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NLRB Overturns Bethlehem Steel - Employers Must Continue Dues- Checkoff After Expiration of CBA

January 25, 2013

By Daniel L. Rowan

LABOR LAW UPDATE

The National Labor Relations Board recently reversed 50 years of precedent on the issue of whether an employer’s obligation in a collective bargaining agreement to deduct union dues from employees’ wages continues after the expiration of the CBA. With its 3-1 decision in WKYC-TV, Gannet Co., Inc., the Board majority concluded that a dues-checkoff provision is a mandatory subject of bargaining and no longer falls within the narrow category of clauses that expire with the contract. An employer therefore violates the duty to bargain in good faith under Section 8(a)(5) of the National Labor Relations Act (NLRA) if it unilaterally discontinues deducting dues under a union dues-checkoff provision in an expired collective bargaining agreement before the parties either reach a new agreement or a valid bargaining impasse. Recognizing the injustice of penalizing employers who have long relied on such longstanding precedent, the Board declined to apply its holding to pending cases and only will apply its holding prospectively.

The Board majority began its analysis by stating the policy underlying the requirement for employers to bargain changes to mandatory subjects and concluded that allowing an employer to discontinue dues-checkoff contravened this policy. Next, it contrasted a dues-checkoff provision with contract clauses that do not survive expiration of the contract, such as arbitration, no-strike, and management rights clauses. While the clauses that do not survive expiration of the contract all involved the surrender of rights in exchange for the stability of the labor contract, the Board majority viewed dues-checkoff as “simply a matter of administrative convenience to the union and employees” and no different from other voluntary checkoff agreements.

The majority then focused on the only provision of federal labor law that deals directly with dues-checkoff, Section 302(c) of the Taft-Hartley Act, and concluded that Congress contemplated a dues-checkoff arrangement that could continue beyond the expiration of the contract because there is language in the NLRA that specifies the conditions under which an employee can revoke his dues-checkoff authorization.

In reaching its decision, the Board majority addressed the prior precedent established by the Board’s 1962 decision in Bethlehem Steel. The majority criticized the rationale from Bethlehem Steel for ignoring Section 302(c) of the Taft-Hartley Act and conflating the mandate of Section 8(a)(3) of the NLRA which prohibits an employer from continuing a union security clause after the expiration of a contract, with an employer’s obligations regarding dues-check off. In Bethlehem Steel, the Board had concluded that dues-checkoff and union security clauses should be treated similarly because dues-checkoff clauses merely “implemented” union security clauses. As the Board majority in WKYC-TV pointed out, however, union security and dues-checkoff clauses are not inseparable because many “right-to-work” states prohibit union security clauses, yet employers in such states still often agree to dues-checkoff provisions.

Finally, the Board majority in WKYC-TV emphasized the difference between the compulsory nature of union security clauses and the voluntary nature of dues-checkoff. The Board majority rejected the argument that an employer who discontinued dues-checkoff after an agreement was protecting employees, pointing out that employees are free to revoke their authorization for dues-checkoff if they so choose once a contract expires.

Although it is a substantial departure from long-standing precedent, the Board’s reversal of Bethlehem Steel was not entirely unexpected. The Ninth Circuit recently refused to enforce the Board’s decision in Hacienda Resort Hotel & Casino, which applied the Bethlehem Steel doctrine. The Ninth Circuit’s claim that the Board was unable to provide a reasoned analysis to support the rule from Bethlehem Steel appears to have been a motivating factor for the Board majority’s decision in WKYC-TV.

The take-away for employers is fairly straightforward: if your contract includes a dues-checkoff clause, then dues-checkoff becomes part of the status quo after the expiration of the contract and must be continued until changed through mutual agreement with the union, or as part of the lawful implementation of a last, best and final offer upon after reaching a valid impasse. As noted by Board Member Hayes in his dissent, however, it is highly unlikely that a union will agree to eliminate a dues-checkoff provision. Thus, if an employer wishes to eliminate dues-checkoff after the contract expires, it should include a proposal to do so in its last, best, and final offer. As a result, the employer must decide whether to include a very unpopular proposal in its last, best, and final offer or face the possibility of collecting funds from employees that may be used to finance economic action against the employer.

Board Member Hayes also criticized the majority for eliminating “a legitimate economic weapon” that has been part of the collective bargaining dynamic for the past 50 years. He observed that, while employees are free to revoke authorization after the contract expires: “It is unlikely that employees will recall the revocation language in their authorizations, and less likely still that they will understand that their obligation to pay dues as a condition of employment terminated as a matter of law once the contract expired.” As Board Member Hayes also points out, employers likely cannot educate employees of these rights absent direct inquiry from the employees.

As a final note, the Board majority took pains to expressly distinguish dues-checkoff from arbitration clauses and other provisions that have traditionally expired with the collective-bargaining agreement. It is therefore unlikely that the Board will extend its decision in WKYC-TV to subjects beyond dues-checkoff. This recent decision does, however, change the landscape of bargaining a successor collective-bargaining agreement. Employers interested in discussing the impacts of this decision or any other issues they may be facing should not hesitate to contact us.

Bullard Law will continue to monitor legal developments that affect employer background check requirements and the recruitment and hiring process. Please also feel free to contact us anytime with any questions about these matters or any other labor, employment, or benefits issues.

UPDATE: As this alert was going to print today, the D.C. Circuit Court of Appeals held that President Obama’s recess appointments of three Members to the NLRB were unconstitutional. This decision questions the validity of all decisions issued by the current Board, including its decision in WKYC-TV. Ultimately, the issue regarding the recess appointments will probably be resolved by the U.S. Supreme Court. We will be providing a more in-depth analysis of the D.C. Circuit’s decision and its potential impacts in an additional Bullard Alert on Monday, January 28. Please stay tuned.
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