Overruling 50-Year Precedent, NLRB Holds Dues Check-Off Continues after Agreement Expires
Does an employer continue to have an obligation to deduct union dues from employee paychecks despite the expiration of a collective bargaining agreement containing a dues check-off provision on which the deductions were based? Prior to December 12, 2012, the answer in many cases was “no.” However, in light of the National Labor Relations Board’s decision in WKYC-TV, Inc., 359 NLRB No. 30, overruling 50 years of precedent, the answer now is “yes.”
Collective bargaining agreements contain numerous provisions regarding the terms and conditions of employment, such as wages and benefits. They also often contain a “union security” provision, dictating whether and in what circumstances employees must join the union, and a “dues deduction” provision (also called a dues check-off provision), which requires the employer to deduct union dues from members’ paychecks and remit them to the union.
Sometimes, as happened in WKYC-TV, Inc., the union and the employer cannot reach agreement on a successor contract prior to the expiration of an existing collective bargaining agreement. Even if the agreement expires, many of the terms of employment reflected in the old agreement, including those regarding wages and benefits, continue in effect until agreement or impasse is reached. Some, however, do not.
For 50 years, it had been the NLRB’s position that dues deduction requirements do not continue in effect. (No-strike, arbitration and management rights provisions also do not continue.) In its 1962 Bethlehem Steel decision, the NLRB decided that a dues deduction provision terminates upon expiration of a collective bargaining agreement. An employer, therefore, was free at that time to stop deducting dues from employee paychecks and remitting them to the union. If the union wanted to collect the dues owed to it, it would have to do so without the assistance of the employer. Because dues are extremely important to any union, stopping dues deduction could provide a tactical advantage to an employer engaged in collective bargaining. A union anxious to ensure the employer will collect dues might be more flexible about consummating a new collective bargaining agreement.
Unfortunately, stopping dues deduction is no longer an employer option. When the collective bargaining agreement in WKYC-TV, Inc., terminated, the employer stopped deducting dues pursuant to the agreement’s dues deduction provision. The union filed an unfair labor practice charge. After a trial before an Administrative Law Judge, the case was referred to the NLRB for decision. On December 12, 2012, the NLRB overruled 50 years of precedent and decided that dues deduction requirements continue in effect upon the expiration of a collective bargaining agreement. Therefore, an employer must honor those provisions post-expiration.
Among others, the NLRB justified its decision on these bases:
- Dues check-off provisions create administrative convenience for unions and employees. Other voluntary check-off agreements, such as employee savings accounts and charitable contributions that also create administrative convenience, survive the expiration of the contract.
- Preserving the status quo after expiration of the collective bargaining agreement facilitates bargaining by ensuring that the tradeoffs made by the parties in bargaining remain in place.
- Nothing in federal labor law or policy indicates that dues deduction provisions should be treated less favorably than other terms and conditions of employment for purpose of the status quo rule.
- The wording of Section 302(c)(4) of the National Labor Relations Act, which exempts dues check-off from the Act’s prohibition against employer payments to unions, indicates that Congress intended a dues check-off arrangement would continue beyond the life of the collective bargaining agreement establishing it.
- In Bethlehem Steel, the NLRB found that dues check-off arrangements “implemented the union-security provisions of the parties’ contract, and therefore the union’s right to check-off, like its right to impose union security, is a contractual right which continues to exist as long as the contract remained in force.” However, for many reasons, union security agreements actually are independent from dues check-off provisions. This is illustrated clearly in right-to-work states because, in those locales, parties are prohibited from including a union security agreement in a contract, yet it is lawful nevertheless to include a dues check-off arrangement.
WKYC-TV, Inc., is not applicable to “pending” cases; it applies only prospectively. The NLRB decided that retroactive application of the holding would work a “manifest injustice” because Bethlehem Steel had been the law for 50 years and employers have relied upon it when deciding whether to stop honoring dues check-off arrangements following contract expiration.
This decision, which favors unions, should not come as a surprise to NLRB watchers. At the time it was issued, the NLRB was comprised of four members (Member Brian Hayes’ term expired on December 16), three of whom are considered by many to be pro-labor. Because of this decision, employers engaged in collective bargaining have lost at least one important arrow in their negotiating quiver for motivating unions to reach agreements favorable to the employer, and sooner rather than later.
If you have any questions about this or other workplace developments, please contact Philip B. Rosen, at (212) 545-4000 or RosenP@jacksonlewis.com, Howard M. Bloom, at (617) 367-0025 or BloomH@jacksonlewis.com, or the Jackson Lewis attorney with whom you regularly work.
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