Ninth Circuit Court Holds That Employers In Right-To-Work States Cannot Unilaterally Stop Union Dues Deductions After Contract Expiration

Volume 10, Issue 10
September 16, 2011

On Tuesday, September 13, 2011, in Local Joint Exec. Bd. of Las Vegas v. NLRB, No. 10-72981 (9th Cir. 2011), the United States Court of Appeals for the Ninth Circuit held that unionized employers in right-to-work states, such as Nevada, cannot unilaterally terminate their union dues deduction processes upon expiration of their collective bargaining agreements. The court's ruling is part of a fifteen-year battle between the Local Joint Executive Board of Las Vegas for the Culinary Workers Union, Local 226 and Bartenders Union, Local 165 ("Culinary and Bartenders Unions") and the National Labor Relations Board ("NLRB") over actions taken by Las Vegas hotel-casino employers in the course of contract negotiations.

In 1995, the Culinary and Bartenders Unions filed unfair labor practice ("ULP") charges with the NLRB against the Hacienda Resort Hotel and Casino and the Sahara Hotel and Casino after both employers stopped deducting union dues from bargaining unit employees' paychecks and forwarding the dues to them. The two hotels initially continued to make the union dues deductions after their collective bargaining agreements with the Culinary and Bartenders Unions expired in May 1994, but later decided to cease such activities in June 1995 as negotiations for successor agreements lumbered along. Each of the expired collective bargaining agreements contained a dues "checkoff" provision.

The NLRB dismissed the ULP charges in 2000, finding that the most reasonable interpretation of the dues checkoff provision was that the parties agreed union dues would be deducted from employees' paychecks and forwarded to the two unions only during the term of the applicable contract. The Culinary and Bartenders Unions appealed the NLRB's decision and, in 2002, the Ninth Circuit Court found that the NLRB had not provided a reasoned explanation for why an employer's dues checkoff obligations would be excepted from the general prohibition under the National Labor Relations Act ("NLRA") against employers making unilateral changes after the expiration of a collective bargaining agreement. Thus, the court sent the case back to the NLRB to provide a better explanation. In 2007, the NLRB issued a new decision finding that the union dues checkoff provision explicitly limited the employers' "checkoff" obligations to the duration of the particular contract, resulting in a second appeal by the Culinary and Bartenders Unions and the Ninth Circuit Court sending the case back to the NLRB for additional explanation. In 2010, the NLRB issued a third decision, declining to overrule its prior decisions and the two unions appealed again.

In considering the Culinary and Bartenders Unions' third appeal, the Ninth Circuit Court concluded that the NLRB failed to provide a satisfactory explanation for its rationale despite having multiple opportunities to do so. Thus, the court vacated the NLRB's decision and proceeded to resolve the underlying ULP charges itself without allowing for any further action by the NLRB. The court held that the two Las Vegas hotel-casinos violated the NLRA by unilaterally terminating their employee union dues deductions processes after their collective bargaining agreements expired. Pointing out that the Culinary and Bartenders Unions had negotiated the dues checkoff provision to guarantee the unions' timely receipt of accurate dues and to spare employees the inconveniences of making their own periodic union dues payments, the Ninth Circuit Court found that the termination of a "free-standing" dues checkoff arrangement after the expiration of a union contract is a mandatory subject of bargaining that must be negotiated with the union. The court also noted that the NLRB may adopt a different rule in the future, provided such a rule is rational and consistent with the NLRA.

Thus, unless a new rule is issued by the NLRB, employers in right-to-work states within the Ninth Circuit must bargain to impasse before stopping the processing of union dues after expiration of a collective bargaining agreement or attempt to negotiate union dues checkoff language that expressly provides the level of flexibility they seek. The latter option will likely prove difficult for employers to obtain from unions as such flexibility provides employers with increased leverage during contract negotiations.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.