Howard M. Waldman October 19 2022 NLRB narrowly rules employers cannot unilaterally cease dues checkoff after CBA expiration FordHarrison LLP | Employment & Immigration - USA Howard M. Waldman Employment & Immigration IntroductionFactsBackgroundDecisionCommentIntroductionOn 3 October 2022, in a three-to-two decision, the National Labour Relations Board (NLRB) reversed its previous ruling from 2019 and held that a union dues checkoff provision should be treated as part of the status quo that the employer cannot unilaterally change following contract expiration.(1) In reaching this decision, the NLRB adopted the rule announced in its 2015 decision in Lincoln Lutheran that an employer, following contract expiration, must continue to honour a dues checkoff provision established in a collective bargaining agreement (CBA) until either the parties have reached a successor CBA or an impasse permits the employer to take unilateral action. While adopting the Lincoln Lutheran rule, the NLRB rejected the Bethlehem Steel rule from 1962, which was reinstated by the NLRB in a 2019 decision, in which the NLRB held that an employer's statutory duty to check off union dues ends when the CBA containing a checkoff provision expires.FactsThe facts of this case were straightforward and not in dispute. The employer and the union had a contract that contained a dues checkoff clause requiring the employer to deduct employees' authorised union dues from their wages and remit those dues to the union. About 13 months after its CBA expired with the union, the employer ceased dues checkoffs without providing the union an opportunity to bargain.BackgroundThe issue in this case – specifically, whether employers may unilaterally stop union dues checkoff after a CBA expires – was not an issue of first impression for the NLRB. The NLRB first dealt with this issue in 1962 in Bethlehem Steel(2), in which the NLRB allowed employers to unilaterally terminate dues checkoff upon contract expiration. In 2015, the NLRB overruled Bethlehem Steel in Lincoln Lutheran of Racine(3), which held that employers had to bargain with the union before terminating dues checkoff after expiration of the CBA that contained the checkoff requirement. Then, in 2019, the NLRB once again reversed course, this time overruling Lincoln Lutheran and reinstating the rule from Bethlehem Steel.After the United States Court of Appeals for the Ninth Circuit remanded the NLRB's 2019 decision to the NLRB, the NLRB had another opportunity to address whether dues checkoff provisions requiring employers to deduct union dues from employees' wages and remit them to unions survive expiration of the CBA. This time, the Board NLRB that such provisions, like most terms and conditions of employment, do survive contract expiration as they become part of the status quo that must be maintained or bargained over after the CBA expires.DecisionThe NLRB reasoned that its majority's rationale in the 2019 decision – namely, that a dues checkoff provision is created by the contract and only enforceable for the duration of the contract:failed to advance the National Labour Relations Act's (NLRA) fundamental policy in favour of collective bargaining;was not supported by statutory provisions regarding dues checkoff; andwas inconsistent with NLRB precedent.The NLRB recognised that other contractual provisions that could also be said to have been "created by the contract" survive the contract's expiration and cannot be changed unilaterally by the employer after expiration, and thus, there is no reason to distinguish dues checkoff from these other provisions.Further, the NLRB found that dues checkoff arrangements should not be an exception to the general rule that an employer is required to refrain from unilaterally changing mandatory subjects of bargaining after the parties' existing contract has expired. In particular, the NLRB recognised that only a few contractually established terms and conditions of employment that are mandatory subjects of bargaining do not survive contract expiration and that those exceptions are narrow and justified by specific considerations. Here, however, the NLRB found that dues checkoff provisions are materially different and distinguishable from these exceptions – such as management-rights clauses, no-strike clauses, and arbitration clauses – to the general rule that the employer must maintain the status quo following expiration of the CBA.Lastly, the NLRB determined that its decision to reinstate the Lincoln Lutheran rule would be applied retroactively – that is, in all pending cases, including this case. In support of this determination, the NLRB found that applying the holding retroactively will avoid the potential for inconsistency in pending cases, assist in restoring clarity to this issue, and more effectively promote stability in labour relations.CommentThe NLRB's decision, which applies to all pending cases and new cases, makes clear that the Lincoln Lutheran standard from 2015 is back in effect, and dues checkoff provisions survive the expiration of the CBA in which such clauses are contained. Employers who rely upon, or who may have been intending to rely upon, Bethlehem Steel and the NLRB's 2019 decision to unilaterally cease union dues deductions from employees' wages following expiration of the CBA could be subject to an unfair labour practice charge under the NLRA. Thus, employers with a recently expired CBA or an upcoming CBA expiration that contains a dues checkoff arrangement should ensure that dues are still deducted from employees' wages and remitted to the unions in accordance with the expired CBA.For further information on this topic please contact Howard Waldman at FordHarrison by telephone (407-418-2300) or email ([email protected]). The FordHarrison website can be accessed at www.fordharrison.com.Endnotes (1) See 28-CA-213783, 371 NLRB No. 160 (2022).(2) 136 NLRB 1500 (1962).(3) 362 NLRB 1655 (2015).