Unions Win Key Ruling on Fees
Labor unions may charge nonmembers at companies where they have a contract for the costs of recruiting at competing firms, a federal appeals court ruled Monday.
The 11-0 ruling by the U.S. 9th Circuit Court of Appeals in San Francisco is the first decision on the controversial issue from a full appellate court.
If the ruling stands, it means that unions in California and 27 other states will have more money to organize. That will enhance their ability to recruit members and improve their position at the bargaining table at workplaces where they already represent employees, according to labor relations experts.
John Sweeney, president of the AFL-CIO, the nation’s largest labor federation, praised the decision, saying that it would help both unionized and unorganized workers.
“We’re pleased that the 9th Circuit has so strongly reaffirmed what America’s union workers have long known--that the best way to win good wages and benefits is to organize,” Sweeney said. “Helping other workers form unions strengthens everyone’s hand at the bargaining table, and makes our communities better places to live.”
The National Right to Work Legal Foundation, which represented several workers protesting the use of their dues for organizing, said it was disturbed by the ruling and would appeal it to the U.S. Supreme Court.
“No worker should be forced to fund the recruitment of supporters to a private ideological cause,” said Stefan Gleason, vice president of the National Right to Work Foundation, a staunchly anti-union group based in Virginia that is a companion group to the legal foundation.
Labor law experts were divided on whether the ruling would be upheld.
In recent years, since Sweeney was elected president of the AFL-CIO, unions have spent an increasing amount of their resources on organizing in an attempt to arrest membership declines. Unions spend 10% to 50% of their budgets on organizing.
In addition, union leaders believe that it is crucial to organize workers at companies that compete with employers where labor unions already exist to strengthen their hand in collective bargaining.
The decision does not affect workers in the 22 states that have so-called “right to work” laws, where employees cannot be compelled to join a union, even if there is a collective bargaining agreement.
In the other 28 states, employees at workplaces with collective bargaining agreements are required to pay dues for the administration of the contract and other services. But there is a limitation on what they can be charged for.
For example, under a 1988 Supreme Court decision, Communications Workers of America vs. Beck, workers cannot be forced to pay full union dues if some of those funds are used for political purposes such as lobbying.
Monday’s 9th Circuit decision stems from the contention that workers who do not belong to a union at a workplace where there is a union contract should not be required to pay for that union’s recruiting drive at a competing employer.
In 1999, in a 4-1 decision the National Labor Relations Board rejected the contention of the nonmembers.
The board held that organizing was “germane” to collective bargaining and therefore the employees could be charged for the organizing activities at other workplaces.
Challenges to NLRB decisions go straight to federal appeals courts across the country. In this instance--a case involving several supermarkets where the United Food & Commercial Workers represents employees--a panel of the 9th Circuit initially reversed the board’s decision in a 3-0 ruling issued in May.
The three-judge panel cited a 1984 Supreme Court decision, Ellis vs. Brotherhood of Railway, Airline and Steamship Clerks, which held that under the Railway Labor Act a union was not permitted to charge nonmembers for organizing activity outside its bargaining unit. The panel acknowledged that this case arose under a different statute--the National Labor Relations Act. However, the panel said that in prior cases the Supreme Court ruled that the two laws were “in all material respects identical.”
On Monday, a larger panel of 9th Circuit judges, led by Stephen Reinhardt, perhaps the most liberal judge on the circuit, reversed that decision.
Reinhardt said the three-judge panel had not acknowledged significant differences between the Railway Labor Act and the National Labor Relations Act (NLRA).
When Congress enacted the NLRA, it created the NLRB to provide an initial review of disputes that arise under that law. No such agency was created to interpret the railway act.
Reinhardt also said the three-judge panel had failed to give proper deference to the NLRB’s findings in this case.
The NLRB’s decision in the case “was supported by extensive research and data on organizing and collective bargaining in general, as well as with respect to the retail food industry,” Reinhardt wrote.
“Numerous studies by economists and labor scholars ... documented” that the higher the percentage of unionization in an industry, the higher the wage rates, Reinhardt wrote.
Ruling Praised by Legal Scholar
“The NLRB’s findings reveal that management is far more willing to negotiate higher wage rates when its competitors are subject to the same union costs,” he wrote.
Consequently, “the NLRB found that for NLRA industries, organizing within the competitive market is germane to collective bargaining,” Reinhardt wrote.
Catherine L. Fisk, a labor law professor at Loyola Law School in Los Angeles, praised the ruling.
“I think it’s right that the National Labor Relations Act and the Railway Labor Act are different,” Fisk said.
In contrast, William F. Gould IV, who teaches labor law at Stanford Law School, said that although he was sympathetic to the decision on policy grounds he thought it was wrong on the law.
“The Supreme Court, in the 1980s, made a terrible, terrible mistake” when it ruled in the Ellis case that organizing expenses are not germane to collective bargaining, said Gould, who served as chairman of the National Labor Relations Board in the Clinton administration.
“There is nothing more germane to collective bargaining than organizing,” he added.
“However, the Supreme Court does not agree with that and only Congress or the Supreme Court can change that,” Gould said.
He said that in most instances the Supreme Court has held that the Railway Labor Act and the National Labor Relations Act are interchangeable and he expressed doubt that the Supreme Court would agree with the distinctions drawn in Monday’s 9th Circuit decision.
Nonetheless, Gould said he hoped that the Supreme Court would “revisit the issue and recognize what they did in the Ellis case is fundamentally wrong.”
