County Right-To-Work Ordinance Is Not Preempted: Sixth Circuit

Practical Law Legal Update w-004-7473 (Approx. 8 pages)

County Right-To-Work Ordinance Is Not Preempted: Sixth Circuit

by Practical Law Labor & Employment

Background

The Fiscal Court of Hardin County (the legislative body for Hardin County) passed county Ordinance 300 on January 13, 2015, to ensure that no employee is required to join or pay dues to a union (Kentucky law does not prohibit union-security agreements). The right-to-work provision found in Section 4 of the ordinance states that:

"No person covered by the National Labor Relations Act shall be required as a condition of employment or continuation of employment:

… (B) to become or remain a member of a labor organization;

(C) to pay any dues, fees, assessments, or other charges of any kind or amount to a labor organization; [or]

(D) to pay to any charity or other third party, in lieu of such payments, any amount equivalent to or a pro-rata portion of dues, fees, assessments, or other charges regularly required of members of a labor organization[.]"

Section 6 of the ordinance declares such agreements "unlawful, null and void, and of no legal effect."

The plaintiff unions argued that:

Sections 4 and 6 of the ordinance violate the Supremacy Clause of the Constitution.
The NLRA preempts:
- right-to-work laws not specifically authorized in Section 14(b) of the NLRA, including the ordinance (see 29 U.S.C. § 164(b));
- the ordinance's regulation of "hiring-hall" agreements (requiring prospective employees to be recommended, approved, referred, or cleared by or through a labor organization); and
- the ordinance's regulation of "dues-checkoff" provisions (which provisions require, if employees authorize, employers to automatically deduct union dues, fees, assessments, or other charges from employees' paychecks and transfer them to the union).

The defendant Hardin County officials contended that the ordinance constitutes state law within the meaning of Section 14(b), and is not subject to preemption.

The district court concluded that:

The ordinance is not "State law" under Section 14(b) and is therefore not exempted from preemption under that Section.
Apart from Section 14(b), the NLRA preempts state and local regulation of any activity that the NLRA even arguably protects or prohibits.
Since Section 14(b) is the only exception to this broad preemption, and Section 14(b) does not encompass the law of a local subdivision, Hardin County's ordinance regulating union-security agreements, an activity protected by Section 8(a)(3) of the NLRA, is preempted and unenforceable (see 29 U.S.C. § 158(a)(3)).
The NLRA also preempts the ordinance's prohibitions of:
- "hiring hall" agreements; and
- "dues checkoff" provisions.

Hardin County appealed to the Sixth Circuit, arguing that:

Because it is a subdivision of state government, its laws do come within the § 14(b) exception.
Even if the court disagrees, the ordinance is still valid because Congress has expressly declined to occupy the field of union-security agreement regulation.

Outcome

The Sixth Circuit affirmed in part and reversed in part, holding that the NLRA:

Did not preempt the right-to-work provision in Hardin County's ordinance because that provision was included in the NLRA's exception from preemption.
Preempted the Hardin County ordinance's provisions about:
- "hiring hall" agreements; and
- "dues checkoff" provisions.

The Sixth Circuit reasoned that:

