Enrichment Services Program

National Labor Relations Board - Board Decisions

May 20, 1998

325 N.L.R.B. 818 (N.L.R.B. 1998)

818
325 NLRB No. 154
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1 In addition, the Employer’s board has five directors who are ei-
ther elected public officials or their representatives and five directors
who are members or representatives of groups or interests in the
community.
2 The Employer’s summary document further states that Ms.
Averett was ‘‘democratically elected by the Chattahoochee Neigh-
borhood Service Center’’ in March 1982.
3 According to the Employer, a majority of the population of
Quitman County is poor.
4 Based on mailing addresses provided by the Employer, it appears
that no more than three of the eight counties the Employer serves
have a resident ‘‘representative of the poor’’ on the Employer’s
board.
Enrichment Services Program, Inc. and Service
Employees International Union, AFL–CIO–
CLC, Petitioner. Case 10–RC–14486
May 20, 1998
DECISION ON REVIEW AND ORDER
BY CHAIRMAN GOULD AND MEMBERS FOX,
LIEBMAN, HURTGEN, AND BRAME
On April 15, 1994, the Regional Director for Region
10 issued an Order dismissing the petition on the
ground that the Employer is exempt from the National
Labor Relations Board’s jurisdiction under Section
2(2) of the National Labor Relations Act as a political
subdivision of the State of Georgia. In accordance with
Section 102.67 of the Board’s Rules and Regulations,
the Petitioner filed a timely request for review of the
Regional Director’s Order. On September 13, 1994, the
Board granted the Petitioner’s request for review.
Having reviewed the record developed by the Re-
gional Director, the Board has determined, contrary to
the Regional Director, that the Employer is not exempt
from its jurisdiction as a Section 2(2) political subdivi-
sion. Accordingly, we shall reinstate the petition and
remand this case to the Regional Director for further
proceedings consistent with this Decision.
Background
The Employer is a private, not-for-profit, tax-exempt
corporation incorporated under the laws of the State of
Georgia. It operates several anti-poverty programs
serving eight counties in western Georgia, and is also
the Head Start provider for its service area. The Peti-
tioner seeks to represent approximately 100 regular
full-time and part-time Head Start employees.
The Employer’s programs, including Head Start, are
funded pursuant to the Community Services Block
Grant (CSBG) Act, which requires that recipient orga-
nizations be governed by a tripartite board of directors,
with one-third of the directors being elected public of-
ficials or their representatives, or appointed public offi-
cials, at least one-third being ‘‘persons chosen in ac-
cordance with democratic selection procedures ade-
quate to assure that they are representative of the poor
in the area served,’’ and the remainder of the directors
being ‘‘officials or members of business, industry,
labor, religious, welfare, education or other major
groups and interests in the community.’’ 42 U.S.C.
§ 9901, 9904(c)(3). The Employer’s bylaws similarly
provide that at least one-third of its board of directors
‘‘shall be comprised of democratically-selected rep-
resentatives of the poor. Such representatives need not
be poor themselves, but will be chosen in a manner to
insure that they truly represent the poor.’’ The Em-
ployer has no other written guidelines for selecting
these individuals.
The Employer currently has five board members se-
lected as ‘‘representatives of the poor’’: Lillian
Adkins, Samuel Nash, Martha Averett, Douglas Bry-
ant, and Tommy Kendrick.1 According to information
provided by the Employer, Ms. Adkins is the president
of the Booker T. Washington Apartments Resident
Council and the unanimously elected president of the
Joint Resident Councils’ Presidents’ Council of the
Columbus (Georgia) Housing Authority, and was elect-
ed to the Employer’s board by the tenants of the Hous-
ing Authority. Mr. Nash was elected to a seat on the
Employer’s board by the Muscogee Neighborhood
Services ‘‘Club’’ at a meeting which apparently was
attended by 12 individuals. With respect to Ms.
Averett, the Employer produced a ballot with the head-
ing ‘‘Chattahoochee County—To select one person to
represent the low-income on the area board’’ and the
names of three candidates including Ms. Averett.2 Mr.
