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Mississippi right-to-work law can’t bar union hiring hall fees

By Ronald Miller, J.D.

NLRA Section 14(b) did not allow the state of Mississippi to prohibit unions from requiring nonunion members to pay a hiring hall fee, the Fifth Circuit held, concluding that the state’s right-to-work law was preempted by federal law to the extent that it prohibited nonunion members from being required to pay hiring hall fees. Accordingly, a nonunion job seeker was lawfully denied a referral because he refused to pay the fee charged by a union to use its exclusive hiring hall, the appeals court held, affirming the district court’s dismissal of his suit contending the fee was unlawful (Simms v. Local 1752, International Longshoremen Association, September 29, 2016, King, C.).

Hiring hall fees. Under the terms of a collective bargaining agreement, an employer was required to hire all of its clerks and other employees through a union hiring hall. As a condition of employment through the hiring hall, an individual had to either be a union member or pay a “service fee.” The employer assisted in the collection of the fee by deducting the amount due from an employee’s paycheck if the employee signed a checkoff authorization card. The employee, who was not a union member, was required to use the hiring hall. He did not make the required payment to the union for use of its hiring hall. The union advised him that he had to either pay the fee or be a dues-paying member of the union.

Since the employee was not a union member, he was required to make some arrangement with the hiring hall to pay the fees, or he would no longer be referred through the hiring hall. But the employee did not make the payments, so the union caused the employer to not employ him. Ten days later, under protest, the employee signed an agreement with the union to pay the delinquent payments in installments, and was once again allowed referrals through the hiring hall. Thereafter, he filed suit asserting that: (1) the union breached its duty of fair representation; (2) its assessment of mandatory fees to a nonunion member for using the hiring hall was prohibited by Mississippi’s right-to-work law; and (3) the payment agreement was void as against public policy for those reasons. The district court dismissed his claims.

Right-to-work law. The employee’s primary argument on appeal was that NLRA Section 14(b) allowed enforcement of Mississippi’s right-to-work law, thereby precluding the union’s assessment of hiring hall fees to the employee. The employee did not allege that the fees were unreasonable or excessive relative to the costs of operating the hiring hall, the appeals court observed; rather, he argued that regardless of the amount, all hiring hall fees can be prohibited by a state right-to-work law because payment of those fees amounts to union “membership” under Sec. 14(b).

Section 14(b)’s reach. Section 8(a)(3) of the NLRA contains a proviso that allows unions to require “membership” as a condition of employment 30 days after the beginning of employment so long as safeguards are met. Essentially, the membership that may be required has been “whittled down to its financial core.” Section 14(b) “was designed to prevent other sections of the Act from completely extinguishing state power over certain union-security arrangements. However, the more restrictive policies that Sec. 14(b) allows states to enact relate not to the hiring process but, rather, to conditions that would come into effect only after an individual is hired.

Thus, Sec. 14(b) did not allow Mississippi to prohibit unions from requiring nonunion job seekers to pay a hiring hall fee. Therefore, to the extent Mississippi’s right-to-work law prohibited nonunion members from being required to pay hiring hall fees, it was preempted.

Hiring hall operation. For nearly 70 years, courts have consistently treated hiring halls as being distinct from union-security agreements generally. While the existence of an exclusive hiring hall may encourage union membership, Sec. 8(a)(3) “does not outlaw all encouragement or discouragement of membership in labor organizations; only such as is accomplished by discrimination is prohibited,” the court observed. Moreover, it is settled law that hiring halls can require nonunion members to pay a reasonable fee related to the costs of operating the hiring hall.

This distinction makes sense. Hiring halls serve a unique purpose, one in which the union can act as an employment agency or referral system for the employer, benefiting all of the parties involved. This distinction is why, unlike a union-security agreement, no court has held that referral fees assessed to nonunion members for use of a hiring hall can be prohibited under a state right-to-work law. It is settled law that, under the NLRA, exclusive hiring halls can assess nonunion members a reasonable fee for the costs of operating the hiring hall. Such a fee does not constitute union “membership” under Sec. 14(b), and this conclusion is reinforced by the fact that this fee relates to pre-hire rather than post-hire conduct. Accordingly, the judgment of the district occur was affirmed.