Section 14(b)'s use of "State" includes political subdivisions and that the ordinance's right-to-work protection is included in Section 14(b)'s exception from preemption because:
- contrary to the district court's ruling, the Supreme Court's rulings in Wisconsin Public Intervenor v. Mortier; City of Columbus v. Ours Garage and Wrecker Service, Inc., and the Sixth Circuit's ruling in State of Tennessee v. FCC represent strong support for Hardin County's position that Section 14(b)'s use of "State" includes political subdivisions;
- there is no persuasive basis in the statutory language, legislative history or rules of construction of Section 14(b) for distinguishing or circumventing Mortier, Ours Garage, or State of Tennessee v. FCC; and
- the presumption of consistent usage actually favors the same construction that Mortier, Ours Garage, and State of Tennessee all support.
(Wisconsin Public Intervenor v. Mortier, 501 U.S. 597 (1991); City of Columbus v. Ours Garage and Wrecker Service, Inc., 536 U.S. 424 (2002); and State of Tennessee v. FCC, 832 F.3d 597 (6th Cir. 2016).)
Although Section 8(a)(3) prohibits employers from discriminating based on union membership and from encouraging or discouraging union membership, it also explicitly provides that employers may, under federal law, enter into union-security agreements without running afoul of these prohibitions.
Hardin County's ordinance, which renders union-security agreements unlawful, regulates an activity that is arguably protected under Section 8(a)(3).
Under San Diego Building Trades Council v. Garmon (Garmon) preemption:
- the County's ordinance could be deemed implicitly preempted but for the Section 14(b) exception;
- even assuming Garmon field preemption would otherwise apply, Congress cannot be deemed to have implicitly intended to preempt a state law that it has explicitly excepted from preemption; and
- the operation of Garmon field preemption to replace the Hardin County right-to-work ordinance is ultimately dependent on the answer to the question of whether Section 14(b)'s explicit exception of state law from preemption encompasses laws of the political subdivisions of the State.
(359 U.S. 236 (1959).)
The Supreme Court's decision in Retail Clerks Int'l Ass'n v. Schermerhorn, supports holding that the ordinance's right-to-work provision is not preempted under Garmon. In particular, the Supreme Court:
- held that Section 14(b) recognizes the power of the States to outlaw union security agreements notwithstanding Garmon preemption; and
- recognized that even though state laws prohibiting union security agreements may represent an obstacle to the accomplishment of Congress's purpose of promoting uniformity, they do not fall victim to Garmon field preemption because Congress, whose purpose is the "ultimate touchstone," expressly provided that they are not preempted.
(375 U.S. 96 (1963).)
Under Mortier and Ours Garage:
- the dispositive question is whether Congress's use of "State" in Section 14(b) includes, beyond mere silence, indication of a clear and manifest purpose to preempt state authority to delegate governmental power to its political subdivisions; and
- none of the arguments amounts to a showing of clear and manifest purpose rebutting the presumption arising from Mortier and Ours Garage that "State" includes political subdivisions of the State. Section 14(b)'s explicit exception of state right-to-work laws from preemption overrides operation of implicit field preemption.
(Mortier, 501 U.S. 597 (1991); Ours Garage, 536 U.S. 424 (2002).)

Because Hardin County's right-to-work ordinance is "State law," under Mortier and Ours Garage, it is not preempted. The Sixth Circuit applied different preemption analysis applied to the Hardin County ordinance's hiring-hall and dues-checkoff provisions and held that they were preempted. In particular, the court reasoned that:

In SeaPAK v. Industrial, Technical & Professional Employees, the court held that a state law regulating a dues-payment arrangement did not fall under the Section 14(b) exception and was preempted because it overlapped with, and was in conflict with, federal regulation under the Labor Management Relations Act (LMRA) (29 U.S.C. § 186(c)(4)) (300 F.Supp. 1197 (S.D. Ga. 1969)).
While Hardin County maintains that its ordinance regulation of dues checkoff provisions does not actually conflict with the LMRA, the activity is subject to regulation under the LMRA. Allowing dual regulation under federal and state law would:
- undermine Congress's purposes; and
- contravene field preemption.
SeaPAK's analysis is not conclusive, but its authority remains essentially unchallenged by any conflicting case law authority.
In Simms v. Local 1752, Int'l Longshoremen Ass'n, the Fifth Circuit recently held that Mississippi right-to-work law's:
- prohibition of compulsory union membership as a condition of hiring is excepted from NLRA preemption by § 14(b); and
- regulation of hiring-hall fees paid by hired employees who are not union members (even though requirement of those fees may encourage union membership) does not fall under Section 14(b) and is therefore preempted because nondiscriminatory use of hiring halls is permissible under Section 8(a)(3) of the NLRA.
(838 F.3d 613, 619–20 (5th Cir. 2016).)
Under these precedents, the district court properly held that the ordinance's provisions on hiring-hall agreements and dues-checkoff requirements are preempted and unenforceable.

Practical Implications

This decision could invite further local right-to-work ordinances and state legislation curbing local jurisdictions from enacting similar ordinances to avoid conflicts between state and local law.

UPDATE: In orders filed March 6, and 15, 2017, the Sixth Circuit denied a rehearing en banc and declined to vacate its November order, respectively. The court said that the state's legislature, not the courts, should determine how Hardin County's right-to-work law should work alongside a new state law passed in January 2017 (Case No. 16-5246.)

County Right-To-Work Ordinance Is Not Preempted: Sixth Circuit | Practical Law