By a vote of 3 to 1, a divided National Labor Relations Board (NLRB or Board) recently ruled that an employer’s obligation to check off union dues from employees’ wages does not automatically terminate upon the expiration of a collective bargaining agreement that establishes such an arrangement. WKYC-TV, Inc., 359 NLRB No. 30 (December 12, 2012). In so holding, the Board overturned 50 years of precedent established by its landmark decision in Bethlehem Steel, 136 NLRB 1500 (1962).

Background

WKYC-TV (the Employer) and the Union had been parties to several collective bargaining agreements, the most recent of which had a term from June 1, 2006 through June 1, 2011 (the CBA). The CBA had a union security agreement which required employees to become and remain members of the union as a condition of employment, and which also required the Employer, pursuant to signed employee authorizations, to deduct union dues from employees’ wages and remit them to the Union, commonly referred to as a “dues checkoff.”

After the contract terminated on June 1, 2009 pursuant to a reopener provision, the Employer continued to deduct Union dues but in October 2010 it stopped doing so. The Union filed an unfair labor practice charge with the NLRB, alleging that the Employer violated Sections 8(a)(5) and (1) of the National Labor Relations Act (the NLRA or Act) by ceasing to honor the provision without first providing notice to the Union and an opportunity to bargain over the decision.  Applying Bethlehem Steel, the Administrative Law Judge dismissed the Complaint. The Acting General Counsel of the NLRB and the Union filed exceptions, and the matter was appealed to the Board.

The NLRB’s Decision

According to the Board, the declared policy of the Act, as stated in Section 1, is to “encourage(e) the practice and procedure of collective bargaining” and to protect the “full freedom” of workers in the selection of bargaining representatives of their own choice. Section 8(a)(5) makes it an unfair la­bor practice for an employer “to refuse to bargain collec­tively with the representatives of his employees.” The Board noted that “(b)e­cause it is critically important that collective bargaining be meaningful, it has long been established that an em­ployer violates Section 8(a)(5) when it unilaterally changes represented employees’ wages, hours, and other terms and conditions of employment without providing their bargaining representative prior notice and a mean­ingful opportunity to bargain about the changes.”

Under this rule, an employer’s obligation to refrain from unilaterally changing these mandatory subjects of bargaining applies both where a union is newly certified and the parties have yet to reach an initial agreement, and where the parties’ existing agreement has expired and negotiations have yet to result in a subsequent agree­ment, as in this case. “In the latter circum­stances, an employer must continue in effect contractu­ally established terms and conditions of employment that are mandatory subjects of bargaining, until the parties either negotiate a new agreement or bargain to a lawful impasse.”

Contrary to its earlier ruling in Bethlehem Steel, the Board declared that:  

An employer’s decision to unilaterally cease honoring a dues-checkoff arrangement established in an expired collective-bargaining agreement plainly contravenes these salutary principles. Under settled Board law, widely accepted by reviewing courts, dues checkoff is a matter related to wages, hours, and other terms and con­ditions of employment within the meaning of the Act and is therefore a mandatory subject of bargaining. The status-quo rule, then, should apply to dues checkoff, unless there is some cogent reason for an exception. We see no such reason.

(citations omitted).

The Board acknowledged that a select group of contractually established terms and conditions of employment — arbi­tration provisions, no-strike clauses, and management-rights clauses — do not survive contract expiration, even though they are mandatory subjects of bargaining. In agreeing to each of these arrangements, however, the NLRB reasoned that “parties have waived rights that they otherwise would enjoy in the interest of concluding an agreement, and such waiv­ers are presumed not to survive the contract.”

However, according to the Board, the rationale behind these narrowly drawn exceptions does not apply to dues checkoff:  

Unlike no-strike, arbitration, and management-rights clauses, a dues-checkoff arrangement does not involve the contrac­tual surrender of any statutory or nonstatutory right. Rather, it is simply a matter of administrative conven­ience to a union and employees whereby an employer agrees that it will establish a system where employees may, if they choose, pay their union dues through auto­matic payroll deduction. Payments via a dues-checkoff arrangement are thus no different from other voluntary checkoff agreements, such as employee savings accounts and charitable contributions, which the Board has recog­nized also create “administrative convenience” and — notably — survive the contracts that establish them.

(citations omitted).

The Board found nothing in Federal labor policy or law suggesting that dues checkoff arrangements should be treated less favorably than other terms and conditions of employment for purposes of the status quo rule. In so finding, it declared that Bethlehem Steel and its progeny should be overruled: “. . .Bethlehem Steel is unsupportable because it is based on questionable reasoning, is inconsistent with established policy generally condemning unilateral changes in terms and conditions of employment, is con­tradicted by both the plain language and legislative his­tory of the only statutory provision addressing dues checkoff, and finds no justification in the policies of the Act.”

Nevertheless, given the longstanding applicability of Bethlehen Steel, the Board declined to apply its new ruling retroactively, because it felt that doing so would cause “manifest injustice.” Thus, the Employer in this case was held not to have violated the Act.

The Dissent

In dissent, Member Brian Hayes reasoned that the Bethlehem Steel holding is consistent with “the Board’s longstanding, commonsense recognition that a union security clause operates as a powerful inducement for employees to authorize dues checkoff, and that it is unreasonable to think that employees generally would wish to continue having dues deducted from their pay once their employment no longer depends on it.”

Conclusion

Although the WKYC-TV case could dramatically change the landscape of labor management relations because it strips employers of a valuable economic weapon in negotiations for successor agreements, the Board suggested that an employer may still be able to eliminate the dues checkoff obligation from an expired agreement by including such elimination it its last and final offer before reaching an impasse and then unilaterally implementing that offer. However, past Board precedent has suggested that it will be difficult for an employer to establish a lawful impasse under such circumstances.