50-year-old Precedent Overruled: Union Dues Checkoff Now Survives Expiring CBA: NLRB

Practical Law Legal Update 9-523-2665 (Approx. 6 pages)

50-year-old Precedent Overruled: Union Dues Checkoff Now Survives Expiring CBA: NLRB

by PLC Labor & Employment

Key Litigated Issues

In WKYC-TV, Inc., the key litigated issue was whether an employer's obligation under a collective bargaining agreement (CBA) provision to deduct union dues from the wages of employees who authorized these deductions (commonly called "dues checkoff") terminates when the CBA that establishes this requirement expires.

Background

WKYC-TV, Inc. and the union have been parties to many CBAs. The most recent CBA was effective from June 1, 2006, through June 1, 2011. The 2006–2011 CBA contained a union security provision, which included:

A union shop clause.
A dues checkoff provision.
A form to enable employees to authorize wage deductions through the dues checkoff.

Under the CBA's reopener provision, WKYC-TV, Inc. terminated the CBA on June 1, 2009. The parties then began bargaining over a new CBA. WKYC-TV, Inc. continued to honor the dues checkoff arrangement in the terminated CBA. On January 4, 2010, WKYC-TV, Inc. implemented portions of a final offer for a renewal CBA, which included a union security provision and dues checkoff arrangement identical to the one established in the terminated CBA. WKYC-TV, Inc. informed the union, however, that it did not intend to implement these provisions and on October 5 and 6, 2010 ceased:

Deducting union dues from employees' wages.
Remitting those dues to the union.

WKYC-TV, Inc. did not bargain with the union over this decision based on longstanding precedent holding that union security clauses and dues checkoff clauses in CBAs cannot survive the CBA's expiration on termination (Bethlehem Steel). The union filed an unfair labor practice (ULP) charge and the NLRB's General Counsel served a ULP complaint alleging that WKYC-TV, Inc. violated Sections 8(a)(5) and (1) of the NLRA when, after the CBA expired, it stopped honoring the dues checkoff arrangement without first giving the union:

Notice.
An opportunity to bargain over that decision.

Applying Bethlehem Steel, an NLRB administrative law judge found that WKYC-TV, Inc. was free to unilaterally cease honoring the union shop and dues checkoff arrangements when the CBA terminated.

The Acting General Counsel and the union appealed the decision by filing exceptions to the panel heading the NLRB's judicial functions (Board), urging the Board to:

Abandon the Bethlehem Steel rule.
Find that an employer's obligation to check off union dues survives CBA expiration.

WKYC-TV, Inc. urged the Board to continue to adhere to Bethlehem Steel.

Outcome

On December 12, 2012, a 2-1 Board majority (Member Hayes dissented) issued an opinion in the case, finding that:

After careful consideration of precedent, including the Ninth Circuit's opinion in Local Joint Executive Board of Las Vegas v. NLRB, Member Hayes' dissenting opinion, and the parties' positions, statutory and policy reasons compelled the Board to abandon the Bethlehem Steel rule. (See Legal Update, Employers May Not Unilaterally Terminate Union Dues Checkoffs: 9th Circuit.)
Requiring employers to honor CBA dues checkoff arrangements after the CBA expires is consistent with:
- language in the NLRA;
- the NLRA's relevant legislative history;
- the general rules against unilateral changes in terms and conditions of employment; and
- the general rule requiring employees to maintain the status quo terms and conditions of employment while negotiating for a CBA or renewal CBA.
The Board in Bethlehem Steel failed to take these considerations into account, and engaged instead in reasoning that cannot withstand scrutiny, even on its own terms.
Bethlehem Steel must be overruled.

The Board further held that:

Like most other terms and conditions of employment, an employer's obligation to check off union dues continues after the CBA that establishes this arrangement expires.
However, because employers, including WKYC-TV, Inc., have long relied on Bethlehem Steel, it would be unjust to apply this new holding in pending cases. The Board therefore dismissed the complaint.

In reaching its conclusion that Bethlehem Steel must be overruled, the Board explained that the Board's holding in Bethlehem Steel with respect to dues checkoff obligations ceasing when CBAs expire is unsupportable because it:

Is based on questionable reasoning.
Is inconsistent with established policy generally condemning unilateral changes in terms and conditions of employment.
Is contradicted by the plain language and legislative history of the only statutory provision addressing dues checkoff.
Has no justification in NLRA policies.

In his dissent, Member Hayes dissented from the Board's change in precedent, stating that:

Dues checkoff is not really voluntary, and that most employees would not willingly agree to checkoff in the absence of a contractual union security provision.
Employers must be allowed to stop honoring the contractual dues checkoff provision on CBA expiration to effectively protect employees' right not to support unions.
Employers must retain unilateral cessation of dues checkoff as a bargaining weapon.
Consistent with his position in Hacienda III, and like arbitration and no-strike clauses, dues checkoff arrangements are:

"uniquely of a contractual nature"; and

"cannot exist in a bargaining relationship until the parties affirmatively contract to be so bound."

Practical Implications

Employers should be aware that, like most other terms and conditions of employment, their obligation to check off union dues will now continue after expiration of a CBA that establishes such an arrangement. This decision overturns a Board policy that has been in place for over 50 years since Bethlehem Steel. The Board recognizes that employers have long relied on Bethlehem Steel in their dealings with unions, and therefore will not apply this new holding to pending cases.

This decision does not overrule the holding in Bethlehem Steel that union security clauses including union shops and agency shops do not survive CBA expiration. The proviso to Section 8(a)(3) of the NLRA limits these provisions to the duration of the CBAs containing them (slip op. n. 9 and at pp. 5-7).

It is unlikely that the Board's holding here will be reversed by a circuit court of appeals in the near future because:

The employer faces no liability.
The General Counsel as a matter of policy does not appeal Board decisions.
The union may have lost the immediate matter but will benefit from its holding going forward.

Accordingly, employers should:

Be prepared to continue dues checkoff arrangements after CBA expiration.
Recognize that:
- they may lose some bargaining leverage because unions will continue to receive dues automatically while negotiations for a renewal CBA are on-going; and
- union security clauses providing for a union shop or agency shop must cease when CBAs expire.

50-year-old Precedent Overruled: Union Dues Checkoff Now Survives Expiring CBA: NLRB | Practical Law