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Municipality’s right-to-work ordinance preempted by NLRA

By Ronald Miller, J.D.

A municipal ordinance that prohibited union security agreements, prohibited unions from imposing hiring hall provisions, and required any dues deduction arrangement to be revocable by the employee at any time was preempted by the NLRA, ruled a federal district court in Illinois. While the court dismissed the claims of certain unions because they lacked standing, and dismissed all of the unions’ claims brought under Section 1983, it nevertheless granted summary judgment in favor of a union that represented employees whose principal place of employment was within the village, concluding that federal law preempted the union security agreement, hiring hall, and dues check-off provisions (Operating Engineers, Local 399 v. Village of Lincolnshire, Illinois, January 7, 2017, Kennelly, M.).

Regulation of unions. In December 2015, the Village of Lincolnshire passed an ordinance providing that: “No person covered by the NLRA shall be required as a condition of employment or continuation of employment with a private-sector employer:” (A) to refrain from membership in a labor organization; (B) become a member of a labor organization; (C) pay dues; (D) pay a third party in lieu of such payments; or (E) be referred for employment through a labor organization. The ordinance also provided that it shall be unlawful for employers located in the village to deduct from an employee’s wages any union dues or assessments, unless the employer had received a signed written authorization of such deductions, which authorization could be revoked by the employee at any time by giving written notice to the employer.

Four unions that were parties to collective bargaining agreements that covered employees of employers located in the village, or represented employees scheduled to perform work in the village or likely to perform work in the future, challenged the ordinance alleging that it was invalid under the Supremacy Clause, and deprived them of rights under Section 1983. The unions also contended that the ordinance was preempted by the NLRA and the LMRA.

The unions moved for summary judgment, arguing that the ordinance was preempted by federal law while the village filed a cross-motion for summary judgment, arguing that the unions lacked standing to bring these claims and that their claims lacked merit.

Standing. To have standing, a plaintiff must have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” The unions alleged that they were the collective bargaining representatives for various units of employees who are employed by companies located in Lincolnshire.

The Supreme Court has not directly addressed what constitutes standing to bring a preemption challenge to state or local ordinances based on the NLRA or the LMRA. But in Oil, Chemical & Atomic Workers International Union, AFL-CIO v. Mobil Oil Corp., the Court held that “right-to-work laws,” apply only to employees whose “predominant job situs” is located within the jurisdiction that passed the ordinance. Thus, the village’s ordinance generated an injury sufficient to confer standing only if the unions represented employees who worked predominantly in the village under agreements containing provisions prohibited by the ordinance.

Consequently, three of the four unions lacked standing to challenge the ordinance’s provisions where they failed to allege they had entered into any agreements containing provisions prohibited by the ordinance. The fourth union met the standing requirement based on declarations from employees that it represented under a CBA whose predominant job site was in the village. Thus, it had standing to challenge all aspects of the ordinance.

Section 1983 claim. The village argued that the unions failed to state a claim under Section 1983 because they could not show it violated a federally protected right. Here, the unions did not argue that the village abridged a right or course of conduct that Congress intended to leave to the control of the free market. Instead, they argued that the village attempted to regulate an area otherwise reserved to the federal government through the NLRA. As a result, the court found that the unions’ claims did not fall within the reach of Section 1983 as established by the Supreme Court’s decision in Golden State Transit Corp. v. City of Los Angeles. The court therefore dismissed the unions’ claims under Section 1983.

Preemption claim. The unions next argued that the challenged provisions of the ordinance were preempted by the NLRA. Specifically, they contended that the NLRA generally preempts state and local regulation of labor relations. Further, they argued that the preemption exception created by 29 U.S.C. Sec. 164(b) (NLRA Section 14) applies only to state, and not local, ordinances. (Section 164(b) permits states to regulate or prohibit the use of union security agreements.) For its part, the village argued that the ordinance fell under the preemption exception in the NLRA.

It is well-accepted “that in passing the NLRA Congress largely displaced state regulation of industrial relations.” Thus states “may not regulate activity that the NLRA protects, prohibits, or arguably protects or prohibits.” The NLRA does, however, create a single exception. Section 164(b) permits states to regulate or prohibit the use of union security agreements.

Municipal ordinance. The State of Illinois has not adopted a statute prohibiting union security agreements. Neither the Supreme Court nor the Seventh Circuit has expressly addressed whether the power given to states and territories in the NLRA to prohibit union security agreements extends to political subdivisions of the state. However, the Supreme Court has indicated that when Congress has intended a statute to preempt regulation in that field, any exception to such preemption must be read as a narrow authorization—as opposed to an expansive protection—of state regulation. Therefore, if the NLRA preempts the field of union security agreements, the exception for state regulation in Section 164(b) does not extend to regulation by local subdivisions.

The legislative history supported the conclusion that Congress intended to preempt the field of union security agreements. Moreover, extending the preemption exception to local ordinances would create an impossibly disparate system that would undermine Congress’s intent to create uniformity in the regulation of labor relations. Accordingly, summary judgment was granted in favor of the unions regarding the preemption issues.

[Ed. Note: Notably, in November 2016, the Sixth Circuit found in United Automobile, Aerospace and Agricultural Implement Workers of America Local 3047 v. Hardin County, Kentucky that a county’s right-to-work ordinance was "state law" for purposes of the exception from preemption by Congress under NLRA Section 14(b). Because Section 14(b) covers political subdivisions of a state, to the extent the ordinance prohibited employers from requiring membership in a labor organization as a condition of employment, it was valid. However, two provisions of the ordinance, which prohibited hiring-hall and dues-checkoff provisions, were not excepted from preemption, and so were unenforceable.]

Check-off arrangements. The LMRA authorizes check-off arrangements so long as the employee makes “a written assignment” to his employer “which shall not be irrevocable for a period of more than one year,” 29 U.S.C. Section 186(c)(4). Check-off arrangements clearly do not amount to the “compulsory unionism” that states are permitted to regulate under Section 164(b), noted the court. Because employers must have written authorization to deduct union dues, check-off arrangements do not compel employees to unionize. In this instance, because the ordinance imposed more stringent requirements than federal law, it conflicted with the LMRA. The LMRA’s express regulation of this aspect of labor relations was sufficient to preempt state regulation.