Employment Law Daily 3-1 NLRB finds it has jurisdiction over cyber charter school
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Friday, August 26, 2016

3-1 NLRB finds it has jurisdiction over cyber charter school

By Matt Pavich, J.D. The NLRB has jurisdiction over a nonprofit corporation that operates a cyber charter school in Pennsylvania, the 4-member Board ruled in a 3-1 decision. The majority likened the charter school to a government contractor, noting that it was not created by the state and was not answerable to state officials. As such, it was not a political subdivision of the state. Moreover, it held, there were no persuasive reasons to decline to assert jurisdiction as a matter of discretion in this case (The Pennsylvania Virtual Charter School, August 24, 2016). In 2001, a group of private individuals incorporated and submitted a charter application with the school district. The district granted the application and the parties entered into a "charter school agreement" under which the district received access to the school’s records and the school was required to give the district its annual budget and goals. The school’s bylaws stated that a six-member board of trustees would decide all operational matters, including hiring and firing, wage decisions, and contractual matters. Board members could only be removed from their position by other board members. The state department of education renewed the charter in 2006 and in 2011. A union filed a petition to represent full-time and part-time teachers and staff, which the school opposed, arguing that it was subdivision of the state and thus was not within the NLRB’s jurisdiction. The NLRB regional director rejected that contention, finding that under the U.S. Supreme Court’s ruling in NLRB v. Gas Utility District of Hawkins County, the school was not exempt because it was neither created by the state nor administered by individuals accountable to public officials. School not created by the state. On review, the majority found that the NLRB had jurisdiction. The Board has typically found that entities created by private individuals are not exempt under Hawkins. Even entities that receive public funding or which have contracts with governmental entities are not exempt based on said funding or contracts. Moreover, the Board has "routinely" asserted jurisdiction over private employers that have contracted with governmental entities to provide services. In the instant matter, private individuals, not the state, created the school. The state did not amend the charter, nor did it take any action regarding the original board of trustees. Furthermore, the school was not an administrative arm of the state. Although the state’s Charter School Law (CSL) characterized charter schools as independent public schools and charter administrators as public officials, the majority found that federal law, rather than state law, governs the determination of what constitutes a public entity. In the instant matter, the majority found that the school was a corporate entity that contracted with the state to provide services, rather than an arm of the state used to provide educational services. The school’s board of trustees was established under the school charter, not state law, as opposed to public school board members who are elected by the public. The board, not the state, decided all matters relating to school operations. While the state had the power to revoke the charter, that fact was more analogous to the power of a governmental entity to cease subcontracting work. Thus, the charter school was not an arm of the state. Trustees not accountable to public. The Board also found that the school’s board of trustees that administered the charter school was not accountable to public officials. The relevant inquiry is whether the administrators are appointed and subject to removal by public officials. In this case, the school’s bylaws dictated how the board of trustees would be selected, not state laws or regulations. It was the board itself that appointed and removed board members, not any state entity. Membership on school committees was limited to board members and excluded government agents. Although the school was subject to oversight and regulation by the state secretary of education, the secretary did not have the power to elect or remove trustees. Because the school was not administered by individuals who were accountable to public officials, the school was not a political subdivision of the state. Board refuses to decline jurisdiction. The Board also refused to decline jurisdiction over the state’s 14 cyber charter schools as a matter of discretion. The school argued that the cyber charter schools had minimal impact on interstate commerce and that asserting jurisdiction would supplant state control over schools. However, the school served 3,000 students annually; each of the 14 schools employed staff and purchased contracts. Thus, the schools did affect interstate commerce. The Board rejected the argument that it would supplant state control, finding that the state had merely made the choice to allow individuals to establish charter schools. Dissent. Member Miscimarra argued that the Board should have declined jurisdiction in this case because any dispute would have a negligible effect on interstate commerce. Additionally, he argued that the majority’s fact-intensive inquiry meant that parties could not reliably determine whether the Board would exert jurisdiction. He also contended that the Board should decline jurisdiction over the industry, which was of such local concern.

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