Bryant apparently was elected to serve on the Employ-
er’s board as the representative of ‘‘Southeast Colum-
bus Neighborhood’’ and his church. According to the
Employer’s summary document, Mr. Kendrick is an
elected commissioner of Quitman County and was
‘‘elected by Quitman County Neighborhood Center to
represent the Center.’’3 There is no specific informa-
tion in the record explaining how elections were con-
ducted, who is eligible to vote, or how the Employer
decided which groups would have the right to elect its
‘‘representative of the poor’’ directors.4
Contentions of the Parties
The Employer asserts that the Board has previously
held that identical entities administering anti-poverty
programs pursuant to CSBG Act grants are exempt po-
litical subdivisions, based on those entities being gov-
erned by tripartite boards of directors like the Employ-
er’s. See, e.g., Woodbury County Community Action
Agency, 299 NLRB 554 (1990), and Economic Secu-
rity Corp., 299 NLRB 562 (1990). The Employer as-
serts that, because its board of directors has the same
tripartite structure, it too is exempt under these prece-
dents.
The Petitioner asserts that Woodbury County and
Economic Security Corp. were wrongly decided and
that the proper test for exemption as a political sub-
VerDate 11-MAY-2000 15:35 May 01, 2002 Jkt 197585 PO 00004 Frm 00818 Fmt 0610 Sfmt 0610 D:\NLRB\325.119 APPS10 PsN: APPS10
819ENRICHMENT SERVICES PROGRAM, INC.
5 Jefferson County Community Center v. NLRB, 732 F.2d 122, 126
(10th Cir. 1984).
6 Except for board member Kendrick, who appears to be both a
‘‘representative of the poor’’ and a public official, there is no con-
tention or evidence that any of the ‘‘representative of the poor’’ di-
rectors are responsible to public officials.
7 See Lima Community Action Commission, 304 NLRB 888
(1991); GMN Tri County Action Committee, 300 NLRB 963 (1990);
Albany County Opportunity, 300 NLRB 886 (1990).
division must include other indicia of political subdivi-
sion status such as representation from the general
electorate, not just the poor; public powers such as the
power of eminent domain; public access to meetings
and records; and some form of public accountability.
In addition, the Petitioner asserts that, even under ex-
isting law, the Employer has not established that it is
an exempt political subdivision because, in prior cases,
the entity found exempt had detailed election proce-
dures providing for actual elections and other safe-
guards to ensure that the board members elected by
‘‘the poor’’ in fact represented those individuals. Ac-
cording to the Petitioner, there is no evidence that such
safeguards exist in this case.
Discussion
Section 2(2) of the Act provides that the term ‘‘em-
ployer’’ shall not include ‘‘any State or political sub-
division thereof.’’ The Supreme Court has held that an
entity is exempt from the Board’s jurisdiction as a po-
litical subdivision if it is either (1) created directly by
the state, so as to constitute a department or adminis-
trative arm of the government, or (2) ‘‘administered by
individuals who are responsible to public officials or to
the general electorate.’’ NLRB v. Natural Gas Utility
District of Hawkins County, 402 U.S. 600, 604–605
(1971). It is undisputed in this case that the Employer
was not created directly by the State of Georgia. Thus,
the Employer is exempt under Hawkins County only if
it is administered by officials who are responsible to
public officials of the State of Georgia or to the gen-
eral electorate.
As noted above, one-third of the Employer’s board
is comprised of ‘‘community leaders’’ from the private
sector; it is undisputed that these individuals are not
responsible to public officials or to the general elector-
ate of the State of Georgia. Another one-third of the
Employer’s board is comprised of state public officials
or their representatives. We find that these individuals
are responsible to public officials or the general elec-
torate. For an entity to be deemed ‘‘administered by’’
individuals responsible to public officials or to the gen-
eral electorate, those individuals must constitute a ma-
jority of the board.5 Thus, the issue here is whether the
one-third of the board required to be ‘‘representative of
the poor’’ is responsible to the general electorate.6
As the Employer notes, in the past, the Board has
found that nonprofit corporations with tripartite boards
established pursuant to CSBG Act requirements are ex-
empt political subdivisions.7 In both Woodbury County
and Economic Security Corp., supra, political subdivi-
sion status was based on a finding that the ‘‘represent-
ative of the poor’’ board members were responsible to
the ‘‘general electorate’’ because they were elected by
all low income residents within the area served by
those employers.
