The National Labor Relations Board has held that an employer has no obligation to continue deducting union dues from employee paychecks pursuant to a dues checkoff provision in a collective bargaining agreement (CBA) after the CBA expires. Valley Hospital Medical Center, 368 NLRB No. 139 (Dec. 16, 2019). Chairman John Ring and Members William Emanuel and Marvin Kaplan were in the majority. Member Lauren McFerran dissented.

The NLRB overruled Lincoln Lutheran of Racine, 362 NLRB 1655 (2015), in which the Board held an employer continues to have an obligation to deduct union dues from employee paychecks despite the expiration of a CBA containing a dues checkoff provision on which the deductions were based.

Background

Most CBAs contain a dues checkoff provision obligating the employer to deduct union dues from employee paychecks and remit those funds to the union. Whether checkoff provisions were part of the “status quo” that had to be maintained after a contract expired or whether the obligation expired with the contract was an open question until 1962. In 1962, the Board, for the first time, in Bethlehem Steel, 136 NLRB 1500 (1962), held that a dues checkoff provision was not part of the “status quo,” and the obligation to deduct dues expired when the contract expired. This, of course, provided an employer significant leverage to engage in negotiations for a new contract. If the contract expired, the employer could exercise its right to cease deducting and remitting dues to the union, eliminating a union revenue stream.

In 2015, the Board, comprised of members appointed by President Barack Obama, overruled Bethlehem Steel in Lincoln Lutheran of Racine, effectively altering the balance of bargaining power that existed for more than 50 years. Lincoln Lutheran held that dues checkoff was part of the “status quo” that must be maintained after contract expiration (like wages and benefits). The Obama Board viewed the promise to deduct dues as a convenience for employees, akin to deductions for charitable contributions or deposits into savings accounts. Therefore, checkoff was to be treated as a term and condition of employment that could not be altered until the employer met its obligation to bargain with the union to an impasse or to a new contract. The practical effect of the decision was that it became easier for a union to play “hard ball” in bargaining since the employer no longer had the ability to cut off its revenue.

Valley Hospital Medical Center

In Valley Hospital Medical Center, the Board returned to the 1962 standard, expressly overruling Lincoln Lutheran and holding that dues checkoff does not survive contract expiration as part of the status quo. Unless there is a contract in force requiring it do so, an employer may cease deducting dues from employee paychecks, the Board ruled. This is true whether the checkoff provision was part of a contract that included union security or whether it was a stand-alone provision, not connected to union security (common in right to work states).

The practical effect of the decision on the balance of power between unions and employers is clear. Comparing dues checkoff provisions to no-strike and no-lockout provisions which also expire when the CBA expires, the Board stated:

Accordingly, as with similarly excepted contractual no-strike and no-lockout provisions, an employer is free upon contract expiration to use dues checkoff cessation as an economic weapon in bargaining without interference from the Board.

(Emphasis added.)