Tag: collective bargaining agreement

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.

 

For more labor law insights and NLRB developments, follow Horton Law on LinkedIn and subscribe to our email newsletter.

Dues Checkoff

Employers Can Again Stop Union Dues Checkoff Under Expired CBA

In a December 16, 2019 decision, the National Labor Relations Board reverted to a legal principle that had stood for over 50 years. In 2015, the NLRB ruled that employers could no longer discontinue a union dues checkoff after a collective bargaining agreement had expired. Now a 3-1 Board majority restores the long-established standard from a 1962 case.

What Is Dues Checkoff?

Dues checkoff refers to the practice of deducting union dues from employees’ pay and remitting the money to the union. This practice is legal where the union and employer have agreed to it and employees have signed dues-deduction authorizations. Unions usually seek and obtain authorizations from most, if not all, bargaining unit members.

Unions typically bargain for provisions requiring employers to make a dues checkoff. This is at least an administrative convenience for unions. Otherwise, they would need to obtain the dues money directly from individual employees.

Legal Debate

Generally, many provisions of a collective bargaining agreement continue past contract expiration if no successor contract is in place. This results from the obligation to maintain the status quo on terms and conditions of employment. The employer can only make unilateral changes after contract expiration if it first bargains to impasse over desired changes.

There are exceptions to this unilateral change doctrine. These historically have included contract provisions for no-strike/lockout pledges, arbitration, management rights, union security, and dues checkoff.

In a 1962 case involving Bethlehem Steel, the NLRB found that dues checkoff was solely a contractual right that ends upon contract expiration. That analysis governed until 2015. Then, an Obama-era NLRB majority reasoned that “[u]nlike no-strike, arbitration, and management-rights clauses, a dues-checkoff provision in a collective-bargaining agreement does not involve the contractual surrender of any statutory or nonstatutory right be a party to the agreement”. The Board, in Lincoln Lutheran, continued, “similar to other voluntary checkoff agreements, such as employee savings accounts and charitable contributions, which the Board has recognized also create ‘administrative convenience’ and, notably, survive the contracts that establish them.”

New Ruling

In a case involving Valley Hospital Medical Center, the NLRB now reinstates the holding of the 1962 Bethlehem Steel case.

The Republican Board majority (all appointed by President Trump) reiterates that there would be no obligation to checkoff dues unless there is a contractual agreement to do so. Thus, once a contract including that obligation expires, the employer has no further duty to withhold and remit dues.

The Board’s lone Democratic member (whose term expired the day of this decision) strenuously objected. She argues that the majority’s analysis is “irrational” and “serves no legitimate statutory purpose.”

Ultimately, it’s tough to deny the purely partisan rift in opinion on this subject. Union dues checkoff is one of many areas where pro-business Republicans and pro-labor Democrats interpret the National Labor Relations Act differently. As such, future oscillation on this and other essential aspects of federal labor law is predictable.

Impact of New Dues Checkoff Rule

Under this latest ruling, employers have the (current) NLRB’s backing to stop a dues checkoff during periods of contract expiration. Employers must, of course, still negotiate in good faith for a new collective bargaining agreement. Assuming a new contract is reached, the company will likely have to reinstate the checkoff (barring the unlikely prospect of an agreement to remove it from the CBA.)

Note that even if the company ends the dues checkoff, the union may still collect dues directly from their members.