By Ronald Miller, J.D.
The case law asks whether challenged expenses are “necessary” for or “germane to” bargaining or the performance of other statutory duties.
A ruling by the NLRB upholding a former union member’s challenge to a union’s decision to charge her for some of its lobbying expenses and refusing to provide her with a letter verifying that its expenses were examined by an independent auditor was upheld by the First Circuit. The appeals court saw no convincing argument that legislative lobbying is not a “political” activity which objectors are not required to financially support. Moreover, the Board acted reasonably in taking a “trust but verify” approach in adopting a requirement that an audit verification letter be included in the “information” to be supplied objectors under Hudson. Accordingly, the appeals court granted the Board’s cross-petition for enforcement of the challenged order (United Nurses & Allied Professionals v. NLRB, September 15, 2020, Kayatta, W., Jr.).
Dues objectors. In September 2009, the employee was among a group of nurses employed by a hospital that resigned their union membership and objected to dues for activities they claimed were unrelated to collective bargaining, contract administration or grievance adjustment. The union lowered the objectors’ fees but still required them to contribute to covering expenses for lobbying for several bills in state legislatures. The union reported in writing that its expenses had been verified by an independent auditor, but it declined to provide a verification letter from the auditor. The employee filed a complaint to the Board.
The primary issue here is whether the union’s lobbying expenses are properly chargeable to the dissenting nurses. The Board determined that the dissenting nurses should not have to pay for any lobbying expenses, reasoning that relevant Supreme Court and lower court precedent compelled holding that lobbying costs are not chargeable as incurred during the union’s performance of statutory duties as the objectors’ exclusive bargaining agent. On appeal the union contends that the Supreme Court has never adopted such a bright-line rule interpreting the NLRA.
Supreme Court precedent. As an initial matter, the appeals court reasoned that because it was “not obligated to defer to an agency’s interpretation of Supreme Court precedent,” it would conduct a de novo review of the precedent that the Board found compelling.
In Communications Workers v. Beck, the Supreme Court clarified that employees have the right to refuse to pay union fees for activities other than those “necessary to ‘[the union’s performance of ] the duties of an exclusive representative of the employees in dealing with the employer on labor-management issues.’” Among the expenses found to be nonchargeable by the circuit court in Beck were those for “lobbying efforts.” But the record made clear that the union made no attempt to show that the lobbying was germane to collective bargaining. Thus, Beck’s ultimate affirmance of the lower court ruling did not provide a rule categorically dealing with lobbying expenses.
The parties in this case relied on pre-Janus public-sector lobbying cases as analogous authority for their respective positions. However, the appeals court pointed out that nothing in Janus purported to reject or modify the assumption of Abood v. Detroit Bd. of Educ., that some lobbying might be at least germane to collective bargaining by public-sector unions.
Lobbying expenses. The element common to both private- and public-sector caselaw regarding the chargeability of union expenses is a focus on the relationship between the expenses and the union’s performance of its duties as the exclusive bargaining agent for all the employees. The caselaw asks whether challenged expenses are “necessary” for or “germane to” bargaining or the performance of other statutory duties.
Here, the First Circuit did not agree with the union that there is no conceptual reason for concluding that lobbying by a private sector union could never be necessary to the union’s performance of its collective bargaining duties. Rather, the appeals court concluded that, in theory, there exist instances in which an expense could reasonably be called both a form of lobbying and germane to collective bargaining. Moreover, nothing in the Supreme Court’s actual holdings compelled the appeals court to conclude either that such expenses are properly chargeable to dissenters, or not. However, in Harris v. Quinn, the Supreme Court strongly suggested that it had drawn a “line” in the private sector between collective-bargaining and lobbying.
Further, dictum in the Supreme Court’s decision in Lehnert v. Ferris Faculty Ass’n, stated that private sector collective bargaining functions do not include political or ideological activities such that they are constitutionally chargeable to dissenting employees. Applying Lehnert’s considered dictum to this case, the appeals court saw no convincing argument that legislative lobbying is not a “political” activity—at least as conducted here. In fact, the Supreme Court in Harris grouped “lobbying” with “political advocacy” as a presumably nonchargeable “activity directed at the government.”
Accordingly, the appeals court granted the Board’s cross-petition for enforcement of the challenged order.
Auditor letter. The union also petitioned for review of the Board’s determination requiring it to provide the dues objector with a letter signed by an auditor verifying that the financial information disclosed to the objectors had been independently audited. In Chicago Teachers Union v. Hudson, the Supreme Court held that “basic considerations of fairness… dictate that the potential objectors be given sufficient information to gauge the propriety of the union’s fee.” Moreover, the Board determined that under Hudson, union expenditures provided to objecting employees must be verified by an independent audit.
Here, the union argued that the additional requirement of providing a letter verifying that the audit took place was unreasonable. However, the appeals court ruled that the Board’s conclusion reasonably applied and extended the Hudson standard. The Board pointed out that providing an audit verification letter to objecting employees avoids “requiring [employees] to accept the union’s bare representations that the figures were appropriately audited.” “Trust but verify” is a reasonable approach for the Board to take. Accordingly, the appeals court found no basis for finding that the Board erred in adopting a requirement that such an audit verification letter be included in the “information” to be supplied objectors under Hudson.
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