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NLRB Overrules Lincoln Lutheran, Reinstates Bethlehem Steel, And Allows Employers To Cease Deducting Union Dues After Contract Expiration
In yet another decision reversing an Obama-era decision, the Board held that, after the expiration of a contract, an employer may unilaterally stop deducting (or checking-off) from the employees’ paychecks union dues and stop remitting such dues to the employee organization.
In Valley Hospital Medical Center, the contract between the medical center and one of its employee organizations lapsed. Thereafter, the parties continued to operate under the terms of the expired contract, including a provision that provided that the employer would deduct and remit union dues from employees’ paychecks to the employee organization. However, thirteen months after the contract expired, and without any bargaining on the subject, the medical center unilaterally stopped the dues deductions and remittances to the employee organization. Employees filed an unfair practice charge alleging that the post-expiration unilateral change constituted an unfair practice in violation of the NLRA.
In reaching its conclusion that the employer acted lawfully, the Board overruled it’s holding in Lincoln Lutheran (2015) 362 NLRB 1655, which established that an employer has a statutory obligation under Section 8(a)(5) to continue checking off and remitting union dues even after the expiration of the contract. Lincoln Lutheran held that the unilateral change doctrine, articulated in NLRB v. Katz (1962) 369 U.S. 736 and extended in Litton Financial Printing Division v. NLRB (1991) 501 U.S. 190 to include post-expiration changes, also included post-expiration unilateral changes to dues checkoffs such that an employer could not permissibly end such practice without first bargaining the change.
In the Valley Hospital Medical Center decision, the Board reinstated the standard from Bethlehem Steel (1962) 136 NLRB 1500, which Lincoln Lutheran overruled in 2015, but which had, for more than 50 years prior to that, held that an employer could lawfully take unilateral action to discontinue checking off and remitting union dues after the contract expired. In reinstating Bethlehem Steel, the Board found that the employer’s obligation to check off and remit dues is rooted in and dependent on the existence of a contract. The Board distinguished such dependent contractual provisions from other contractual provisions, including wages, benefits, hours, and working conditions, which it concluded do not arise with or necessarily depend on the existence of a contract, but rather exist from the commencement of the bargaining relationship. With respect to contractual deduction and remittance provisions, the Board concluded that such obligations are coterminous with the contracts that give rise to them.
The Board then assessed whether Lincoln Lutheran or Bethlehem Steel conflicted with statutory bargaining principles articulated in the NLRA, concluding that Lincoln Lutheran conflicted with such principles because it impermissibly removed an economic weapon – dues deduction and remittance – that an employer could legitimately use as leverage in its bargaining position. The Board stated that requiring an employer to deduct and remit union dues for the employee organization, constituted interference in the bargaining process and should be disallowed.
The Board concluded that Bethlehem Steel represented the more appropriate view of an employer’s statutory dues checkoff obligations post-expiration. The Board then dismissed the complaint on that basis.
Valley Hosp. Med. Ctr., Inc. d/b/a Valley Hosp. Med. Ctr. & Local Joint Executive Bd. of Las Vegas (Dec. 16, 2019) 368 NLRB No. 139.