After careful consideration, however, we find that
the Hawkins County requirement that the employer be
administered by individuals who are responsible to the
general electorate is not met when the electors com-
prise only a limited group of voters. As the Board ex-
plained in Concordia Electric Cooperative, 315 NLRB
752, 754 (1994), bargining order enfd. 95 F.3d 46 (5th
Cir. 1996), it
will find an entity ‘‘responsible to the general
electorate’’ only if the composition of the group
of electors eligible to vote for the entity’s govern-
ing body is sufficiently comparable to the elector-
ate for general political elections in the State that
the entity in question may be said to be subject
to a similar type and degree of popular political
control.
In Concordia Electric, the Board found that an elec-
trical cooperative which provided electricity to rural
consumer/members did not satisfy the requirements for
exemption under Section 2(2) inasmuch as its members
did not include all eligible voters residing in its geo-
graphic area and, at the same time, included corpora-
tions and other entities and individuals not eligible to
vote in state elections. Id. at 754–755.
Applying these principles to the facts of this case,
we find that an electorate comprised, as here, of mem-
bers of various low income neighborhoods and, in
Economic Security Corp. and Woodbury County, of
‘‘all poor’’ persons is not comparable to the electorate
for general political elections. An ‘‘electorate’’ of all
poor persons or groups thereof does not include all in-
dividuals in the area served who would be eligible to
vote in general political elections. Accordingly, we
find that the Employer’s directors who are ‘‘elected by
the poor’’ are not ‘‘responsible . . . to the general
electorate’’ within the meaning of the Hawkins County
test.
Our holding in this regard is not inconsistent with
our decisions in Salt River Project, 231 NLRB 11
(1977), and Electrical District No. 2, 224 NLRB 904
(1976), as those cases are distinguishable. In both
cases, the Board found that it did not have jurisdiction
over special purpose districts created under state law to
provide electricity to landowners in designated coun-
ties of a State. It is true that the electorate in those
VerDate 11-MAY-2000 15:35 May 01, 2002 Jkt 197585 PO 00004 Frm 00819 Fmt 0610 Sfmt 0610 D:\NLRB\325.119 APPS10 PsN: APPS10
820 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
8 The constitution of the State of Arizona specifically provides that
electrical districts are ‘‘political subdivisions’’ of the State. Elec-
trical District No. 2, supra at 905. Further, the Supreme Court has
referred to the Salt River Project as a ‘‘local governmental body.’’
Ball v. James, 451 U.S. 355, 357 (1981).
9 See also Oxnard Harbor District, 34 NLRB 1285 (1941) (exempt
employer was established by petition filed with county board of su-
pervisors, which had authority under state law to levy taxes for ben-
efit of district). In Lewiston Orchards Irrigation District, 186 NLRB
827 (1970), enf. denied 469 F.2d 698 (9th Cir. 1972) (per curiam),
the Board found that an irrigation district established by a petition
filed with the county board of supervisors, which was considered a
municipal or public corporation under state law, was not a political
subdivision because its electorate was limited to landowners. The
Ninth Circuit declined to enforce the Board’s assertion of jurisdic-
tion, however, and the Board subsequently recognized in Electrical
District No. 2, supra at 906, that a limitation of voting eligibility to
landowners was not sufficient to justify a finding that the employer
was not a political subdivision in light of the other circumstances,
discussed above, present in that case.
10 To the contrary, community action agencies like the Employer
have consistently been found to be private entities. See Hines v.
Cenla Community Action Commission, 474 F.2d 1052 (5th Cir.
1973) (community action agency not state actor for purposes of Fed-
eral civil rights suit); Longoria v. Cearley, 796 F. Supp. 997 (W.D.
Tex.1992) (community action agency not exempt from ERISA as
state political subdivision).
11 By contrast, there is no evidence that the Employer has ever
sought, or obtained, Federal tax exemption pursuant to 26 U.S.C.
§ 115, which does require a determination of political subdivision
status. Accordingly, we need not pass on the effect, if any, that an
exemption on that basis would have on the question of an entity’s
political subdivision status under Sec. 2(2).
12 Sec. 9902 provides, in pertinent part:
In any geographic area of a State not presently served by an
eligible entity, the Governor of the State may decide to serve
such a new area by . . . designating any . . . organization
which has a board meeting the requirements of section 675(c)(3)
[i.e. at least one-third of the directors are ‘‘representative of the
poor’’] or any political subdivision of the State . . . .
