NLRB reverses longstanding practice and rules that a "dues-checkoff" provision survives a contract's expiration

On December 12, the National Labor Relations Board (“NLRB” or “Board”) ruled 3-1 that a labor contract provision authorizing an employer to deduct union dues from an employee’s paycheck (known as a “dues-checkoff”) continues in force after the labor contract containing the dues-checkoff provision expires. See WKYC-TV, Inc., 359 N.L.R.B. No. 30 (2012), available here. In so holding, the Board abandoned its well-established rule from Bethlehem Steel, 136 N.L.R.B. 1500 (1962) and subsequent cases, which for 50 years held that a dues-checkoff provision expires with the expiration of the collective bargaining agreement containing it.

In WKYC-TV, the company validly terminated a labor contract containing a union-security provision and a dues-checkoff provision. While WKYC-TV continued to honor the dues-checkoff during subsequent negotiations, the company later stopped deducting union dues. The union alleged that WKYC-TV’s unilateral action violated Section 8(a)(5) and (1) of the National Labor Relations Act (“NLRA”).

In deciding the case, the NLRB held that the longstanding rule from Bethlehem Steel was unjustified, and further found that requiring employers to continue honoring dues-checkoff provisions after a contract expires is consistent with the language and history of the NLRA.  

The Board first explained that a dues-checkoff provision is a mandatory bargaining subject—like wages, hours, and other terms and conditions of employment. As a general rule, employers cannot unilaterally change mandatory subjects without bargaining in good faith until the parties reach impasse. Most mandatory bargaining terms also remain in force according to the labor contract’s terms, even after the contract expires. Because of this, employers cannot unilaterally modify these terms without violating the NLRA.  

The Board acknowledged that some mandatory bargaining terms—like arbitration provisions and management-rights clauses—do not survive a contract’s expiration. However, the Board reasoned that these provisions are unique because they involve voluntary waivers of rights guaranteed by the NLRA. By contrast, the Board found that dues-checkoff provisions do not function as waivers. Instead, the Board stated that dues-checkoff is simply an administrative convenience. The Board analogized duescheckoff to employer withholdings for employee savings accounts and charitable contributions, which do survive expiration of the contracts authorizing them.  

The Board further reasoned that nothing in federal labor law or policy is inconsistent with holding that dues-checkoff survives a contract’s expiration. In particular, the Board found that although the Taft-Hartley Act prohibits employers from giving anything of value to a labor union, the Act allows for dues-checkoff provisions. The Board also suggested that the Taft-Hartley Act contemplates duescheckoff provisions surviving a labor contract’s expiration. As evidence of this, the Board observed that the same section of Taft-Hartley also allows for employers to transfer trust fund payments to unions when such transfers were authorized “in a written agreement with the employer.” The NLRB has ruled these trust fund provisions survive a contract’s expiration.

Moreover, the Board claimed that its historical precedent on the issue was fundamentally flawed. In Bethlehem Steel, the Board held that because a union-security provision cannot survive a contract’s expiration (and a dues-checkoff implements a unionsecurity provision), dues-checkoff also cannot survive the contract’s expiration. Board precedent has continued to apply this rule from Bethlehem Steel since 1962.  

However, the current Board found that union-security and duescheckoff provisions were independent, as evidenced by so-called “right-to-work” laws, which prohibit union-security clauses but allow dues-checkoff provisions. The Board further noted that while a union-security clause imposes a mandatory obligation (i.e., membership), a dues-checkoff clause requires a voluntary action in that it must be authorized by the individual employee.

Despite its willingness to abandon the longstanding rule from Bethlehem Steel, the Board ruled that it would only apply its new rule prospectively. The Board acknowledged that employers had relied on the rule from Bethlehem Steel for some 50 years, and it would be unjust to apply its new ruling to existing cases.

In dissent, NLRB Member Hayes argued that the rule from Bethlehem Steel should be preserved. He argued that employees likely assent to a dues-checkoff only because they are required to pay dues by a union-security provision. Since the unionsecurity provision expires with the labor contract, Member Hayes argued that most employees would not want the dues-checkoff to continue. Although the employees could deauthorize the duescheckoff, Member Hayes believed employees may not be aware of this option or may not understand how to exercise it. Instead, Member Hayes contended that labor negotiations would be better served by maintaining the long-established, existing rule.

The Board’s decision will clearly affect parties’ respective economic language in contract negotiations, given employers’ historical use of discontinuing dues deduction after a labor contract expires to pressure a union during a labor dispute. A further challenge to the Board’s new rule before the Circuit Court of Appeals seems likely.