Thomas C. Garretson, Robbins Schwartz, Chicago
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Charter Schools’ Union Neutrality Law Survives Early Federal Court Challenge
On February 24, 2026, Hon. John Robert Blakey of the U.S. District Court for the Northern District of Illinois issued a memorandum opinion and order denying a motion for preliminary injunctive relief filed by a group of Illinois charter school operators. Illinois Network of Charter Schools v. Raoul, Case No. 1:24-cv-05057, 2026 WL 509223 (N.D.Ill. Feb. 24, 2026). The plaintiffs argued that enforcement of P.A. 103-0416 (eff. Aug. 4, 2023), which requires the inclusion of a “union neutrality clause” in every charter school agreement and renewal, violated federal and state law and requested that the court grant a preliminary injunction to stay enforcement of the Act pending a ruling on the merits. Charter Schools, supra, and an order denying preliminary injunctive relief reflect that the plaintiffs preemption and First Amendment arguments are unlikely to prevail on the merits as litigation progresses.
Under the Charter Schools Law, 105 ILCS 5/27A-1, et seq., individuals or organizations seeking to operate a charter school are required to submit a proposal to their local school board and the State Board of Education for certification and, if accepted, the parties then enter into a charter agreement. 105 ILCS 5/27A-7. Charter agreements impose several requirements for operating a charter school and, in exchange for accepting those conditions, the charter school then receives funding through its charter authorizer. 105 ILCS 5/27A-5(h). P.A. 103-0416 amended the Charter Schools Law to require that all new charters or charter renewals contain a union neutrality clause within the charter agreement, meaning a charter school must be “neutral regarding the unionization of any of its employees, such that the charter school will not at any time express a position on the matter of whether its employees will be unionized.” 105 ILCS 5/27A-3. The union neutrality clause also requires charter operators to provide labor organizations with access to employee workspaces to discuss unionization and agree to union recognition through a majority card check process (as opposed to an election). Id.
The plaintiffs’ complaint, filed against the Illinois Attorney General, the Illinois State Board of Education, and the Chicago Board of Education, sought declaration that P.A. 103-0416 is invalid based upon preemption under the National Labor Relations Act (NLRA), ch. 372, 49 Stat. 449 (1935), the First Amendment, and the Fifth Amendment. 2026 WL 509223 at *2. The plaintiffs concurrently filed a motion for preliminary injunction to prevent enforcement of the Act pending a decision on the merits.
With respect to the NLRA argument, the plaintiffs asserted that the NLRA preempts the state law because the NLRA contains provisions governing labor relations of the charter school employers. 2026 WL 509223 at *3. While denying the defendants’ argument that the plaintiffs constitute “political subdivisions” falling outside of the scope of the NLRA, the court did conclude that charter schools act as state contractors and, as such, the state may permissibly impose contractual restrictions (i.e., the requirement to include a union neutrality clause in charter agreements) that may otherwise be preempted by federal law. Here, the court ruled that the state is operating as a “market participant” as opposed to a “market regulator,” stating that P.A. 103-0416 did not impose requirements on noncontractors or implicate conduct unrelated to the charter. 2026 WL 509223 at *5. By virtue of enacting P.A. 103-0416, the court held that the state does not seek to regulate education or labor generally, but the law only manages the state’s specific charter contracts in the world of education and labor. According to the court, the law serves the proprietary interests of the state by promoting labor peace through a union neutrality agreement, reflecting proper proprietary state action, not regulation. As such, the requirement of including a union neutrality clause constitutes an acceptable condition of state funding that satisfies the market participant exception to the federal preemption doctrine. Id.
Regarding the plaintiffs’ claim that the union neutrality clause violates their First Amendment speech rights, the court noted that while the plaintiffs have standing to sue under the First Amendment, P.A. 103-0416 does not reflect that the state is seeking to generally suppress speech related to unions. 2026 WL 509223 at *8. Instead, the law provides that funding of charter schools is conditioned upon acceptance of a union neutrality clause, which reflects that the state “has simply chosen not to subsidize” speech by charter schools related to unions. Id. In addition, the court stated that P.A. 103-0416 does not implicate any viewpoint-based discrimination, as the law prevents speech related to unions without reference to the speaker’s viewpoint. According to the court, the law does not violate the First Amendment and constitutes a permissible condition on funding from the State, as the law does not require the charter schools to express the State’s view on unions, but only prohibits the schools from expressing any view on the issue.
Because the plaintiffs failed to show a likelihood of success on their preemption and First Amendment claims, the court did not address the Eleventh Amendment argument and denied the plaintiffs’ motion for a preliminary injunction. While the court did not actually rule on the merits of plaintiffs’ case and the litigation will likely progress, the court’s ruling on the motion for preliminary relief (and the rationale for such) does reflect that the state can, under certain circumstances, legally restrict the speech rights of certain public employers with respect to the issue of employee unionization.
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