13 Accordingly, Woodbury County, Economic Security Corp., and
all subsequent cases finding CSBG Act anti-poverty service provid-
ers like the Employer to be exempt political subdivisions, where the
‘‘representative of the poor’’ members of the tripartite board were
elected by limited groups of voters, are overruled.
cases did not include all persons eligible to vote in
general political elections, as voting rights on most
matters were limited to individuals who owned speci-
fied amounts of land within the district. However,
other significant factors were present. These entities,
which were considered to be political subdivisions
under state law,8 were created after the filing of an
election petition with the county board of supervisors,
and upon an election among the taxpaying property
owners within the district’s geographical borders. In
addition, the entities had the power to levy taxes and
to condemn private and public property. The Board re-
lied on these factors in finding that these entities were
exempt political subdivisions of the state in which they
were created.9 None of these factors is present here.
There is no showing that the Employer is considered
to be a political subdivision of the State of Georgia.10
Although a state determination is not controlling, it is
to be given ‘‘careful consideration.’’ See Hawkins
County, supra at 602. Likewise, the Employer has no
authority to levy taxes or to condemn public property.
It was incorporated by private individuals under the
State’s nonprofit corporation laws, and there was no
requirement for the filing of a petition with any gov-
ernmental body or for the holding of an election to ap-
prove its creation. Absent any of the factors on which
the Board relied to find that the employers in Salt
River Project and Electrical District No. 2 were politi-
cal subdivisions of the state in which they were cre-
ated, we find that those decisions provide no support
for the Employer’s contention here that it is exempt
from the Board’s jurisdiction.
Further, the Board in Concordia Electric stated that
such additional factors as the employer’s tax status, its
regulation by Federal and state agencies, and the fact
that other Federal and state authorities do not consider
it to be a political subdivision ‘‘do not support, and in-
deed tend to negate, the Employer’s claim that it is ex-
empt from the Board’s jurisdiction.’’ Concordia Elec-
tric, supra at 756. The Employer here concedes that its
Federal tax exemption is pursuant to 26 U.S.C.
§ 501(c)(3), which applies to nonprofit charitable enti-
ties. This exemption requires no proof of political sub-
division status, but turns instead on the Employer’s
nonprofit status.11 Of course, the Board routinely exer-
cises jurisdiction over other nonprofit entities, includ-
ing hospitals and colleges, which are, like the Em-
ployer, exempt from Federal taxes pursuant to
§ 501(c)(3). We find that the Employer’s tax exemp-
tion under these circumstances does not support a find-
ing of political subdivision status. Concordia Electric,
supra.
Congress recognized in the CSBG Act that commu-
nity action services could be provided by political sub-
divisions or by private entities such as the Employer.
See 42 U.S.C. § 9902.12 Here, the State of Georgia
provides various community anti-poverty services, in-
cluding Head Start, to the eight-county area involved
in the instant case by private means rather than by the
state itself. There is no evidence that the State of
Georgia considers the Employer a political subdivision.
Conclusion
For the foregoing reasons, we find that individuals
are responsible to the general electorate under Hawkins
County only if the relevant electorate is the same as
that for general political elections.13 Because the Em-
ployer’s ‘‘representative of the poor’’ directors do not
satisfy this requirement, we find that they are not ‘‘re-
sponsible . . . to the general electorate.’’ Accordingly,
inasmuch as less than a majority of the Employer’s
board is comprised of public officials or individuals re-
sponsible to the general electorate under Hawkins
VerDate 11-MAY-2000 15:35 May 01, 2002 Jkt 197585 PO 00004 Frm 00820 Fmt 0610 Sfmt 0610 D:\NLRB\325.119 APPS10 PsN: APPS10
821ENRICHMENT SERVICES PROGRAM, INC.
1 As Chairman Gould set forth in his dissent in Oklahoma Zoologi-
cal Trust, 325 NLRB No. 17 (Nov. 8, 1997), in his view a critical
factor in establishing whether an entity’s administrators are account-
able to the general electorate or the public officials who appointed
them is whether the general electorate or the public officials have
an unfettered right of removal during the administrator’s term. Id.
slip op. at 4.
1 In the following cases, entities were held to be political subdivi-
sions, notwithstanding the fact that only property owners were eligi-
ble to vote for the directors of the entity. Salt-River Project, 231
NLRB 11 (1977); Electrical District No. 2, 224 NLRB 904 (1976);
NLRB v. Lewiston Orchards, 469 F.2d 698 (9th Cir. 1972). Consist-
ent with these cases, the Board has held that other entities were also
political subdivisions, notwithstanding the fact that only poor persons
were eligible to vote for certain directors of the entity. See Economic
Security Corp., 299 NLRB 562 (1990); Woodbury County Commu-
nity Action Agency, 299 NLRB 554 (1990).
