Friday, September 22, 2006
State May Ban Employers’ Use of State Funds to Fight Unionization—C.A.
By a MetNews Staff Writer
California may prohibit employers from using state grant money to oppose union organizing campaigns, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
In a 12-3 en banc decision, the court reversed since-retired U.S. District Court Judge Gary L. Taylor of the Central District of California, who held that the National Labor Relations Act preempted California law prohibiting employees who receive more then $10,000 in state grant or program funds from using the funds to “assist, promote or deter union organizing.”
The ruling replaces a 2-1 panel decision affirming Taylor’s grant of partial summary judgment in favor of the Chamber of Commerce of the United States and other plaintiffs and an injunction prohibiting the State of California and other defendants from enforcing the law against any employer subject to the NLRA.
Senior Judge Robert R. Beezer wrote the majority panel opinion in which U.S. District Judge Morrison C. England of the Eastern District of California, sitting by designation, concurred, and from which Judge Raymond C. Fisher dissented.
The purpose of the law is set forth in its preamble, which states:
“It is the policy of the state not to interfere with an employee’s choice about whether to join or to be represented by a labor union. For this reason, the state should not subsidize efforts by an employer to assist, promote, or deter union organizing. It is the intent of the Legislature in enacting this act to prohibit an employer from using state funds and facilities for the purpose of influencing employees to support or oppose unionization and to prohibit an employer from seeking to influence employees to support or oppose unionization while those employees are performing work on a state contract.”
Employers who violate the law are subject to disgorgement of the state funds used and a civil penalty equal to twice the amount of those funds. Suspected violators may be sued by the state Attorney General or by any private taxpayer. If an employer commingles state and other funds, the law presumes that any expenditures to assist, promote or deter union organizing derive in part from state funds.
Fisher, writing the majority en banc opinion, said that the law is not preempted by the NRLA because “California’s refusal to subsidize employer speech for or against unionization does not regulate an activity that is actually protected or actually prohibited by the NLRA,” and does not regulate an area intended by Congress “to be controlled by the free play of economic forces.”
Fisher also said that the law does not violate employers’ First Amendment rights.
“Employers remain free to convey their views regarding unionization, and thus to exercise their First Amendment rights, provided only that they do not use state grant and program funds to do so,” he said.
Chief Judge Mary M. Schroeder and Judges Stephen Reinhardt, Alex Kozinski, Michael Daly Hawkins, Sidney R. Thomas, Barry G. Silverman, M. Margaret McKeown,
Kim McLane Wardlaw, Richard A. Paez, Johnnie B. Rawlinson, and Richard R. Clifton joined in Fisher’s opinion.
In his dissenting opinion joined by Judges Andrew J. Kleinfeld and Consuelo M. Callahan, Beezer said:
“[California law] is far from a neutral enactment that simply restricts use of undefined ‘state funds.’ It abrogates the First Amendment rights of employers to speak out and discuss union organizing campaigns.”
“Under the guise of preserving state neutrality, the statute operates to impel employers themselves to take a position of neutrality with respect to labor relations, in direct conflict with employers’ rights under the First Amendment.”
Beezer pointed out that the law “applies to any vendor of goods or services who receives payouts from the State of California ‘in excess of ten thousand dollars in any calendar year on account of its participation in a state program,’” which he said “brings under the auspices of the statute every purveyor of goods or services unlucky enough to cross the magic $10,000 threshold in its annual contracting with the state.”
Beezer also said the law is burdensome, requiring employers who want to speak out on union organizing efforts to maintain two completely separate accounting and payroll systems and allocate “every single employer expense related to union organizing activity, including supervisor time and employee time, which must be meticulously logged and tracked.”
“The significant and undeniable impact [the law] has on employers’ speech rights means that not only does it violate the First Amendment, but it is undoubtedly preempted by the NLRA.”
Attorney General Bill Lockyer said in a statement:
“California state law says that taxpayer money should not be used by public employers or private business to influence workplace elections. The right of employees to freely decide whether to unionize is fundamental, and already guaranteed by both state and federal laws. The business plaintiffs failed to convince the court that federal law should pre-empt a reasonable state restriction on the use of its own taxpayers’ dollars. I am pleased that the 9th Circuit upheld California’s common sense law.”
The case is Chamber of Commerce of the United States v. Lockyer, 03-55169.
Copyright 2006, Metropolitan News Company