On August 27, 2015, the National Labor Relations Board (“NLRB”) overturned its policy that had existed since 1962, and held that employers remain obligated to withhold from wages and remit union dues to their employees’ union, even after the expiration of a collective bargaining agreement that creates the obligation.

Collective bargaining agreements frequently contain “dues check off” provisions, which require employers to deduct union dues from their employees’ wages, and to then forward those dues to the union. For the past 50 years, these check off provisions were among certain reciprocal contractual entitlements flowing to the union and employer that automatically terminated when a collective bargaining agreement expired. As such, they were not among other contractual provisions that pertained to the wages, benefits and other terms and conditions of employment for the bargaining unit employees that continued indefinitely after the collective bargaining agreement expired until impasse or a replacement agreement was reached. This allowed employers to stop collecting dues for unions once their contract ended.

The NLRB attempted to overrule this policy in 2012 in its WKYC-TV Inc. decision, finding that requiring employers to honor dues check off provisions after the termination of a collective bargaining agreement was consistent with the National Labor Relations Act (“NLRA”) and the “status quo” doctrine. However, The United States Supreme Court’s 2014 Noel Canning decision invalidated the recess appointments of two members of the Board, and effectively overturned WKYC-TV Inc. and other decisions.

The NLRB took up the issue again this August in Lincoln Lutheran of Racine and Service Employees International Union Healthcare Wisconsin, SEIU-HCWI, and explicitly held that “like most other terms and conditions of employment, an employer’s obligation to check off union dues continues after expiration of a collective-bargaining agreement that establishes such an arrangement. Accordingly, employers subject to the NLRA may no longer unilaterally decline to continue honoring dues check off provisions after the termination of a collective bargaining agreement.

Prior to the NLRB’s decision, the automatic expiration of dues check off provisions provided employers with a powerful economic weapon that could be used in bargaining for the next agreement with a union. The removal of this weapon from employers’ arsenals could “significantly alter the playing field,” and leave employers at a disadvantage in negotiations. In a possible scenario, an employer might be forced to collect and turn dues over to its union during a boycott, essentially financing union opposition to the employer’s bargaining position.

Importantly, the NLRB’s decision only applies prospectively, meaning that any case pending as of the date of the Lincoln Lutheran decision will be decided under the old rule that dues check off provisions expire with the contract. Employers should also note that the Lincoln Lutheran decision does not limit their ability to bargain for an agreement that a dues check off provision will expire with the collective bargaining agreement. The NLRB warned, however, that if a union does agree to waive its right to have a dues check off provision survive the contract, its waiver will only be valid if it is “clear and unmistakable.”

This decision is bad news for employers, as it has removed a powerful negotiating tool. Employers with collective bargaining agreement negotiations on the horizon should take special note of the Lincoln Lutheran decision, and prepare for negotiations accordingly.