NLRB Judge’s Decision Tees Up Reconsideration of Test for Religious Exemption

On February 23, 2023, an administrative law judge for the National Labor Relations Board (NLRB) ruled that a Catholic university in Florida is exempt from the Board’s jurisdiction as a religious institution. But the case tees up the test for the religious institution exemption to be overturned by the full Board—which could open up more religious educational institutions to Board jurisdiction.

In Saint Leo University, Inc., Administrative Law Judge Ira Sandron found that Saint Leo University, a Roman Catholic liberal arts university founded by Benedictine monks, easily meets the test to be exempt from Board jurisdiction as a religious institution under the Board’s Trump-era rule in Bethany College. However, counsel for the NLRB general counsel argued that the Board should abandon the bright line rule in Bethany College and revert back to the rule under the Board’s 2014 decision in Pacific Lutheran University, which requires universities to show that faculty actually perform religious functions to be exempt.

While the judge held that the Bethany College rule was binding, the general counsel was allowed to develop a full record on areas relevant to Pacific Lutheran with the understanding that the issue is likely to go before the full Board. The decision thus sets up the issue for the Board as the NLRB general counsel has been pushing to overhaul Board precedent and as the Board, given its current political makeup, has been keen to overturn Trump-era decisions and issue more employee-friendly rulings.

Religious Institution Test

The NLRB has long struggled to balance enforcement of the National Labor Relations Act (NLRA) with the religious freedoms of religious institutions under the First Amendment. In the 2014 Pacific Lutheran decision, the Board held that a religious institution is not exempt from Board jurisdiction unless it holds itself out as providing religious education and holds out its faculty members as “performing a religious function in furtherance of its religious mission.” Under that test, NLRB regional directors have asserted jurisdiction over religious educational institutions even in cases where faculty have been encouraged to discuss religious values.

However, the NLRB acknowledged in Bethany College that the test may be inconsistent with Supreme Court of the United States precedent and the U.S. Constitution. The Board moved away from that Pacific Lutheran test and adopted a bright-line, three-pronged standard outlined in the U.S. Court of Appeals for the District of Columbia Circuit decision in University of Great Falls v. National Labor Relations Board. Under the Bethany College standard, the Board looks at whether an educational institution claiming the religious exemption: (a) holds itself out to the public as a religious institution, (b) is a nonprofit, and (c) is religiously affiliated.

Applying Bethany College

The current case centers on a dispute between Saint Leo University and the union representing the approximately 130 full-time faculty members at the university. Amid collective bargaining negotiations in October 2020, the university withdrew its recognition of the union under the Bethany College standard and began to issue new rules and a new faculty handbook without negotiating their terms with the union. The union then filed an unfair labor practice charge alleging the university violated Section 8(a)(5) and (1) of the NLRA by refusing to bargain with the union over those new handbook terms.

The judge found that Saint Leo’s institution of new rules without negotiation violated the Act but that the university was exempt from the Act as a religious institution. Applying the Bethany College standard, the judge said Saint Leo “clearly” meets the “criteria for religious exemption” because: “it is nonprofit; religiously affiliated; and in many and highly visible ways, both on campus and on online, regularly holds itself out to the public and to students as a religious institution guided by Catholic principles.”

The judge noted that the Bethany College standard requires a less intensive examination of the actual religious functions of the faculty, stating that “nothing in the appropriate analysis places the burden on the Respondent to demonstrate an overwhelming religious presence in order to qualify for an exemption.” The judge stated that the Bethany College standard does not depend on the “degree of affiliation or religious participation by the faculty and students,” nor does it require the university to mandate that faculty or students be of a certain religion. The judge further stated that the standard does not turn on the degree to which the school’s “Catholic/Benedictine nature is outweighed by its secular nature.”

Key Takeaways

The ruling acknowledges that the religious exemption test could be reconsidered by the full Board as the NLRB general counsel pushes to revert to the broader standard in Pacific Lutheran, creating uncertainty for religious educational institutions. However, the ruling reinforces that the Bethany College standard is binding, at least for now, meaning religious educational institutions do not have to rely on the religious functions of their faculty to be exempted from Board jurisdiction.

Ogletree Deakins’ Traditional Labor Relations and Higher Education Practice Groups will continue to monitor and report on the case and will post updates on the Traditional Labor Relations and Higher Education blogs. Important information for employers is also available via the firm’s webinar and podcast programs.