In a decision released on Oct. 3, the NLRB held in Valley Hospital Medical Center, Inc., 371 NLRB No. 160 (2022) that employers are prohibited by Section 8(d) and 8(a)(5) from unilaterally stopping dues checkoff after the expiration of the parties’ collective bargaining agreement. The Board’s decision reverses a 2019 decision and returns to the rule set forth in the Board’s 2015 decision: Lincoln Lutheran of Racine, 362 NLRB 1655 (2015).
In 1962, the Board held in Bethlehem Steel Co., 136 NLRB 1500 (1962) that the dues checkoff provisions in a collective bargaining agreement (CBA) do not survive expiration. That is, while the NLRA requires an employer to maintain the “status quo” with respect to most employment terms following expiration – at least until reaching a lawful “impasse” – an employer could unilaterally stop withholding dues as required by the (now) expired CBA.
In 2015, the Board reversed the Bethlehem Steel standard in a case called Lincoln Lutheran of Racine, 362 NLRB 1655 (2015) and held that an employer was required to continue deducting and withholding union dues after expiration. Then, in 2019, the Board reversed itself again and returned to the Bethlehem Steel standard allowing employers to unilaterally cease withholding dues following contract expiration. After an appeal, the decision was returned to the Board, which then reversed itself again (and returned to Lincoln Lutheran).
The NLRB Returns to Lincoln Lutheran
In Valley Hospital Medical Center, Inc., 371 NLRB No. 160 (2022), the Board carefully examined its decisions in 1962, 2015, and 2019. Ultimately, the Board determined that Lincoln Lutheran was correctly decided. Under the standard set forth in Lincoln Lutheran, an employer must, following CBA expiration, continue to honor a dues-checkoff arrangement established in an expired CBA until: (a) the parties have reached a successor CBA or (b) a valid overall bargaining impasse permits unilateral action by the employer. Employers may no longer unilaterally terminate dues checkoff.
In Valley Hospital, the employer (Valley Hospital) had a CBA with a union that required the employer to deduct dues from employees and remit them to the union. Approximately 13 months after the parties’ CBA expired, the employer ceased withholding dues. According to stipulated facts, the employer ceased deduction dues with 5 days’ notice and without providing the union an opportunity to bargain.
Under the standard set forth in Lincoln Lutheran, the Board easily concluded that Valley Hospital violated Section 8(a)(5) and (1) of the Act. As a remedy, the NLRB ordered the Hospital to reimburse the Union for “any dues [the Union] would have received but for” the employer’s failure to withhold dues.
Critically, the Board also held that it intended to apply its rule in this case retroactively to all current pending cases. Thus, any employer who unilaterally ceased withholding dues under the 2019 decision will likely be subject to an order to reimburse the Union for any dues that were not collected by the Union.
The NLRB has removed an economic weapon for employers to use in bargaining a new CBA by no longer allowing the unilateral cessation dues checkoff provisions once a CBA expires. While the decision will likely be appealed, it remains to be seen whether a federal appellate court will reverse the NLRB’s decision.
For now, employers with expired CBAs (or CBAs that will soon expire) should avoid halting the collection of union dues. Depending on your contract language, it may still be possible to cease withholding dues, but such action should not be taken lightly and should only be done with guidance from counsel.
FCA International will continue monitoring this situation closely.
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