NLRB Must Re-Examine Whether Dues Checkoff Authorizations Were Properly Revoked

By Scott R. Eldridge May 3, 2017

Dues checkoff authorizations—requiring the payment of union dues—may be enforceable after employees resign from the union, a recent case indicates.

Fry's Food Stores is a retail grocery company with stores in Arizona, which is a right-to-work state. In its collective bargaining agreement (CBA) with the local union, which covered Oct. 26, 2003, to Oct. 25, 2008, Fry's agreed to establish a checkoff arrangement for paying dues: "This authorization and assignment shall be irrevocable for a period of one (1) year from the date of execution or until the termination date of the [CBA], whichever occurs sooner, and from year to year thereafter, unless not less than 30 days and not more than 45 days prior to the end of any subsequent yearly period I give the employer and union written notice of revocation bearing by signature thereto." The CBA expired, and a successor agreement was not put in place until Nov. 12, 2009.

During that "hiatus" period, a group of employees who executed the checkoff agreement provided notice of their resignation from the union and sought to revoke the checkoff authorizations. Although it honored their resignations, the union refused to stop the dues checkoff, stating that the attempted revocations were untimely because they should have been revoked during the prescribed 15-day window preceding the anniversary of their authorizations. Fry's therefore continued to deduct union dues from their paychecks. The employees filed an unfair labor practice charge.

The administrative law judge (ALJ), relying on a 1979 National Labor Relations Board (NLRB) decision titled Frito-Lay, dismissed the complaint, concluding that none of the employees had submitted a revocation request during the yearly 15-day escape window. The NLRB summarily affirmed the ALJ's decision. On appeal, the U.S. Circuit Court of Appeals for the D.C. Circuit examined whether the NLRB's previous Frito-Lay decision controls in light of Section 302(c)(4) of the Labor Management Relations Act (LMRA).

[SHRM members-only HR Q&A: What was the purpose of the LMRA?]

The court explained that the LMRA makes it a crime for an employer to give payments to a labor union. Section 302(c)(4) of the LMRA establishes an exception to that prohibition for dues checkoff transfers. This exception requires, however, that an employee's checkoff authorization be revocable in enumerated circumstances. Specifically, the employer must have "received from each employee, on whose account such deductions are made, a written assignment which shall not be irrevocable for a period of more than one year, or beyond the termination date of the applicable collective agreement, whichever occurs sooner." The NLRB, the court explained, has long held that employers and unions engage in unfair labor practices if they check off union dues without an employee's valid authorization.

According to the D.C. Circuit, the NLRB has also "long understood" Section 302(c)(4) to "guarantee an employee two distinct rights when he executes a checkoff authorization": the chance at least once a year to revoke authorization and the chance to do so upon termination of the collective bargaining agreement. In Frito-Lay, the NLRB concluded that there is no violation of Section 302(c)(4) of the LMRA "as long as employees are accorded an opportunity to revoke their authorizations at least once a year and at the termination of any applicable collective-bargaining agreements" and that the "limiting of the opportunity to revoke to a reasonable escape period, such as between 20 and 10 days before the expiration of either of those periods, does not require a different result." Thus, according to the D.C. Circuit, the NLRB has concluded that a CBA "can validly confine the available revocation window to a reasonable escape period preceding the anniversary and expiration dates, respectively."

This case, the court explained, is different from Frito-Lay in that the Fry's CBA does not provide for any revocation opportunity tied to the contract's expiration. Because of the "significant factual difference" between Frito-Lay and this case, the court concluded that the ALJ and the NLRB improperly applied and relied upon Frito-Lay.

Consequently, the court vacated the NLRB's decision and sent the case back to the agency for further consideration. It instructed: "On remand, insofar as the [NLRB] might seek to reinstate the same result in favor of the company and union, the [NLRB] would need to explain how it could do so consistently with Frito-Lay … or justify any departure" from that decision.

Stewart v. NLRB, D.C. Cir., No. 15-1102 (March 21, 2017).

Professional Pointer: Dues checkoff authorizations, which must be voluntary, are different from union security clauses. Even in right-to-work states, where union security clauses are generally prohibited in CBAs, dues checkoff authorizations may be enforceable after an employee resigns from the union.

Scott R. Eldridge is an attorney with Miller, Canfield, Paddock and Stone, P.L.C. in Lansing, Mich.


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