Shattering 50 years of precedent, the National Labor Relations Board (NLRB) late last year ruled that employers must continue to withdraw union dues from employee checks and forward them to the union, even after a collective-bargaining agreement has ended. 

But the 3-1 ruling by the board, an arm of the U.S. Department of Labor, could be invalidated by an appeals court ruling in a case that does not address the specifics, but challenges many of the decisions of the NLRB, including this one, on the grounds that the Obama administration appointments to the board were illegal.

In the December case, WKYC-TV, Inc. and National Association of Broadcast Employees and Technicians, Local 42 a/w Communications Workers of America, AFL-CIO, Case 08-CA-039190, the board overturned a 1962 decision involving Bethlehem Steel. The board said it found “compelling statutory and policy reasons to abandon the Bethlehem Steel rule.” The board reasoned in the WKYC case that “like most other terms and conditions of employment, an employer’s obligation to check off union dues continues after expiration of a collective-bargaining agreement that establishes such an arrangement.” The board majority concluded that making employers continue to honor dues check off arrangements even if the union contract has expired “is consistent with the language of the [National Labor Relations Act], its relevant legislative history, and the general rule against unilateral changes to terms and conditions of employment.”

NLRB Chairman Mark Gaston Pearce and members Richard Griffin and Sharon Block approved the policy change. Commissioner Brian Hayes, who is no longer on the NLRB, strongly dissented, accusing the majority of trying to alter the employment “playing field” in favor of unions. He wrote that “my colleagues know well that an employer’s ability to cease dues checkoff upon contract expiration has long been recognized as a legitimate economic weapon in bargaining for a successor agreement . . . . Indeed, even in times of boycott and other economic actions in opposition to an employer’s legitimate bargaining position, the employer will be forced to act as the collection agent for dues to finance this opposition. This is the unspoken object of today’s decision.” Hayes, the only Republican on the board, left the board four days after the decision. All four members were Obama appointees.

The NLRB decision left the labor bar buzzing. Doug Hass and Amy Moor Gaylord of Franczek Radelet commented, “Unlike most business agreements, employers have a duty, under the National Labor Relations Act, to maintain almost all of the terms of a collective bargaining agreement, even after it expires, while the parties bargain over a successor agreement. Historically, the NLRB has ruled that a few provisions do expire. For example, a ‘union security’ provision is only viable during the term of an agreement. Similarly, ‘no strike’ and arbitration provisions do not survive an agreement’s expiration. Recently, the board’s Democratic majority has begun rolling back these exceptions.”

Joel S. Barras of the Reed Smith Labor & Employment Group wrote in Employment Law Watch, “Under the new ruling, an employer may legally stop deducting dues in only three instances. The first is if employees individually revoke their previously signed dues deduction authorizations. The second is if the employer and the union reach a valid impasse in negotiations over extension or elimination of the check-off provision. The third is if the employer can prove the union’s ‘clear and unmistakable’ waiver of its right to negotiate over the continuation of check-off. All three are unlikely factually and/or difficult to establish legally.”

Cynthia Springer of Faegre Baker Daniels said, “What this means for unionized employers is that, regardless of the parties’ intent during expiration unless the CBA clearly and unmistakably waives the Union’s right to have dues deductions continue after CBA expiration. Unionized employers also may want to consider their strategy in future negotiations concerning their willingness to include a dues checkoff provision in future CBAs and/or may want to consider appropriate language to include to ensure they are not obligated to continue dues deduction in the absence of a CBA.”

Meanwhile, an unrelated decision by the U.S. Court of Appeals for the D.C. Circuit in late January could have implications for the NLRB’s dues ruling. In a case involving an NLRB ruling affecting the Teamsters Union, a three-judge panel ruled that President Obama’s three recess appointments to the board a year ago exceeded his authority. Therefore, the remaining two members did not constitute a quorum and none of the decisions of the board are valid. The U.S. Constitution gives the president authority to make appointments when the Senate is in recess and unable to confirm the appointments. Every president in recent history, including Obama’s predecessor George W. Bush, has used the authority liberally, particularly when members of the Senate were blocking nominations to further partisan interests.

Obama made three NLRB appointments in January 2012 while the Senate was still on a year-end holiday break. He named Democrats Griffin and Block and Republican Terrence Flynn, who left the board last July.

In the surprise ruling overturning the appointments, Chief Judge David Sentelle, joined by judges Karen LeCraft Henderson and Thomas B. Griffith, said the White House view of the recess appointment authority gives the White House “free rein to appoint his desire nominees at any time he pleases, whether that time be a weekend, lunch, or even when the Senate is in session and he is merely displeased with its inaction. This cannot be the law.”

The decision perplexed legal mavens. Jeffrey Toobin, who follows the courts for The New Yorker magazine, termed it a clear case of “right-wing judicial activism.”

The U.S. Supreme Court is likely to decide what constitutes the law. Sentelle’s decision noted that another federal appeals court has ruled that the broad interpretation of the recess authority is legal, teeing the issue up for the high court. In the meantime, the question of the validity of NLRB rulings made by the board with the Obama appointees is unclear. Under Sentelle’s ruling, the NLRB decision in the dues checkoff would not be valid.

White House spokesman Jay Carney said the ruling is “unprecedented” and the administration would continue following its normal practices.

NLRB chairman Pearce said in a statement on the agency’s web site: “The board respectfully disagrees with today’s decision and believes that the president’s position in the matter will ultimately be upheld. It should be noted that this order applies to only one specific case … and that similar cases have been raised in more than a dozen cases pending in other courts of appeals. In the meantime, the board has important work to do.”

Labor unions claimed that the appeals court decision would produce “chaos” in employment jurisprudence. Lawyer Charles Cohen, a former NLRB member now practicing at Morgan, Lewis & Bockius, told the Washington Post the decision will “present a quandary for employers about how to comply with the law.”

What should employers do as this mess gets sorted out? Attorneys at the Washington firm McGurieWoods advise that until that point, “the NLRB remains able to continue applying the standards stated in opinions issued during the past year and to continue hearing new cases. Accordingly, employers should not rush to disregard recent NLRB decisions, including those reversing longstanding Board precedent. We recommend instead that employers continue to adhere to these standards or risk unfair labor practice proceedings. Nevertheless, employers involved in litigation before the NLRB should raise the constitutional invalidity of the recess appointees as a defense in board proceedings.”

—Kennedy Maize is MANAGING POWER’s executive editor