NLRB Mandates Dues Check-Offs Even After Union Contract Expires

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money photoThe National Labor Relations Board may be inoperative at present. Yet one of its rulings last month, unless undone, will curtail a longstanding right of employers and individual workers. On December 12, in WKYC-TV Inc., the NLRB ruled 3-1 that an employer must continue to collect dues from union members via automatic "checkoff" even after the collective bargaining agreement expires. The ruling effectively overturns the board's Bethlehem Steel decision of 1962, which ruled against forced dues check-offs following contract expiration. It's another case of President Obama's appointees to the normally five-member body favoring forced unionism. The ruling, for now, isn't affected by last Friday's federal appeals court ruling voiding Obama's recess appointments to the board in January 2012. But even with a welcome revisit, the outcome is likely to be the same. 

In labor-management relations, the term "dues checkoff" refers to a common method of collection of membership dues (or "agency fees," in the case of non-members). Here, a collective bargaining agreement (CBA) authorizes an employer to deduct dues payments directly from paychecks and forward them to the union. The enabling statute is Section 302(c)(4) of the Taft-Hartley Act of 1947. Union officials like the arrangement. It ensures an uninterrupted flow of funds into their coffers, thus absolving them of the unpleasant task of hitting up individual workers for the money. Employers accept the arrangement, if only grudgingly, as a way keeping labor peace. But what happens when a CBA expires? Should an employer at that point be required to function as a union dues collection agency? Labor officials long have held "yes." Their obstacle, at least until recently, was 50 years of legal precedent.

That precedent was the National Labor Relations Board's Bethlehem Steel decision back in 1962. The board had held that automatic dues checkoffs, along with union-supported "security agreements," can't be forced to continue upon expiration. In arriving at its position, the board referred to Section 8(a)(3) of the National Labor Relations Act (NLRA), which states, "Nothing in this Act...shall preclude an employer from making an agreement with a labor organization...to require as a condition of employment membership therein." The NLRB interpreted the statute this way: "The acquisition and maintenance of union membership cannot be made a condition of employment except under a contract" that includes this provision. What's more, the provision can be imposed only "so long as such a contract is in force."

The principle thus was established: Once a union contract expires, so do all terms and conditions pursuant to it, unless otherwise negotiated. The NLRB and federal appeals courts repeatedly have upheld it over the decades. But starting a little over a decade ago, a major crack in this legal edifice appeared in the form of a trio of cases that came to be known as the Hacienda decisions. In 2002, the U.S. Court of Appeals for the Ninth Circuit Court ruled that unions even in Right to Work states had the standing to contest the ban on dues collections after the contract period expired. The decision effectively reversed a 2000 NLRB ruling. A pair of Las Vegas hotel-casinos, the Hacienda and the Sahara, had a contract with the Local Joint Executive Board of Las Vegas, the latter representing Culinary Workers Local 226 and Bartenders Local 165, each an affiliate of UNITE HERE. The union contracts stated that the deduction of dues "shall be continued in effect for the term of this Agreement." About a year after the contracts expired, the casinos stopped deducting dues payments. The union executive board, in response, sued to resume the deductions.

The union appeared to have no case, especially since Nevada is a Right to Work state. The contract was straightforward in exempting hotel-casino management from having to continue making deductions. The National Labor Relations Board agreed, holding that dues checkoffs and union security clauses constituted exceptions to the "unilateral change bar" as defined by another 1962 ruling, NLRB v. Katz. The unions appealed, and in 2002, won. The appeals court remanded the case back to the board. Upon review, the NLRB in 2007 again dismissed the union's complaints, concluding it had waived its right to bargain over the issue. Once again, the unions appealed. And once again, in 2008, they won. The court remanded the case to the NLRB. In August 2010, the board, deadlocked 2-2, opted to dismiss rather than clarify the case. The two union-friendly voting members on the Board (the third union supporter, Craig Becker, had recused himself) made clear they would seek "an appropriate case" in which they could overturn Bethlehem Steel.

