Colleges and universities should take note of the Court of Appeals for the D.C. Circuit’s recent decision in University of Southern California v. National Labor Relations Board, Case No. 17-1149 (D.C. Cir. Mar. 12, 2019) addressing whether non-tenure track faculty at universities are “employees” under the National Labor Relations Act (“NLRA”), giving them the right to form a union, or whether they are “managers” and thus exempt from coverage under the NLRA.

In its decision, the D.C. Circuit largely upheld the standard set forth in Pacific Lutheran University, 361 NLRB 1404 (2014), a 2014 decision by the Obama-era National Labor Relations Board (“NLRB” or “Board”). The D.C. Circuit took issue, however, with how the Board applied Pacific Lutheran to the University of Southern California’s (“USC”) facts. Specifically, the court rejected the Board’s treatment of a faculty subgroup (e.g., adjuncts) not holding a majority of seats on a university committee (e.g., curriculum committee), so that the subgroup could not be considered “managers” (the so-called “subgroup majority status rule”). It found that such a strict rule was “a major problem” and remanded the case back to the now Republican-controlled NLRB for reconsideration.

Background

The Supreme Court held in N.L.R.B. v. Yeshiva University, 444 U.S. 672 (1980) that the critical inquiry for analyzing whether university faculty are employees or managers under the NLRA is whether they exercise “effective control” over central university policies. In Pacific Lutheran, the Board established a “majority status rule” which measured such “effective control” based on an assessment of whether: (1) faculty were part of university committees; (2) the committees exercised decision-making power as to “central” university policies; (3) faculty constituted a majority of the committee’s membership; and (4) the committee’s recommendations “routinely” became “operative without independent review.”

The Pacific Lutheran Board also defined five key areas for evaluating whether university polices generated by faculty committees are considered “central,” three of which are considered “primary” and two of which are considered “secondary.” Primary decision-making areas include academic programs, enrollment management policies, and finances, while secondary areas include academic policies, and personnel policies and decisions.

NLRB Decision – University of Southern California

In 2016, the Regional Director in Los Angeles applied Pacific Lutheran’s “majority status rule” to a group of non-tenure track faculty at USC. The Regional Director did not analyze whether the faculty at large comprised a majority of university committees, but instead found that, specifically, non-tenure track faculty did not constitute such a majority—creating a “subgroup majority status rule” where the non-tenured subgroup had to make up a majority of the committees. Therefore, non-tenure track faculty were held to be “employees,” not “managers.” The Board adopted the Regional Director’s findings.

D.C. Circuit Decision – University of Southern California

On appeal, the D.C. Circuit affirmed the test articulated by the Board in Pacific Lutheran, but took issue with the Board’s application of the “majority status rule” to a “subgroup majority status rule.” The court stated that the Board erroneously “ignore[d] the possibility that faculty subgroups [e.g., tenured faculty and adjuncts], despite holding different status within the university, may share common interests and therefore effectively participate together” to exercise joint decision-making authority over university policies.

Thus, instead of focusing on whether subgroups, like adjuncts, make-up a strict majority of committees, the court held that the Board must engage in a two-step inquiry: (1) whether a faculty body as a whole exercises effective control based on the Pacific Lutheran factors; and (2) if so, whether the petitioning subgroup is included in that managerial faculty body. The court emphasized that the Board must treat the two steps of the Pacific Lutheran test separately, “and may not conflate them by asking whether the petitioning subgroup alone exercises effective control.”

The court remanded the case for the Board to reapply the D.C. Circuit’s modification of the Pacific Lutheran test to the non-tenure track faculty at issue in University of Southern California.

Takeaways

The Pacific Lutheran framework for determining the managerial status of university faculty lives on, but with the D.C. Circuit’s limiting gloss. The court’s rejection of the “subgroup majority rule” may make it more difficult for non-tenure track faculty to unionize because the pathway to “employee” status has been narrowed. But the full impact of the D.C. Circuit’s decision is yet unknown, as the Pacific Lutheran test could now be reconsidered by the Trump Board, which already has overturned several Obama-era decisions.

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Photo of Paul Salvatore Paul Salvatore

Paul Salvatore provides strategic labor and employment law advice to companies, boards of directors/trustees, senior executives and general counsel in such areas as labor-management relations, litigation, alternative dispute resolution, international labor and employment issues, and corporate transactions.

He negotiates major collective bargaining agreements…

Paul Salvatore provides strategic labor and employment law advice to companies, boards of directors/trustees, senior executives and general counsel in such areas as labor-management relations, litigation, alternative dispute resolution, international labor and employment issues, and corporate transactions.

He negotiates major collective bargaining agreements in several industries, including real estate and construction. Paul represents the NYC real estate industry’s multi-employer organization, the Realty Advisory Board on Labor Relations (RAB), and its principal trade organization, the Real Estate Board of New York (REBNY). In 2023, he helped the RAB reach a new collective bargaining agreement with SEIU Local 32BJ, covering 20,000 commercial building employees, enabling the industry to adapt its labor practices to tenants’ post-COVID utilization of office space, including that caused by remote/hybrid work.

