NLRB Further Limits Mandatory Union Fees

Board says lobbying is not part of representing employees

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The National Labor Relations Board (NLRB) recently ruled that employees in a collective bargaining unit who are nonmember objectors to a union can't be forced to pay for union lobbying activities.

The decision doesn't have a direct impact on employers, but it does affect employees who exercise their right to decline full union membership, said Brian Hayes, an attorney with Ogletree Deakins in Washington, D.C.

"Unions' ability to collect dues continues to be whittled away," said Amy Zdravecky, an attorney with Barnes & Thornburg in Grand Rapids, Mich. The board's decision adds to the impact of the Supreme Court's 2018 ruling that public-sector unions can't force nonmembers to pay fees and the growing number of so-called right-to-work states that have outlawed mandatory fees in the private sector.

[SHRM members-only HR Q&A: What is a "right-to-work" state?]

The NLRB also held that, if requested, the union must provide objectors with an audited financial statement showing the breakdown of chargeable and nonchargeable expenses.

The union must be able to show that the figures were "appropriately audited," the board said. "Independent verification by an auditor is essential information objectors need to decide whether to challenge the propriety of the union's fee."

Representational Activities

In some states, private-sector employers and unions can agree to require workers in a bargaining unit to either join the union or pay certain fees within a specified time after their start date. Proponents of such arrangements argue that federal labor law requires unions to represent all workers in a bargaining unit—even if they don't become members—so they should pay their fair share. However, some employees have argued that they should have the freedom to choose whether they want union representation and shouldn't be forced to pay for it.

Labor unions use membership dues to fund various activities including "representational activities," such as collective bargaining, contract administration and grievance adjustments and nonrepresentational activities, such as lobbying and political work.

In 1988, in Communications Workers of America v. Beck, the Supreme Court ruled that a union violated its duty of fair representation by charging fees that included expenses beyond what is necessary to perform representational activities.

The National Labor Relations Act (NLRA) doesn't allow a union to spend funds collected from nonmembers on activities they oppose that are not related to collective-bargaining activities, the high court said. Rather, the NLRA authorizes unions to charge fees that are necessary in "performing the duties of an exclusive representative of the employees in dealing with the employer on labor-management issues." 

But sometimes the line between representational and nonrepresentational activities isn't obvious. So in a 3-1 decision on March 1, the NLRB made clear that even though lobbying activities can sometimes relate to employment or collective bargaining, they aren't part of the union's representational function.

"Lobbying activity is not a representational function simply because the proposed legislation involves a matter that may also be the subject of collective bargaining," the NLRB held.

So nonmember objectors—who are called Beck objectors after the Supreme Court case—can only be required to pay the portion of monthly union dues that are attributable to collective-bargaining expenditures, Hayes said.

Outlook

"No immediate action is required by an employer," Hayes noted. "If the employer is party to a collective bargaining agreement that provides for dues checkoff and it is properly notified of a reduction in amount for any Beck objectors, it must promptly implement the adjustment."

Employers should note, however, that the matter involves the hot-button issues of union revenue and individual employee rights, so additional litigation seems inevitable, he said. Beyond lobbying expenses, there are a number of other common expenditures that may or may not be properly chargeable. 

As unions' ability to collect dues and fees diminishes, labor groups may direct more attention toward increasing their membership rates. "I think we can expect to see a lot more union organizing efforts," Zdravecky said. "So employers should know the signs of union organizing and be aware of what they can and can't do in response."

The case is United Nurses & Allied Professionals (Kent Hospital), 367 NLRB No. 94 (March 1, 2019). 

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