Ballard Spahr LLP

Continuing its shift toward more employer-friendly workplace decisions, the National Labor Relations Board (Board or NLRB) in Valley Hospital Medical Center held that employers may cease deducting union dues from employees’ paychecks when the collective bargaining agreement with the union expires. This is a sharp reversal of a 2015 Obama-era decision that required employers to continue union dues deductions even after contract expiration and marks a return to the Board’s 1962 Bethlehem Steel decision.

In Valley Hospital Medical Center, the Board majority held that dues checkoff provisions are a mandatory subject of bargaining “rooted in the contract” and that employers have no independent statutory obligation under the National Labor Relations Act (the Act) to check off and remit employees’ union dues after contract expiration. The Board distinguished dues checkoff provisions, which do not exist at the outset of the bargaining relationship and are uniquely contractual in nature, from provisions related to wages, pension, hours, and other working conditions, which exist before the bargaining relationship even if they are subsequently bargained and appear in the contract.

Under well-settled law, once a union and employer have a bargaining relationship, an employer is prohibited from making changes to employees’ working conditions without first bargaining with the union. Even after a contract expires, employers generally are required to maintain the status quo until a successor contract is reached or the parties reach an impasse in bargaining. Despite the “status quo” rule, the Board and courts have recognized a narrow category of contract provisions that are not operative after contract expiration.  These provisions are arbitration clauses, no strike/no lockout clauses, management rights clauses, and now, dues checkoff clauses.  

The Board in Valley Hospital Medical Center said cessation of dues deductions at contract expiration is an “economic weapon” that employers may use to exert pressure in the collective bargaining process. The majority noted that employees still may be obligated, pursuant to union checkoff authorizations, to continue contributing to the union, but that unions should seek the payments directly from employees.   

In her dissent, Democratic Board Member Lauren McFerran, whose term expired on December 16, called the majority’s decision “irrational” and “artificial.” She argued that the majority diminished the scope of collective bargaining, empowered employers, and undermined the role of unions in the American workplace.

Valley Hospital Medical Center may have sweeping effects on the collective bargaining process. Employers should think strategically before agreeing to interim extensions of collective bargaining agreements during negotiations for a successor contract. The Board’s decision is likely to encourage earlier negotiations for successor collective bargaining agreements because unions will be motivated to secure a successor agreement before contract expiration. Unions also may be motivated to negotiate longer-term agreements.