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Labor Relations Update

NLRB Discards 50 Years Of Precedent – Dues Checkoff Clauses Now Survive Expiration Of Bargaining Agreement

Posted in Collective Bargaining, General Counsel, NLRA, NLRB, Section 8(a)(5), Uncategorized, Unfair Labor Practices

Claiming that the Board “has never provided a coherent explanation” for the 50 year old rule that the obligation to continue deducting dues pursuant to a dues checkoff provision ceases upon expiration of the collective bargaining agreement, the NLRB recently announced it has overruled existing precedent.  Dues checkoff provisions now survive the expiration of an agreement and may not be altered without negotiations.

Under the Act, an employer may not make a unilateral change to a term or condition of employment of an expired collective bargaining agreement without first bargaining with the union.  So, when a contract expires, the terms or conditions of employment remain in effect by force of law pending negotiations.  There are some exceptions to this general rule.  It is fairly well known in labor relations that certain provisions of a collective bargaining agreement do not survive expiration of the contract.  Thus, arbitration and no-strike provisions are viewed as linked.  When a contract expires the employees are free to strike to pressure the employer for new demands, and the employer is not obligated to take disputes to arbitration.  Likewise, management rights clauses are often viewed as becoming ineffective beyond the term of the contract.

Union security clauses, those clauses, legal in non-right to work states only, that require employees to become and remain members of a union also become inoperable upon expiration of the agreement.  And, finally, for 50 years, Board precedent has held the dues checkoff clause – the contractual provision by which the employer deducts union dues from all members and transmits the same to the union in one check– was considered inoperable after expiration of the agreement.  The dues checkoff exception was set forth in Bethlehem Steel Company (Shipbuilding Division), 136 NLRB 1500 (1962) where the Board held such provisions essentially “implemented union-security provisions” and that “when the contracts terminated, the [employer] was free of its checkoff obligations to the Union.”

Employers consider the ability to cease paying dues an economic weapon occasionally used to bring pressure on the union to accede to bargaining demands.  Strikes and lockouts are economic weapons as well.

The Board recently overruled Bethlehem Steel in WKYC-TV, Inc., 359 NLRB No. 30 (December 12, 2012), a 3-1 decision (Member Hayes dissenting).  The ruling essentially rests on the conclusion that the arbitration, no-strike and management rights provisions represent instances where the “parties all waived rights they would otherwise enjoy in the interest of concluding an agreement, and such waivers are presumed not to survive the contract.”  In deciding to overrule Bethlehem Steel, the Board characterized dues checkoff as falling into a different category:

The rationale behind these narrowly drawn exceptions to [the duty to not make unilateral changes] does not apply to dues checkoff.  Unlike no-strike, arbitration, and management-rights clauses, a dues-checkoff arrangement does not involve the contractual surrender of any statutory or nonstatutory right.  Rather, it is simply a matter of administrative convenience to a union and employees whereby an employer agrees that it will establish a system where employees may, if they choose, pay their dues through automatic payroll deduction. 

The Board essentially concluded that the dues checkoff was a less important term or condition of employment than the other terms that do not not survive contract expiration, relegating it to a status “administrative convenience,” a sweeping conclusion that ignores the importance parties often place on dues checkoff provisions.

All of the exceptions to the rule are grounded in the law.  Union security clauses are specifically and expressly authorized by Section 8(a)(3) of the Act but only when there exists an agreement.  Section 8(a)(3) provides, “nothing in this Act [subchapter], or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization (not established, maintained, or assisted by any action defined in section 8(a) of this Act [in this subsection] as an unfair labor practice) to require as a condition of employment membership therein on or after the thirtieth day following the beginning of such employment or the effective date of such agreement, whichever is the later.”  The Supreme Court of the United States has likewise linked no-strike and arbitration provisions to the existence of an agreement.  The issue of dues-checkoff was placed in similar category as union security by the NLRB 50 years ago.

Even though the employer in WKYC-TV unilaterally ceased paying dues when the contract expired, the Board dismissed the complaint, deciding it could only apply the new rule prospectively:

We find that retroactive application of today’s holding would work a manifest injustice.  Mistaken or not, Bethlehem Steel has been the law for 50 years.  Employers, like Respondent, have relied upon it when considering whether to cease honoring dues-checkoff arrangements following contract expiration.  Although the validity of Bethlehem Steel had been called into question on several recent occasions, the Respondent and other similarly situated employers did not have adequate warning that the Board was about to change the law at the time of the events in any currently pending cases.

Indeed, not only were there no pending cases to warn the parties of the change in the law (although the Board has toyed with the idea in recent years), the NLRB recently cited Bethlehem Steel in support of a finding that a pay raise provision survived contract expiration.

Member Hayes,  dissented, summing up his view of the problem with the Board majority’s decision as follows:

For 50 years, the Board has held that an employer is privileged to take this step, as an employer’s obligation to check off union does does not survive the expiration of the collective-bargaining agreement.  Today, the majority abandons that precedent and instead requires that dues checkoff, once instituted, continue ad infinitum until the parties either agree to discontinue it or reach a valid impasse.  I am not persuaded that this disruption of settled law, and of settled expectations and negotiating practices of those who rely on it, is adequately justified by the majority.

As noted, the Board has previously considered overruling Bethlehem Steel and so it cannot be too much of a surprise.  It is odd, however, that the NLRB would consider tinkering with such a long-standing precedent when a court ruling on the validity of its membership is pending.  The outcome of that litigation could nullify this (and many other) NLRB decisions.

So, from this point forward, an employer may not unilaterally cease deducting dues pursuant to a checkoff provision at expiration of the contract without first bargaining with the union.

The decision does not address a situation where the language of the checkoff provision itself is expressly tied to the term of an agreement or similar language that may clearly evidence an intent of the parties to have the provision expire at the end of the contract.