NLRB Restores Longstanding Dues Checkoff Rule

The National Labor Relations Board (NLRB), in Valley Hospital Medical Center, 368 N.L.R.B. 139 (Dec. 16, 2019), ruled an employer’s obligation to check off union dues expires along with the underlying collective bargaining agreement. This overrules a 2015 board decision and reestablishes a longstanding rule first articulated in 1962.

Reasoning

Employers and unions must negotiate in good faith over workers’ terms and conditions of employment. Accordingly, the so-called Katz doctrine prohibits un-negotiated changes by employers to fundamental terms and conditions like wages and hours. However, there is an exception: Obligations created by collective bargaining agreements—even those that parties must consider in their negotiations—rise and fall with those agreements. In other words, purely contracted obligations are not part of the status quo that continues when a bargaining agreement expires.

Valley Hospital recognizes once again checkoff provisions, which require employers to pay  workers’ union dues via wage deductions, are contractual in nature and therefore outside the Katz doctrine. As a result, when a collective bargaining agreement with a checkoff provision expires, the employer’s obligation to check off dues expires as well.

The board established this rule 57 years ago in Bethlehem Steel. To reinstate it, the Valley Hospital board overruled a 2015 decision, Lincoln Lutheran of Racine. There, the board abandoned the Bethlehem Steel rule in an attempt to promote collective bargaining under the National Labor Relations Act.

The Lincoln Lutheran and Valley Hospital decisions disagree about what threatens the collective bargaining process. According to Lincoln Lutheran, it is employers who cut the lifeline—meaning checked-off dues—between workers and their unions. According to Valley Hospital, it is decisions like Lincoln Lutheran that abandon decades of precedent, upset the negotiation’s existing employer-union balance, and dictate the economic weapons available to employers.

Board Membership

The board is comprised of five members, each sitting for a five-year term. Traditionally, the party of the sitting president occupies three of the five seats.

Both Lincoln Lutheran and Valley Hospital were decided along party lines. In Lincoln Lutheran, two Republican members dissented from the board majority’s reasoning. In Valley Hospital, the sole Democratic member dissented from the board’s three-member decision. (One Democratic seat was vacant at the time.) That dissenter, Lauren McFerran, was the only board member at the time of both decisions. Her term expired the same day Valley Hospital was published.

Consequences

Valley Hospital is still vulnerable to judicial review. The union will likely appeal the board’s decision to the Ninth Circuit, a court that has questioned Bethlehem Steel’s reasoning in the past. In light of Valley Hospital’s bolstered support for the reestablished checkoff rule, it appears likely to survive. Furthermore, the Valley Hospital decision will be applied immediately and retroactively to other matters before the board.