Viability of California Labor Neutrality Law Is Being Reconsidered; New York Law Is Ruled Invalid
Posted: June 3, 2005
State laws restricting employers that receive state funds from exercising their rights to deter unionization efforts by their employees have undergone vigorous legal challenge in both California and New York. The status of the California law – struck down by two federal courts – is once again in question after the U.S. Court of Appeals for the Ninth Circuit withdrew its 2004 decision invalidating the law and ordered a rehearing. Meanwhile, a federal district court in New York has ruled that a similar law in that state is invalid. In both cases, the arguments have hinged on whether the National Labor Relations Act preempts the state laws as the exclusive statutory scheme governing the rights of employees and employers in selecting representatives for collective bargaining purposes.
The California law in question prohibits employers that annually receive more than $10,000 in state funds from using those funds to assist or deter union activities by their employees. Especially hard hit by this restriction are health care providers relying on state Medicaid reimbursements. (Chamber of Commerce of the U.S. v. Lockyer, 9th Cir., No. 03-55166, order 5/13/05).
Supporting the position taken by the Chamber of Commerce of the United States and various employer associations, including the California Association of Health Facilities, the National Labor Relations Board filed an amicus brief arguing that the state law is preempted by the NLRA. In April 2004 a three-judge panel of the Ninth Circuit affirmed the ruling of the trial court that the state law "undermine[s] federal labor policy by altering Congress' design for the collective bargaining process." According to published reports, the same three-judge panel will rehear the case, on the request of California Attorney General Bill Lockyer and the AFL-CIO, without additional oral argument by the parties.
Similar New York Law Is Overturned
In a challenge by the Healthcare Association of New York State and other employer groups, a New York federal district court has ruled a state law that prohibits recipients of state funding from using any of those funds to encourage or discourage their employees from participating in a union organizing drive is preempted by the National Labor Relations Act. (Healthcare Ass'n of N.Y. State Inc. v. Pataki, N.D.N.Y., 5/17/05).
Deciding that the New York law directly interferes with the NLRA, U. S. District Court Judge McCurn said, "It is difficult, if not impossible to see, however, how an employee could intelligently exercise such rights, especially the right to decline union representation, if the employee only hears one side of the story--the union's." The ruling is in the form of a permanent injunction barring the state from enforcing the law.
In reaching the decision, the judge relied heavily on the first decision of the Ninth Circuit invalidating the California law. That decision was withdrawn by the Ninth Circuit four days prior to the issuance of this decision by the New York federal court.
The New York law originally banned the use of state funds by employers to train managers, supervisors or other administrative personnel" in methods for discouraging union organization. The law was revised in December 2002 to prohibit using state funds to encourage or discourage union organizing or participation in a union organizing drive, and it expanded the restrictions to ban the hiring of attorneys, consultants, or employees to engage in such activities. The New York attorney general is given the authority to enforce the law, which also includes financial recordkeeping and reporting requirements for employers that receive state funds.
Jackson Lewis attorneys represented the Chamber of Commerce and CAHF in the successful challenge of the California neutrality law before the U. S. District Court and the 9th Circuit. Jackson Lewis partner Bradley Kampas was the lead attorney on the appeal, and he commented on the most recent developments: "We are pleased that the New York court essentially adopted the argument we advanced to the 9th Circuit. We hope the 9th Circuit will reaffirm its decision, since we believe it is based on sound legal precedent and correct."