2 See fn. 10 of plurality opinion.
County, the Employer is not an exempt political sub-
division.
ORDER
It is ordered that the petition filed in Case 10–RC–
14486 be reinstated, and this proceeding is remanded
to the Regional Director for Region 10 for further pro-
ceedings consistent with this decision.
CHAIRMAN GOULD and MEMBER FOX, concurring.
We agree with Members Liebman and Brame that
the Employer is not exempt from the Board’s assertion
of jurisdiction as a political subdivision, and with the
overruling of Woodbury County Community Action
Agency, 299 NLRB 554 (1990); Economic Security
Corp., 299 NLRB 562 (1990), and subsequent related
cases. Unlike our colleagues, however, we would also
overrule Salt River Project, 231 NLRB 11 (1977), and
Electrical District No. 2, 224 NLRB 904 (1976), cases
which they find are distinguishable from the present
case.
The Board holds today, and we agree, that an entity
is not exempt under Section 2(2) of the Act as a politi-
cal subdivision, under the Board’s test as set forth in
NLRB v. Natural Gas Utility District of Hawkins
County, 402 U.S. 600, 604–605 (1971), unless the
electorate to which an entity’s administrators are re-
sponsible reflects all individuals in the area served who
are eligible to vote in general elections. Thus, this re-
quirement is not met when the electors comprise only
a limited group of voters.
Salt River Project and Electrical District No. 2 in-
volved electorates comprised of a limited group of vot-
ers, and are therefore inconsistent with this holding.
Although our colleagues acknowledge that the entities
at issue in those cases were not ‘‘responsible to the
general electorate’’ because voting rights were limited
to persons owning specified amounts of land within
the districts, they cite various other factors present in
those cases as establishing that the entities were never-
theless political subdivisions. Under the Hawkins
County test, however, the Board has expressly limited
the exemption for political subdivisions to entities that
meet either the first or the second prong of the test,1
regardless of what other factors may be present. Thus,
consistent application of the Hawkins County test re-
quires that Salt River Project and Electrical District
No. 2 be overruled.
In addition, the Supreme Court’s decision in Ball v.
James, 451 U.S. 355 (1981), relied on by the plurality,
does not require a different result. Although in that
case the Court referred to the Salt River District as a
‘‘local governmental body,’’ the issue of whether Salt
River District was a political subdivision was not be-
fore the Court. In fact, the Court noted that its review
‘‘of the history, organization, functions and financing
of the [Salt River] District [was] drawn from the stipu-
lation of facts in the District Court.’’ Id. at 357. Be-
cause this issue was never considered by the Court, its
reference to the Salt River District as a ‘‘local govern-
mental body’’ carries no precedential value.
Accordingly, although we concur in the assertion of
jurisdiction over the Employer, Enrichment Services
Program, Inc., we would overrule Salt River Project
and Electrical District No. 2 in doing so.
MEMBER HURTGEN, concurring.
I do not believe that an entity is private simply be-
cause its directors are elected by only a segment of the
citizenry. Thus, if directors are elected by property
owners, or by persons living in certain ‘‘poor’’ neigh-
borhoods, that is consistent with public control.1
On the other hand, there are other factors in this
case which affirmatively establish that the Employer is
private rather than public. The IRS regards it as a non-
profit charitable entity under 26 U.S.C., § 501 (c)(3),
rather than as a political subdivision under 26 U.S.C.
§ 115. In addition, the Employer has no authority to
levy taxes or to condemn property. Further, it was cre-
ated by private individuals who filed a petition under
Georgia’s nonprofit corporation laws. Moreover, under
the Community Services Block Grant Act, community
services can be provided by political subdivisions or
by private entities. It would appear from the above that
Georgia has followed the latter course. Certainly, there
is no evidence that Georgia regards the Employer as
a public entity. Finally, I note that similar agencies
have been held to be private entities.2
Based on the circumstances set forth above (and not
on the fact that the eligible voters are confined to the
poor), I conclude that the Employer is a private entity.
VerDate 11-MAY-2000 15:35 May 01, 2002 Jkt 197585 PO 00004 Frm 00821 Fmt 0610 Sfmt 0610 D:\NLRB\325.119 APPS10 PsN: APPS10