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NLRB Holds That Union Dues Checkoff Provisions Survive CBA Expiration

In a recent decision, Valley Hospital Medical Center Inc., d/b/a Valley Hospital Medical, the National Labor Relations Board (the “NLRB” or “Board”) reversed its earlier ruling in the case and held that an employer’s obligation to deduct union dues from employee paychecks in accordance with a collective bargaining agreement (“CBA”) does not automatically end when the CBA expires.

Through this ruling, the Board reinstated its Obama-era rule that so-called dues checkoff provisions remain in effect at least until the parties have concluded a new CBA or reached an impasse in their negotiations.

Background

Dues checkoff provisions, a common term of CBAs, require employers to deduct from employee paychecks union dues for those employees who authorize these automatic deductions. The dues are then remitted directly to the union. As a rule, unions push to include such provisions in CBAs, as they relieve a union of the need to chase members down to pay their dues individually.

In general, after a CBA expires, the employer is required, under the National Labor Relations Act (“NLRA”), to keep existing terms and conditions of employment the same until a new CBA is negotiated or an impasse is reached in the bargaining process. Until recently, however, dues checkoffs were an exception to this general rule.

This issue dates back to the Board’s 1962 decision, in Bethlehem Steel, that employers could unilaterally stop dues checkoffs once a CBA expired, without bargaining to impasse. The Bethlehem Steel precedent was in effect for more than 50 years, until the Board, in its 2015 Lincoln Lutheran of Racine decision, overturned this rule, holding that an employer must bargain to impasse before unilaterally stopping dues checkoffs.

Case History

The Valley Hospital case arose in 2018, when, more than a year after the expiration of a CBA containing a dues checkoff provision, the employer announced to the union that it intended to end its dues checkoffs in five days’ time, without giving the union the opportunity to bargain over the decision. Acknowledging that this action was inconsistent with the Lincoln Lutheran rule, the employer referenced a recent memorandum issued by the NLRB Office of the General Counsel, indicating that the Board was considering reversing the Lincoln Lutheran holding.

The following year, the Board did just that in the Valley Hospital litigation, overruling Lincoln Lutheran and returning to the Bethlehem Steel rule. The Board stated that “a dues-checkoff provision properly belongs to the limited category of mandatory bargaining subjects that are exclusively created by the contract and are enforceable… only for the duration of the contractual obligation created by the parties.” However, upon review, the 9th Circuit remanded the case back to the Board, expressing concern about the Board majority’s reasoning – specifically, its failure to acknowledge “apparently contrary precedents.”

The Board’s Decision

Following the remand, the NLRB – whose membership had shifted to a Democratic majority following President Biden’s election – reversed its earlier decision in the case, finding no persuasive justification for “[treating] dues checkoff differently from most terms and conditions of employment.” The Board opined that permitting an employer to cancel dues checkoffs without first bargaining to impasse “both undermines the union’s status as the employees’ [representative] and creates administrative hurdles that can undermine employee participation in the collective-bargaining process.”

The Board emphasized that the few terms and conditions of employment which do not survive the expiration of a CBA are narrow “exceptions to the rule” and are “justified by specific considerations that distinguish the contract terms at issue from most other contractually established terms and conditions of employment.” Unilateral action by employers is generally disfavored under the NLRA, and the Board found nothing in the statute that would make dues checkoff provisions materially different from those terms and conditions that survive the expiration of a CBA.

Further, the Board rejected the contention in the earlier majority decision in the case that continuing dues checkoffs after a CBA has expired is “divisive” to the collective-bargaining process.

Employer Takeaways

Based on the Valley Hospital decision, employers that have withheld and remitted union dues under a dues checkoff provision should continue doing so even after their CBA expires. An employer that wishes to end this practice must either secure the union’s agreement – which is likely to be a difficult prospect – or bargain to impasse before making this change unilaterally.

If you have questions about the Board’s latest Valley Hospital decision or any other issues relating to collective bargaining, please feel free to reach out to one of our labor attorneys.