to the Board's attention in the recent past.
(First Congregational Church of Los Angeles, 189 N.L.R.B. No. 117
(1971)). In that case, the Board asserted jurisdiction because the
churchaffiliated cemetery in question was open to the general public and thus was
commercial in character. Nonetheless, in Catholic Cemeteries,
Archdiocese of Los Angeles, 21-RC-11683, and Catholic Cemeteries, Diocese of
Erie, at least two regions have declined jurisdiction over Catholic
cemeteries because they are not open to the general public, and thus are not
commercial in nature.
" See Young World, 216 N.L.R.B. No. 97 (1975).
The Board has been subject to stiff criticism for the heavy handed way
in which it has applied industrial labor criteria to secular educational
institutions." Indeed, it has been contended that Board action with respect
to such institutions is significantly altering their internal structures." It
remains to be seen what effect NLRB jurisdiction will have on religious
education and religious institutions generally.
First, as a result of the Archdiocese of Baltimore case, we can expect
an increased effort to unionize church-affiliated schools and school
Second, churches are deeply involved in administering government
funded social and educational programs. This involvement has cost
churches the use of buildings and organizational expertise, but as yet, has
not in general required substantial outlays of funds. As a result of the
policies enunciated in the Lutheran Welfare Services case, substantial
unanticipated financial obligations as well as governmental and political
entanglements over appropriations and program guidelines may be now
imposed on churches.
Third, whatever disposition the NLRB makes of the jurisdictional
issues I have discussed today, the legal problems attendant to unionization
under the labor law of certain states, or in the absence of any labor law at
all, will also have to be considered by Diocesan attorneys.
Finally, these jurisdictional problems are only threshold questions in
the vast body of federal labor law which is being invoked regarding
churchaffiliated institutions. Thoughtful and informed legal planning regarding
this entire body of law is necessary if we are going to marshal it to maintain
the religious character of these institutions and achieve the goals
established by church management.
Kahn, The NLRB and Higher Education; The Failure of Policymaking through
Adjudication, 21 U.C.L.A.L. REV. 63 (1973); cf. Finkin, The NLRB in Higher Education, 5
TOLEDO L. REV. 608 (1974).
11 Kahn, The NLRB and Higher Education: The Failure of Policymaking through
Adjudication, 21 U.C.L.A.L. REv. 63 (1973); cf. Finkin, The NLRB in HigherEducation, 5
TOLEDO L. REV. 608 (1974).