Category: Labor Law

Dues Checkoff

NLRB Changes Course on Dues Checkoff

For many decades, the National Labor Relations Board permitted employers to discontinue dues checkoff arrangements following the expiration of a collective bargaining agreement. More recently, employers’ right to do so has fluctuated depending on which political party has held the majority of seats on the NLRB. On September 30, 2022, the current Democratic majority ruled that employers must continue a contractual dues checkoff despite the expiration of the subject union contract.

Dues Checkoff Provisions

A dues checkoff agreement requires that the employer deduct union dues from employees’ wages and remit them to the union as authorized by the employee. Historically, upon expiration of a collective bargaining agreement (CBA) containing a dues checkoff provision, the employer could lawfully stop collecting dues for the union without having to bargain over the changed practice. In other words, the dues checkoff did not outlive the contract.

Bethlehem Steel Precedent

In 1962, the U.S. Supreme Court held that an employer must maintain employees’ terms and conditions of employment following the expiration of a CBA until the parties either agree to new terms or reach an impasse in their negotiations of a successor agreement. However, the NLRB has always recognized exceptions to this doctrine.

The Board first expressed such an exception for dues checkoff agreements in a 1962 Bethlehem Steel case. There, the NLRB reasoned: “The Union’s right to such checkoffs in its favor . . . was created by the contracts and became a contractual right which continued to exist so long as the contracts remained in force.”

The Bethlehem Steel holding survived at the Board, and in the federal courts, until 2015. Then, with a Democratic majority, the NLRB first held that employers must continue to deduct dues even after the contract expires. By 2019, Republicans gained the Board majority and reinstated the Bethlehem Steel precedent.

Valley Hospital Medical Center Reversal

The 2019 reinstatement of Bethlehem Steel occurred through a case involving Valley Hospital Medical Center. Following that decision, the union requested review by the U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit remanded the case to the NLRB to “supplement[] its reasoning” for reversing the 2019 decision.

Instead of supplementing the 2019 reasoning, the Board, again with a Democratic majority, rejected the application of Bethlehem Steel. According to the majority opinion, “treating contractual dues-deduction provisions comparably with nearly all contractual provisions, which establish terms and conditions of employment that cannot be changed unilaterally after contract expiration, implements the [National Labor Relations] Act’s policy goals of both encouraging the practice and procedure of collective bargaining and of safeguarding employees’ free choice in the exercise of their Section 7 rights.”

Thus, under the latest Valley Hospital Medical Center ruling, employers must continue deducting union dues despite CBA expiration.

What does this mean for employers?

The NLRB ordered Valley Hospital Medical Center to make the union whole for dues it would have received from employees. This remedy includes paying the unpaid dues with interest to the union. The Board applied this changed interpretation retroactively to all pending cases where dues checkoff is at issue. Accordingly, all employers that have unilaterally stopped withholding and remitting union dues after a CBA expired are no longer in compliance with the law and could be required to pay the dues with interest.

This latest ruling will likely return to the courts for further proceedings. However, there is no certainty of a return to the long-standing Bethlehem Steel exception. Thus, most employers will likely choose to continue dues checkoff following contract expiration as long as the current Valley Hospital Medical Center decision remains the Board’s majority view.

 

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Workplace Dress Codes

NLRB Increases Scrutiny of Workplace Dress Codes

On August 29, 2022, the National Labor Relations Board (NLRB) found that Tesla’s dress code violated the National Labor Relations Act (NLRA). This decision reversed existing precedent, giving employers less leeway in controlling what their employees wear to work. Now, any workplace dress codes that may be read to restrict wearing union insignia or apparel will be presumed to violate federal labor law. Employers must show special circumstances to justify any such policy.

Section 7 Rights

The NLRB’s analysis of workplace dress codes arises under Section 7 of the NLRA. Section 7 grants employees the rights to “self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” It also protects employees’ right to refrain from such activities.

Section 7 rights include the prerogative to demonstrate support for a labor union, such as by wearing union insignia on buttons or apparel. However, the right is not absolute and has always been subject to various time, place, and manner restrictions. The scope of those restrictions has fluctuated over the years based on varying views of NLRB members.

