Employment Law Daily LMRA preempts Wisconsin law shortening irrevocability of dues-checkoff authorizations from one year to 30 days
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Tuesday, September 18, 2018

LMRA preempts Wisconsin law shortening irrevocability of dues-checkoff authorizations from one year to 30 days

By Ronald Miller, J.D.

Wisconsin’s attempt to shorten the maximum period for which a dues-checkoff authorization is irrevocable from no longer than one year to 30 days was preempted by federal labor law, ruled a divided Seventh Circuit, in a 2-1 decision. Because the challenged portion of Wisconsin’s Act 1 regulates an employee’s optional dues-checkoff authorization rather than an employee’s obligation to pay dues as a condition of employment, it fell outside the scope of the “right-to-work/union security agreement exception.” Accordingly, the appeals court concluded that the LMRA preempted Wisconsin’s attempt to set new rules for dues-checkoff authorizations. Judge Manion filed a separate dissenting opinion (International Association of Machinists District Ten v. Allen, September 13, 2018, Hamilton, D.).

Union security agreements. Before Act 1 was enacted in 2015, Wisconsin law had allowed union security agreements in which unions and employers would agree that employees would be required either to join the union or pay fair-share fees. Act 1’s “right to work” provisions prohibit employers from requiring their employees to pay dues or fees to a union. This also meant that Wisconsin employers could no longer enter into enforceable mandatory union security agreements. Act 1 requires employers to terminate dues-checkoff authorizations within 30 days of receiving written notice from an employee.

In November 2002, an assembler at a John Deere plant signed an authorization to have union dues deducted from her wages and remit them to the union. Her authorization card stated that it was irrevocable for one year or until termination of the collective bargaining agreement, whichever occurs sooner. It also provided that it would be automatically renewed unless the CBA terminated or the employee gave notice during a 15-day annual period.

Checkoff revocation. In the wake of Act 1, John Deere and the union updated their CBA, but left in place a term making dues-checkoff irrevocable for one year. In July 2015, the employee sent a letter to John Deere and the union invoking Act 1 and requesting the termination of her dues-checkoff authorization. The union responded that her request was untimely, and could not be granted unless she renewed it during the annual cancellation period.

Thereafter, the employee filed a complaint with the Wisconsin Department of Workforce Development (DWD) claiming that John Deere was violating state wage laws by not honoring within 30 days her attempt to revoke the dues-checkoff authorization. The agency sided with the employee and held that John Deere had to honor her cancellation and refund request, or face an enforcement action. The company reimbursed the amount deducted from her paycheck. Around the same time, the agency handled another similar dues-checkoff complaint invoking Act 1, and concluded that it must enforce the statute in its current form.

Preemption challenge. The union filed this action and moved to enjoin the state from enforcing Act 1’s dues-checkoff provision that prohibited dues checkoff authorizations unless revocable upon 30 days’ notice by an employee. According to the union, the state law prohibition was preempted by § 302(c)(4) of the LMRA, which expressly permits dues checkoff authorizations so long as the deductions are not “irrevocable [by the employee] for a period of more than one year.” The union argued that this year-long dues-checkoff exception in federal labor law is incompatible with, and thus preempts, the 30-day provision in Act 1.

The district court granted the union’s motion for summary judgment and permanently enjoined enforcement of Wis. Stat. § 111.06(1)(i). According to the district court, resolution of this dispute was controlled by the Supreme Court’s decision in SeaPak v. Indus., Tech. & Prof. Employees, Div. of Nat’l Maritime Union.

The Seventh Circuit observed that the main issue in this appeal was whether Wis. Stat. § 111.06(1)(i) is preempted by § 302(c)(4). Additionally, the appeals court had to address whether Section NLRA 14(b)’s exception to preemption for state “right-to-work” laws allowed Wisconsin to do what it attempted to do here.

Seapak’s continuing force. Here, the appeals court held that the LMRA preempted Wisconsin’s attempt to set new rules for dues-checkoff authorizations. Because the challenged portion of Act 1 regulates an employee’s optional dues-checkoff authorization rather than an employee’s obligation to pay dues as a condition of employment, it fell outside the scope of the “right-to-work/union security agreement exception.” Further, the appeals court agreed with the district court that the Supreme Court’s summary affirmance in SeaPak controlled this case.

The appeals court concluded that SeaPak is consistent with the Court’s other labor law preemptions decisions. In Murphy v. National Collegiate Athletic Ass’n, the Supreme Court explained that all forms of federal preemption “work the same way: Congress enacts a law that imposes restrictions or confers rights on private actors; a state law confers rights or imposes restrictions that conflict with federal law; and therefore the federal law takes precedence and the state law is preempted.”

Labor law preemption applies when a State acts “as a regulator of private conduct” with an “interest in setting policy” that is different from the policy of the federal government. Both Garmon and Machinists doctrines apply broadly to the NLRA and Taft-Hartley Acts.

Dues-checkoff rules. Turning to the text of the relevant Taft-Hartley provision, § 302(c)(4), the appeals court noted that federal labor law imposes only minimal rules for collective bargaining on dues-checkoff authorization. Federal law leaves other details for resolution by private actors through the collective bargaining and dues-checkoff authorization processes. States are not free to mandate additional restrictions for the benefit of unions, employers, or employees. The judgment of the district court was therefore affirmed.

Dissent. In a dissenting opinion, Judge Manion argued that SeaPak deserves a fresh look. He argued that Seapak’s holding that all state regulation of checkoff agreements is preempted does not fit comfortably within the Machinists preemption doctrine. Nor did he find that it stands up to any scrutiny under modern general preemption doctrine, which now requires much stronger textual indications of Congressional intent to displace state regulation. Accordingly, the dissent concluded that developments over the last 47 years have eroded the precedential value of SeaPak to such an extent that the Seventh Circuit is no longer obliged to follow it. Accordingly, Manion would permit Wisconsin to enforce its limitation on checkoff agreements.

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