Friday, March 1, 2019

NLRB Classifies Lobbying as Nonchargeable Union Fees Expense

Today, in Kent Hospital, the NLRB ruled that lobbying expenses--even if related to employment terms or indirectly to collective bargaining--are always nonchargeable. The Board also found that the union violated its duty of fair representation by not providing nonmembers a so-called "validation letter," which I'll get to in a moment,

As a reminder, or introduction, unions' ability to require nonmembers to pay dues (where they can require them to pay any dues at all--i.e., private-sector employers in non-right-to-work states) is based on where those dues are going. The Supreme Court (in Beck, among other cases) has divided union activities into two categories: chargeable (which unions can require nonmembers to contribute to) and nonchargeable (nonmembers can choose not to contribute). Some activities are easy to classify. For instance, expenses related to negotiating and implementing a collective-bargaining agreement are clearly chargeable; political activity such as working to elect a candidate is clearly not. Kent Hospital deals with an activity in middle: lobbying. The key line usually used for distinguishing the two classifications is that unions can only require contributions for activities "necessary to ‘performing the duties of an exclusive representative of the employees in dealing with the employer on labor-management issues.’” (BeckEllis).

In Kent Hospital, local nurses unions are part of a regional union (UNAP), and each local contributes a per capita amount of funds to UNAP. In turn, UNAP uses these funds for various activities, including lobbying for certain bills in states in which it operates. The bills at issue in the case were those addressed to: hospital regulation (including mergers), public employee retirement system, hospital funding, safe patient handling programs, mandatory hospital overtime, and mental health care funding. In other words, bills that would obviously impact and be of concern to nurses, albeit not always in a direct way. The ALJ found that the hospital merger, hospital funding, and mental health funding were chargeable because they would affect UNAP's ability to represent its members. The Board disagreed, concluding broadly that lobbying activities are never chargeable, because they are is not part of unions' statutory collective-bargaining obligations. This is true, according to the Board, even if targeted to matters that may be subject to collective bargaining (e.g., workplace changes related to patient safety).    

Whatever one thinks about the bills here, the Board seems to have painted with too broad a brush. There is a wide range of legislation, some of which may well be directly related to unions' collective-bargaining obligations. Among many examples she uses in her dissent to criticize the majority's categorical "lobbying is nonchargeable" rule, Member McFerran cites a bill that would change terms in a collective-bargaining agreement. The dissent is well worth the read, as it does a good job undercutting the majority's categorical approach.

Finally, the Board addressed the union's failure to provide objectors an audit verification letter, which the union possessed but didn't provide to nonmember objectors because it didn't think it was legally required to. An audit verification letter is what it sounds like: something from an auditor stating that the union's classification of expenses is appropriate. Following the Ninth Circuit, the Board concluded that unions must provide objectors the audit verification letter, rather than the mere assurance that the auditor agreed to the classification as occurred in Kent Hospital. Member McFerran agreed, although dissented to applying this new rule retroactively.

-Jeff Hirsch

 

https://lawprofessors.typepad.com/laborprof_blog/2019/03/nlrb-classifies-lobbying-as-nonchargeable-union-fees-expense.html

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