A lot of ink has been spilled over the “December Massacre,” when the Board issued a plethora of decisions severely limiting or eliminating many long-standing employer rights. But the Board didn’t stop there; it also seriously eroded the rights of employees who are nonmember dues objectors (“objectors”) to limit unions from using their money for political activities that the objectors do not support.
In United Nurses & Allied Professionals (Kent Hospital), 359 NLRB No. 42 (December 14, 2012), the Board ruled 3-1 that union “lobbying expenses are chargeable to objectors to the extent that they are germane to collective bargaining, contract administration, or grievance adjustment.” The Board further held that the Union, which had provided the objector with a letter stating that its major expense categories had been verified by a CPA, did not violate the Act when it withheld the actual CPA letter from the objector.
Many private sector labor agreements (excluding those in right to work states) on their face require employees to join a union and pay union dues as a condition of employment. In Communications Workers v. Beck, 487 U.S. 735 (1988), the Supreme Court held that dues objectors could only be required to pay the percentage portion of union dues used for the purposes of collective bargaining, contract administration, or the adjustment of grievances.
The objector in Kent Hospital had been charged for the union’s lobbying expenses, which she contended were not monies used for any of the purposes enumerated in Beck. She also objected to the union’s refusal to provide her with the verification letter from the independent auditor who had examined the union’s books.
The Audit Verification Issue
In Kent Hospital the union essentially argued that its mere assertion that the financial information provided to the objector was based on an independently verified audit was all the law required. The counsel for the Acting General Counsel (“general counsel”) asserted that the objector was entitled to the actual letter from the auditor. In support of this argument, general counsel relied heavily on the decision in Cummings v. Cornell, 316 F.3d 886 (9th Cir. 2003).
In Cummings the Ninth Circuit held that a public-sector union was required to provide objectors with an independent verification that an audit had been performed. In Cummings, the union had proceeded essentially as the union had in Kent Hospital, which the Ninth Circuit found inadequate to assure objectors that the expenditures cited had been independently verified. The Board declined to incorporate a requirement similar to the one imposed by Cummings, based upon the rationale that “unlike cases involving public sector unions … in which the unions’ conduct is evaluated under a heighted First Amendment standard, the Union’s conduct here is properly analyzed under the duty of fair representation” (Slip op. at p. 3), which the Board concluded the union had met.
With respect to the assertion that without an audit verification letter, the objectors lacked an unequivocal assurance that the union’s claimed expenses were incurred, the Board majestically reasoned as follows:
[T]he Board has long endeavored in this area of the law to achieve a “careful balance between the competing interests involved”, rather than promote the unqualified interests of the individual or the union. In our view, the Board’s current approach [of not requiring the furnishing of the auditor’s letter] strikes the appropriate balance.
(Id.; footnote omitted.) One is left to wonder how requiring the Union to furnish the audit letter (that then Member Brian Hayes noted in his dissent was already in the Union’s possession) would upset this “careful balance.”
The Issue of Lobbying Expenses
Although the verification issue is important, the critical issue addressed in Kent Hospital is with respect to the inclusion of lobbying expenses in the fees that must be paid by objectors. The objector argued that under Beck lobbying expenses incurred by private sector unions are per se non-chargeable. The general counsel, again relying largely on public sector precedent, contended that lobbying expenses are only chargeable if oriented toward ratification or implementation of a labor agreement. The union, on the other hand, asserted that lobbying expenses were germane to its representational functions, which it broadly defined.
The Board essentially accepted the union’s position, stating that “as to certain kinds of lobbying expenses, there may exist such a direct, positive relationship between the union’s representational duties and the union’s goals in pursuing legislative or other action that a rebuttable presumption of germaneness is warranted” (Id. at p. 9). The Board offered the following “concrete examples” of such activities that might be presumptively germane:
Lobbying with respect to minimum wage; Lobbying for professional licensing and certification legislation affecting employees represented by the union; and Lobbying for State supplemental legislation relative to the Worker Adjustment and Retraining Notification (WARN) Act.
On the other hand, the Board stated that lobbying relative to general economic stimulus or broad social or environmental policies might be difficult to view as presumptively germane to a union’s representational functions. The Board invited all interested parties to file briefs in the case regarding how the Board should define and apply a germaneness standard in the context of lobbying activities.
Then Member Brian Hayes would have none of this, stating:
I do not agree with the vague, overbroad test the majority proposes for determining whether the lobbying expenses are chargeable to objecting employees. Unlike my colleagues, I believe that relevant Supreme Court precedent compels a holding that there are only very limited circumstances, if any, in which these costs may be chargeable….
(Id. at p. 12.)
In short, the Board appears to be heading in the direction of allowing unions to use objector’s mandatory dues for a whole host of lobbying expenses that arguably are tenuous to the type of activities contemplated by the Supreme Court in the Beck decision. Further, a practical matter, it would be nearly impossible for your typical objector to make any qualitative determination as to whether a particular lobbying expenditure is, or is not, authorized, particularly when the Board is essentially telling objecting employees to “take the union’s word for it.” Additionally, if the Board establishes categories of lobbying activities that are presumptively relevant, this will impose a significant burden – both legally and practically - on objectors when contesting the inclusion of lobbying expenditures in the levy of dues.
Kent Hospital seemed a likely candidate for an appeal–that is until the Noel Canning decision came down (holding that the Board was/is not properly constituted). Regardless of what happens with respect to the Kent Hospital decision per se, the direction of the Board under this Administration seems – in the words of the Board’s successorship doctrine – “perfectly clear.”