The opportunity would avail itself soon enough. Paving the way, in September 2011, was a Ninth Circuit Court affirmation of its two previous Hacienda decisions. In forcing hotel-casino management to continue checking off and forwarding union dues, the court used reasoning worthy of its decades-long reputation for radicalism and the accompanying nickname, "the Ninth Circus." Citing Section 302 of NLRA, the court concluded that because this statute didn't automatically bar dues checkoffs to continue beyond the expiration date, it thus authorizes it. Thus, the court argued, the law made it illegal for employers to cease making deductions without prior union consent.

This ruling led directly to the NLRB's WKYC ruling of several weeks ago. WKYC-TV, Channel 3 in Cleveland, is a Gannett Company-owned NBC affiliate. Three years ago, in early 2010, contract negotiations between station management and the National Association of Broadcast Employees and Technicians, a Communications Workers of America (CWA) affiliate, had broken down in the face of proposed pay cuts. The contract expired. And Gannett, in response, ceased deducting dues from paychecks and remitting them to the union. The union filed a complaint with the National Labor Relations Board, arguing management lacked such authority. Given its 3-1 Democratic majority, siding with the union wasn't a hard call for NLRB. In overturning Bethlehem Steel, the board wrote: "Requiring employers to honor dues-checkoff arrangements post-contract expiration is consistent with the language of the Act, its relevant legislative history, and the general rule against unilateral changes in terms and conditions of employment." The result is a new NLRB doctrine: "An employer, following contract expiration, must continue to honor a dues-checkoff arrangement in that contract until the parties have either reached agreement or a valid impasse permits unilateral action by the employer." From now on, if employers wish to discontinue dues checkoffs following contract expiration, they will have to negotiate it. And given what they may have to sacrifice, the effort might not be worth it.

The decision wasn't a total rout on behalf of organized labor. The NLRB did acknowledge three instances in which an employer may stop deducting dues: 1) if employees individually revoke their previously signed dues deductions authorizations; 2) if the employer and the union reach a valid impasse in negotiations over extension or elimination of the dues-checkoff provision; or 3) if the employer can prove the union's "clear and unmistakable" waiver of its right to negotiate over the continuation of the checkoff. But these conditions in practice are difficult to establish, factually and legally. In essence, it was a union victory.

In invalidating Bethlehem Steel, the board stated that nothing in federal labor law or policy suggests dues-checkoff provisions should be treated less favorably than other terms. This assertion, as described earlier, is false. Yet given the current makeup of NLRB, tortured reasoning could have been expected. The three votes against WKYC-TV came from Chairman Mark Gaston Pearce, Richard Griffin and Sharon Block, all highly partisan Democrats. Pearce and the ethically-challenged Griffin in their previous jobs were union lawyers; Block was a deputy assistant secretary under aggressively pro-union Labor Secretary Hilda Solis.

Adding to the majority's sense of urgency, Griffin and Block owed their jobs temporary recess appointments back in January 2012, courtesy of President Obama. No doubt they had entertained the possibility of a three-judge panel for the District of Columbia federal appeals court ruling in the Noel Canning case that the appointments were unconstitutional because the time frame of their appointments didn't fit the definition of a recess. That very ruling, as National Legal and Policy Center explained in detail, came to pass last Friday. The dissenting NLRB vote came from the lone Republican, Brian Hayes, who argued, "To strip employers of that opportunity [to stop dues check off] would significantly alter the playing field that labor and management have come to know and rely on." But Hayes' term expired only days later, prompting his resignation. That leaves the board with just three members. And two of them won't be around if the NLRB appeals Noel Canning and loses.

The National Labor Relations Board was set up by Congress in 1935 as part of the NLRA to adjudicate labor disputes. And it's a necessary function. Without it, strikes, lockouts and violence would be a lot more common. Yet despite its avowedly impartial mission, NLRB, like any regulatory agency, is subject to prevailing political winds. And those of the current administration blow strongly in favor of unions. Back in April 2008 future President Obama declared in a campaign speech before the AFL-CIO: "We're ready to play offense for organized labor. It's time we had a president who didn't choke saying the word ‘union.'" He wasn't kidding. Unfortunately, his NLRB appointments, valid or otherwise, have produced a number of highly questionable rulings. The WKYC-TV Inc. decision surely ranks among them.

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