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On December 16, 2019, in Valley Hospital Medical Center, Inc., Case 28-CA-213783, the National Labor Relations Board (NLRB) reversed Lincoln Lutheran of Racine, a controversial Obama Board decision that had overruled more than 50 years of precedent. So what was old is new again. Once more, the long relied-upon rule from Bethlehem Steel is back and an employer can lawfully unilaterally stop deducting union dues from its employees’ paychecks when a collective bargaining agreement (CBA) expires.

In Valley Hospital Medical Center, Inc., the employer and the Local Joint Executive Board of Las Vegas, a UNITE HERE local, were parties to a CBA in Nevada that expired on December 31, 2016. As Nevada is a right-to-work state, the CBA had no enforceable union security clause, just a dues checkoff provision. In February 2018, after no successor agreement had been reached—and following the NLRB general counsel’s December 1, 2017, memorandum (GC Memo 18-02) that included dues checkoff among the significant issues that are mandated for submission to the Division of Advice—the employer gave the union five days’ notice that it would cease withholding union dues from its employees. Then it did so. The union filed an unfair labor practice charge based on Lincoln Lutheran and, notwithstanding the general counsel’s direction to refer the matter to the Division of Advice, the regional director issued a complaint alleging that the cessation of dues checkoff was an unlawful unilateral change. The administrative law judge dismissed the complaint, and the union appealed.

The Board, in a 3–1 decision, with Member McFerren dissenting, found that contract provisions for no-strike/no-lockout pledges, arbitration, management rights, union security, and dues checkoff all expire with a CBA. The Board found that “the Bethlehem Steel principle that an employer can lawfully cease dues checkoff upon expiration of a contract has been an established part of the collective-bargaining process and the settled expectations of parties negotiating in good faith under Section 8(d) of the [National Labor Relations] Act.” The Board explained that decision in Lincoln Lutheran (and the dissent’s arguments in this case) to exclude dues checkoff provisions from the short list of exceptions to the general prohibition on post-expiration unilateral changes “undermines and conflicts with the statutory bargaining process.” The Board explained that an employer having the potential economic weapon of cutting off dues checkoff to utilize, if desired, would be much less disruptive to the bargaining process for employers, employees, and unions alike than an indisputably lawful lockout. The Board found that because dues checkoff is “a mandatory bargaining subject rooted in contract and enforceable under the Act only for the duration of the contract, dues checkoff is excepted from the Katz unilateral change doctrine.” Specifically, the Board held that “an employer is free upon contract expiration to use dues-checkoff cessation as an economic weapon in bargaining without interference from the Board.”

Key Takeaways

A significant economic weapon has been added back to the employer’s quiver with this decision. For many unions, the possibility of the employer no longer collecting union dues directly from the employees could put significant pressure on the union to take a more productive approach to the bargaining and reduce the risk of disruptive strikes and lockouts.

This decision also has been given retroactive effect, so that it will apply to any pending cases alleging that cutting off dues checkoff was an unlawful unilateral change.

On appeal, the general counsel also argued that the Board should modify its interpretation of dues-checkoff authorization forms to permit employees to withdraw their authorizations upon termination of the CBA and at any time that no CBA is in effect. Given the decision to overrule Lincoln Lutheran based on the conclusion that an employer has no statutory obligation to check off dues when no contract containing a dues-checkoff provision is in effect, it was unnecessary for the NLRB to address that argument, but this is an interesting insight into another avenue that the general counsel is pursuing to ensure that “voluntary” dues checkoffs are truly voluntary.

Finally, while what is old is new again, it is likely that this decision will be appealed to the Ninth Circuit Court of Appeals, which has been the only circuit to question the exception of dues checks off from the Katz unilateral change doctrine in a long-running dispute with the NLRB on this issue going back to 2002. So keep your radio tuned to this dial because what is new could become old yet again.


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Traditional Labor Relations

The attorneys in Ogletree Deakins’ Traditional Labor Practice Group have vast experience in complex and sophisticated traditional labor law matters. This includes experience advising and representing employers of all sizes and across virtually all industries in connection with union representation campaigns, collective bargaining negotiations, strike preparations, labor arbitrations, and National Labor Relations Board proceedings.

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