Employment Law Daily Municipality’s right-to-work ordinance preempted by NLRA
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Tuesday, October 2, 2018

Municipality’s right-to-work ordinance preempted by NLRA

By Ronald Miller, J.D.

The authority conferred under Section 14(b) of the NLRA, which permits states to bar compulsory union membership as a condition of employment, did not extend to the political subdivisions of states, ruled the Seventh Circuit. In so ruling, the appeals court affirmed the judgment of a district court which held that an ordinance passed by the Village of Lincolnshire, Illinois purporting to forbid the inclusion of union-security or hiring-hall provisions in collective bargaining agreements, forbid the mandatory use of hiring halls, and forbid dues checkoff arrangements, was preempted and without force (International Union of Operating Engineers Local 399 v. Village of Lincolnshire, September 28, 2018, Wood, D.).

Municipal ordinance. In 2015, the Village of Lincolnshire adopted an ordinance that banned union security agreements within the village by forbidding any requirement that workers join a union, compensate a union financially, or make payments to third parties in lieu of such contributions. The ordinance also barred any requirement that employees “be recommended, approved, referred, or cleared for employment by or through a labor organization.” Finally, the ordinance prohibited employees from making payments to unions on a worker’s behalf except pursuant to a “signed written authorization” that may be revoked by the employee at any time by giving written notice.

A collection of unions sued the village asserting that the NLRA preempted the ordinance. The district court held that all three provisions of the ordinance were preempted by the NLRA.

The Supreme Court has affirmed that Section 8 of the NLRA occupies the field for any activities that it “may fairly be assumed” fall within the ambit of the NLRA. The negotiation and adoption of union-security clauses, hiring hall rules, and dues checkoffs, are such activities. However, if states that have adopted right-to-work laws, the tables are turned. Union security clauses are forbidden as a matter of state law.

Union-security ban. Illinois does not have a state-wide right-to-work law. The village asserted that it had the right to enact the ordinance under Section 14(b) of the NLRA, which permits states to bar compulsory union membership as a condition of employment. The village contended that, as a political subdivision of Illinois, it was entitled to exercise the state’s power in this respect.

The question here was whether, as a matter of federal law, Section 14(b) authorized political subdivisions to act in this area. The NLRA favors permitting union-security agreements unless the state with sufficient interest in the relationship expresses a contrary policy via right-to-work laws. A local union-security provision would seriously undermine the objectives of the NLRA in any state that has not taken advantage of Section 14(b) to forbid agency shops. Thus, Lincolnshire’s ordinance undermines that congressional goal by banning CBAs designed to ensure that workers shoulder their portion of the costs of representation.

Hiring hall ban. The hiring hall aspect of the village’s ordinance also ran into problems with preemption. State regulation of hiring halls is blocked by field preemption. The use of hiring halls routinely has been treated as a mandatory subject of bargaining and so hiring hall provisions are affirmatively permitted under the NLRA. Lincolnshire’s attempt to prohibit them requires unions and employers to choose between complying with national or municipal law and thus creates an actual conflict.

Dues-checkoff regulation. Finally, the appeals court held that the village’s dues-checkoff provision was also preempted. Dues checkoff provisions are mandatory subjects of bargaining. Its regulation is thus subject to Section 8, and federal law requires state law to yield. In this respect the Lincolnshire ordinance threatened an actual conflict with federal law since it permitted employers to remit dues only pursuant to fully revocable checkoffs, while federal law requires employers to bargain in good faith over checkoff proposals that bind the parties for up to one year.

Section 302 of the LMRA comprehensively regulates the payment of fees by employers, including payments to unions. The statutory scheme represents a careful balancing of interests and leaves no room for regulation by subnational units of government. Therefore, the appeals court concluded that the ordinance’s provisions invaded territory occupied by federal law. Lincolnshire could prevail only if the court accepted its argument that Section 14(b) also authorized a state’s political subdivisions to override federal rules in any of the three ways set forth in the ordinance.

Political subdivisions. Section 14(b) is the exclusive source of states’ authority to pass right-to-work laws. This case turned on whether, as a matter of statutory interpretation, Congress meant to include local laws when it referred to “State or Territorial law.” The only serious issue relates to the agency-shop aspect of the ordinance. Section 14(b) does not authorize any government—state or local—to restrict the use of hiring halls or checkoffs.

The central question on appeal was whether Section 14(b) permitted a state to delegate to some or all of its subdivisions the power to ban agency shops at the local level. Construed the way the village would have it, the ordinance would put employers in and around the village in an impossible position. An employer would risk civil or criminal penalties if it misjudged “predominant” job situs and bargained over an agency shop rule, if most of the work was done within the village. Moreover, the ordinance did not limit its effect to employees whose primary work situs was the village.

The appeals court concluded that permitting local legislation under Section 14(b) threatens “a crazy-quilt of regulations,” thereby creating an administrative burden and an incentive to abandon union security agreements. Consequently, interpreting the words “State or Territory” in Section 14(b) to permit delegation to local units of government would thus do violence to the broad structure of labor law.

Concluding that Section 14(b) does not permit local governments on their own authority to ban agency-shop, hiring-hall, or check-off agreements, the appeals court affirmed the judgment of the district court.

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