Paul has long represented construction employers and developers, such as the Related Companies, Cement League, Association of Master Painters and others. He negotiates Project Labor Agreements (PLA’s), such as for Related (enabling the construction of Hudson Yards), and presently for Gateway Development Corporation (GDC) in building the New York-New Jersey train tunnels, the largest infrastructure project in America. City & State magazine has named him one of the most powerful lawyers in New York for his work in this sector.

Paul also tries arbitrations and litigations, and argues appeals, arising from labor-management relationships. He argued and won before the U.S. Supreme Court 14 Penn Plaza LLC v. Pyett. In a 5-4 decision of importance to employers, the Court held that a collective bargaining agreement explicitly requiring unionized employees to arbitrate employment discrimination claims is enforceable, modifying 35 years of labor law. Unions and employers now negotiate “Pyett clauses” in collective bargaining. He has argued and won federal circuit court cases reversing the National Labor Relations Board’s findings against employers, including in the D.C. and Fifth Circuits.

Paul represents universities and colleges in their labor and employment relations, including in the currently active areas of unionization and collective bargaining with graduate students, undergraduates, athletes and adjunct faculty. Among other schools he has worked with are Yale, Duke, Chicago, Washington University in St. Louis and Caltech. Paul pioneered innovative non-NLRB graduate student union election agreements at Cornell, Brown and Syracuse Universities.

An honors graduate of Cornell’s School of Industrial and Labor Relations (ILR) and the Cornell Law School, Paul served eight years on Cornell’s Board of Trustees, including on its Executive Committee. He subsequently was elected Trustee Emeritus and Presidential Councilor. He presently serves as a Trustee Member of the Board of Fellows of Weill Cornell Medicine, as well as on the Law School and ILR Deans’ Advisory Councils. In 2002, ILR awarded him the Judge William B. Groat prize, the school’s highest honor.

At Proskauer, Paul was elected to its Executive Committee and served as co-chair of its global Labor & Employment Law Department, named during his tenure by The American Lawyer and Chambers USA as one of the premier U.S. practices. He is widely recognized as a leading U.S. labor and employment lawyer in such publications as Chambers Global and USA (Band 1), and Legal 500 (“Hall of Fame”). The National Law Journal selected Paul as one of “The Decade’s Most Influential Lawyers” – one of only three in the labor and employment law field. His peers elected him to the College of Labor and Employment Lawyers.

An active speaker and writer on labor and employment law issues, Paul’s recent publications include “One Dozen Years of Pyett: A Win for Unionized Workplace Dispute Resolution” in the American Bar Association Labor & Employment Law Journal (“ABA Journal”), Volume 36, Number 2 at 257, and “The PLA Alternative in an Increasingly Open Shop New York City Construction Market: The REBNY-BCTC Statement of Principles,” Volume 37 ABA Journal, Number 3 at 415. He is an Adjunct Professor at Cornell Law School, teaching “Current Issues in Collective Bargaining.”

Photo of Steven Porzio Steven Porzio

Steven J. Porzio is a partner in the Labor & Employment Law Department and a member of the Labor-Management Relations Group. Steve assists both unionized and union-free clients with a full range of labor and employee relations matters. He represents employers in contract…

Steven J. Porzio is a partner in the Labor & Employment Law Department and a member of the Labor-Management Relations Group. Steve assists both unionized and union-free clients with a full range of labor and employee relations matters. He represents employers in contract negotiations, arbitrations, and representation and unfair labor practice cases before the National Labor Relations Board.

Steve has experience conducting vulnerability assessments and providing management training in union and litigation avoidance, leave management, wage and hour, and hiring and firing practices. He provides strategic and legal advice in certification and decertification elections, union organizing drives, corporate campaigns, picketing and union contract campaigns. Steve has represented employers in a number of different industries, including higher education, health care, construction and manufacturing in successful efforts against unions in election and corporate campaigns.

In addition to his traditional labor law work, Steve assists companies with handbook and personnel policy drafting and review, daily management of employee disciplines and terminations, and general advice and counsel on compliance with federal and state employment laws.

Steve’s litigation experience includes work on matters before state and federal courts, the Equal Employment Opportunity Commission, the Connecticut Commission on Human Rights and Opportunities, the New York State Division of Human Rights and various other administrative agencies. He has litigated matters involving age, race, national origin, gender and disability discrimination, wage and hour, whistleblower and wrongful termination claims.

While attending the Syracuse University College of Law, Steve served as the editor-in-chief of the Syracuse Science and Technology Law Reporter. He also received the Robert F. Koretz scholarship, awarded in recognition of excellence in the study of labor law.