In a recent decision, the National Labor Relations Board confronted the issue of whether it has jurisdiction over The Pennsylvania Virtual Charter School (PVCS) – a school formed pursuant Pennsylvania’s Charter School Law. In addressing the issue, the Board was confronted with two questions: (1) whether the school was exempt from the National Labor Relations Act (the “Act”) as a political subdivision; and (2) if the school was not exempt, whether the Board should nevertheless exercise its statutorily-granted discretion to decline jurisdiction. It answered both questions with a resounding “no.”

Political Subdivision Exemption

Political subdivisions are excluded from the list of “employers” subject to the Act. According to the Supreme Court of the United States, an entity is a “political subdivision” if it was created directly by the state, so as to constitute departments or administrative arms of government, or it is administered by individuals who are responsible to public officials or to the general electorate.

Applying this test, the Board held that PVCS was not created directly by the Commonwealth of Pennsylvania, but was a created by private individuals that formed a non-profit corporation. To reach this conclusion, the Board asked whether PVCS was created by a governmental entity, legislative or judicial act, or public official. It found that the answer was no. The Board found it largely irrelevant that: (1) the school’s charter was – as it must be under the Charter School Law – issued by the Pennsylvania Department of Education; (2) PVCS received ninety-seven percent of its funding from the Commonwealth of Pennsylvania; and (3) the Charter School Law places employees of cyber charter schools within Pennsylvania’s public employee labor relations system.

Moreover, the Board found that PVCS was not administered by individuals who are responsible to public officials or the general electorate. Under this prong of the political subdivision test, the Board examined if the administrators are individuals appointed by, or subject to removal procedures applicable to, public officials. PVCS’ board of trustees were appointed and removed pursuant to the school’s bylaws. The bylaws provided that sitting board members appoint and remove other board members, and only board members appoint and remove administrators. Under the Charter School Law the board members are statutorily deemed “public officials.” The Board held that despite the Charter School Law’s designation of the board members as “public officials,” they were not public officials for purposes of the Act. It reasoned that “PVCS’ board was created and governed by its internal bylaws (the first board was selected by the private citizens . . .) and is a self-perpetuating entity.” Accordingly, the Board found that PVCS was not administered by individuals responsible to public officials or the general electorate and was not a political subdivision.

Declination of Jurisdiction

Having concluded that PVCS was not exempt as a political subdivision, the Board finally examined whether it would nevertheless exercise its discretion to decline jurisdiction. PVCS argued that the Board should decline jurisdiction because cyber charter schools do not have a substantial effect on commerce and exercising jurisdiction would supplant state control. The Board found that PVCS had 3000 students, it had an operating budget in the millions of dollars each year, and it was only one of fourteen cyber charter schools in Pennsylvania. As a result, the Board determined that there was sufficient impact on commerce to justify maintaining jurisdiction. Additionally, the Board concluded that its jurisdiction would not supplant state control because charter schools are not state schools, but an alternative permitted by the Commonwealth of Pennsylvania. As such, it held that PVCS should be subject to the same federal regulations as other private employers.

It is noteworthy that the Board reached the same conclusion with respect to charter schools in New York. You can find the full PVCS opinion here. You can find the New York opinion here.

Our regular blog subscribers will note that we have routinely commented on the Board’s increasing efforts to expand its jurisdiction. This is yet another instance. Why does this matter? Even though your business may not be a charter school, it is a reminder that the Board is continuing its aggressive expansion of the Act.