For a second time in recent weeks, the National Labor Relations Board has chosen to bolster unions’ rights at employers’ expense. On September 30, 2022, in Valley Hospital Medical Center, Inc., 371 NLRB No. 160 (2022), a divided Board ruled that a “dues checkoff” provision in a collective bargaining agreement survives the expiration of that agreement and cannot be terminated except through bargaining, notwithstanding several decades of contrary precedent.
A dues checkoff arrangement requires the employer, when authorized by an employee, to deduct union dues from employees’ wages and remit them to the union. Historically, when a contract expires, an employer lawfully could terminate a dues checkoff arrangement without bargaining. For over 50 years following its decision in Bethlehem Steel, 136 NLRB 1500 (1962), the Board considered dues checkoff provisions to be one of the few provisions in a collective-bargaining agreement that would cease to be binding upon the parties upon the CBA’s expiration. Others include no-strike/no-lockout, arbitration, management rights and union security provisions. In contrast, wages, benefits, hours of work, paid time off, seniority and most other contract terms do survive expiration of the CBA and can only be changed or terminated through bargaining.
Despite a brief deviation from this standard between 2015 and 2020, for most of the last half century, employers, employees and unions could rely on the Board’s stance regarding dues checkoff provisions and plan accordingly. Specifically, an employer’s right to terminate dues checkoff can provide a means to put pressure on the union in bargaining, as recognized by the dissent in Valley Hospital Medical Center. Unfortunately for employers, the NLRB’s General Counsel does not approve of what it called the “weaponization” of dues checkoff in this manner. Early in her tenure, she identified the reversal of the Board’s longstanding position on this issue as one of her priorities.
In a cutting comment regarding previous Board decisions on this issue, the Board majority stated: “we acknowledge the existence, but not the persuasiveness, of Bethlehem Steel and its progeny.” The majority went on to conclude that previous Boards never provided a persuasive rationale for treating dues checkoff differently from the significant majority of contract terms that remain in effect upon the CBA’s expiration. Accordingly, the Board majority held that “an employer, following contract expiration, must continue to honor a dues checkoff arrangement established in that contract until either the parties have reached a successor collective-bargaining agreement or a valid overall bargaining impasse.” Moreover, the Board ordered Valley Hospital Medical Center to pay the union all of the dues that it failed to remit after it terminated the dues checkoff provision on February 1, 2018, without seeking to recoup it from the employees, from whose pay the dues would have been withheld, in the ordinary course of things. The dissent blasted this portion of the decision as “clearly punitive” and beyond the scope of the National Labor Relations Act’s remedial provisions.
The Board also made its decision retroactive to all pending cases. That means that employers who unilaterally have stopped withholding and remitting employees’ union dues after contract expiration are now not in compliance with the NLRA and could be required to pay the withheld dues without seeking recoupment from their employees.
Unfortunately for employers, this case is yet another example of President Biden’s Board appointees actualizing his promise to be the most pro-union President ever, and it most certainly will not be the last. If you have any questions regarding the Board’s decision or other legal issues around collective bargaining agreements, feel free to contact the author or the attorney with whom you usually work.
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