The Political Subdivision Exception of the National Labor Relations Act and the Board‘s Discretionary Authority

Duke Law Journal, Dec 1982

M. Edward Taylor

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The Political Subdivision Exception of the National Labor Relations Act and the Board‘s Discretionary Authority

DUKE LAW JOURNAL THE POLITICAL SUBDIVISION EXEMPTION OF THE NATIONAL LABOR RELATIONS ACT AND THE BOARD'S DISCRETIONARY AUTHORITY The collective bargaining rights set forth in the National Labor Relations Act (NLRA)l extend only to workers qualifying as "employees" within the meaning of the Act.2 The definition of employee is limited to those individuals employed by an entity that meets the Act's definition of "employer. ' 3 Because section 2(2) of the Act specifies that states and political subdivisions are not "employers, ' 4 employees of these entities receive none of the Act's protections. Thus, the threshold determination whether an entity is a political subdivision is of utmost importance to workers seeking the protection of the National Labor Relations Board (NLRB), the agency charged with the enforcement of the NLRA.5 Despite the far-reaching ramifications of the determination whether an entity is a political subdivision, Congress failed to define the term "political subdivision" in the NLRA. As a result, the task of defining the scope of the exemption has been left to the Board and the courts. Although it has not been difficult to make this determination in 1. 29 U.S.C. §§ 151-169 (1976 & Supp. 1111979). 2. The rights protected by the Act are set forth in section 7, which provides as follows: Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities .... 29 U.S.C. § 157 (1976). The means by which these rights may be violated by employers and labor organizations are set forth respectively in sections 8(a) and 8(b) of the Act. 29 U.S.C. § 158(a)-(b) (1976). 3. "Employee" is defined in section 2(3) of the Act as follows: "The term 'employee'. shall not include any individual employed. . . by any other person who is not an employer as herein provided." 29 U.S.C. § 152(3) (1976). 4. NLRA § 2(2), 29 U.S.C. § 152(2) (1976 & Supp. III 1979), states that "[t]he term 'employer'... shall not include. . . any state or political subdivision thereof." 5. The Board's primary responsibilities include conducting representation elections and certifying exclusive bargaining agents. See NLRA § 10, 29 U.S.C. § 159 (1976). - many cases,6 the distinction between political subdivisions and private employers is frequently unclear. 7 The Board's exercise of its discretion to decline jurisdiction8 complicates further an analysis of the scope of the political subdivision exemption. The Board relies frequently on its discretionary authority to exempt from its jurisdiction employers that provide services to or on behalf of political subdivisions. 9 Thus, the political subdivision exemption of section 2(2) operates at two levels: first, it exempts entities that do not meet the statutory definition of employer because they are political subdivisions and second, it exempts entities that fall within the definition of employer, but are nonetheless granted a discretionary exemption by the Board. This note addresses the problems that exist in the application of the political subdivision exemption. Part I discusses the evolution of the statutory exemption and the Board's development of the discretionary exemption. Part II analyzes several recent decisions issued by the Courts of Appeals for the Seventh and Tenth Circuits t0 and discusses those courts' misapplication of the exemption and their incursions upon the Board's discretionary authority. Part III of the note concludes that the Board's use of the discretionary exemption is unnecessary, and suggests that the Board might alleviate some of the difficulties created by the courts' misconstruction of the exemption by relying solely on the statutory criteria set forth by the Supreme Court." t I. The Statutory Exemption During the early years of the NLRA, the Board had few occasions to apply the political subdivision exemption. Entities claiming the exemption clearly fell within the intended scope of the clause.' 2 Conse POLITICA4L SUBDIVISION EXEMPTION quently, the Board's perfunctory opinions included no meaningful analysis of the clause and failed to consider whether "political subdivision" should be defined in the context of state or federal law. 13 The Board first considered whether state law should control the political subdivision determination in New Bedford, Woods Hole, Martha's Vineyard & Nantucket Steamship Authority. 14 The Board disregarded the need for uniform application of the clause and declared that state law would control its decision.' 5 The Board then held that the Steamship Authority was a political subdivision, citing three factors: the Authority was created pursuant to a general enabling act of the state; its bonds were classified as those of the stat (...truncated)


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M. Edward Taylor. The Political Subdivision Exception of the National Labor Relations Act and the Board‘s Discretionary Authority, Duke Law Journal, 1982, Volume 31, Issue 4,