Tesla’s Policy

Tesla required production associates manufacturing its electric vehicles to wear assigned company uniforms. The company provided each associate with two pairs of black pants, two black short-sleeve shirts, two black long-sleeve shirts, and a black sweater. The shirts and sweaters bear Tesla’s logo. Supervisors and line inspectors wear red and white shirts, respectively, to distinguish them by job function.

Production associates were allowed to substitute other all-black clothing for the company-issued uniform. However, Tesla’s team-wear policy specified that “[a]alternative clothing must be mutilation free, work appropriate and pose no safety risks (no zippers, yoga pants, hoodies with hood up, etc.).”

Wal-Mart Precedent

In a 2019 decision involving Wal-Mart, the NLRB held that a facially neutral employee appearance policy would be deemed lawful. The burden would then fall to the party challenging dress codes to demonstrate how they unduly restrict employees’ rights to show union support.

The Tesla ruling expressly overrules Wal-Mart. Two NLRB Board members who were in the majority in deciding the Wal-Mart case three years ago dissented in Tesla. The Board majority has shifted to 3-2 control by pro-labor members.

New Standard for Workplace Dress Codes

Under Tesla, the NLRB will find any limitation on employee dress and appearance policies that might limit the display of union insignia to violate the NLRA, unless the employer demonstrates sufficient justification for its policy. Thus, the decision flips the presumption.

There are various situations where the NLRB has permitted limited restrictions on what employees wear. For example, employers may impose restrictions when the display of union insignia “may jeopardize employee safety, damage machinery or products, exacerbate employee dissension, [] unreasonably interfere with a public image the employer has established, or when necessary to maintain decorum and discipline among employees.” But when an employer seeks to uphold their workplace dress code based on any of these rationales, the NLRB will “engage[] in a rigorous, fact-specific inquiry to determine whether the employer actually established the presence of special circumstances in the context of its workplace.”

Employers Beware

Under the new Tesla standard, employers are at risk of having any workplace dress code struck as unlawful. The dissenters hypothesize many scenarios where requiring employees to dress relatively uniformly would not survive the NLRB’s scrutiny. At best, employers would need to rely on exceptions that may or may not be deemed to apply to their situation. Moreover, the NLRB applied its changed standard retroactively to Tesla, demonstrating that any company is at risk of being faulted for relying on an existing exception that the current NLRB majority disagrees with.

In the bigger picture, employers should realize this is just the first significant reversal of NLRB policy by the newly pro-labor Board majority. It is prudent to expect similar rulings beyond the issue of what employees can wear to work. The Wal-Mart ruling followed a 2017 standard for reviewing workplace policies established in a case involving Boeing. The NLRB will likely further erode Boeing‘s relative protection of employers’ rights to control what happens in their workplaces.

 

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Union Organizing Update for Employers Cover Slide

Union Organizing Update for Employers (Webinar Recap)

On August 4, 2022, I presented a complimentary webinar entitled “Union Organizing Update for Employers”. For those who couldn’t attend the live webinar, I’m happy to make it available for you to watch at your convenience.

In the webinar, I discuss:

  • Representation Case Statistics
  • Starbucks’ Impact
  • Decertification & Withdrawal of Representation
  • Planning Ahead

and much more!

The National Labor Relations Board recently reported a 58% increase in union election petitions. In this webinar, I break down that statistic to help employers understand what it may mean for their company.

In addition to the deep dive into NLRB data on recent union organizing efforts, we discuss practical implications and what you should consider if a union seeks to organize your employees.

Don’t have time to watch the whole webinar right now? Click here to download the slides from the webinar.

Why You Should Watch “Union Organizing for Employers”

Most companies would prefer not to have to negotiate with a third-party union over their employees’ terms and conditions of employment. Therefore, employers should remain alert as to employee concerns at all times. Beyond knowing your own employees, you should remain aware of general trends in unionization that could affect your workforce. This webinar provides an in-depth analysis of NLRB union election statistics to better inform you on the current status of labor organizing in the U.S.

Despite general pronouncements of increased union election activity, we find two major factors driving the statistics. How do these affect your company? What should you be doing now if you want to remain union free?

Plus, learn what you should be prepared to do if a union does seek an election among your employees. There are critical decisions to be made quickly in these cases and the wrong moves can have negative legal and practical consequences.

Don’t Miss Our Future Webinars!

Click here to sign up for the Horton Law email newsletter to be among the first to know when registration is open for upcoming programs! And follow us on LinkedIn for even more frequent updates on important employment law issues.