Back to Beck: NLRB Expands Rights of Beck Objectors

On March 1, 2019, only seven days after the NLRB General Counsel issued a Memorandum taking an expansive view of Beck rights, a divided NLRB ruled that nonmember objectors cannot be compelled to pay for union lobbying expenses United Nurses & Allied Professionals (Kent Hospital), Case 01-CB-011135 (March 1, 2019).

The Board majority held that lobbying activity, although sometimes relating to terms of employment or incidentally affecting collective bargaining, is not part of the union’s representational function, and therefore lobbying expenses are not chargeable to Beck objectors. The ruling relies on relevant judicial precedent holding that a union violates its duty of fair representation if it charges agency fees that include expenses other than those necessary to perform its statutory representative functions.

The Acting General Counsel alleged that the Union vi­olated Section 8(b)(1)(A) by charging objectors dues that it used to fund lobbying, which the Acting General Counsel categorized as nonrepresentational activity. Specifically, he contested the chargeability of lobbying expenses related to the following seven bills:

1. The Hospital Merger and Accountability bill (Rhode Island): This bill, among other things, would have empowered a state government council to monitor and regulate hospitals that own more than 50 percent of hospital beds in the state.
2. Public Officers and Employees Retirement bill (Rhode Island): This bill would have raised the cap on post-retirement earnings that former state-employed registered nurses could earn without reducing their retirement benefits.
3. Hospital Payments bill (Rhode Island): This bill, among other things, would have provided all acute-care hospitals in Kent County (home of Kent Hospital) with $800,000 in funding.
4. Center for Health Professions bill (Rhode Island): This bill would have created a center tasked with developing a sufficient, diverse, and well-trained healthcare work force in the state.
5. Safe Patient Handling bill (Vermont): This bill would have required hospitals to establish a safe patient handling program, which would entail, among other things, establishing rules to protect nurses and purchasing new equipment to improve patient-handling procedures.
6. Mandatory Overtime bill (Vermont): This bill, among other things, would have prohibited hospitals from requiring any employee to work more than 40 hours a week.
7. Mental Health Care Funding bill (Vermont): This bill would have provided additional funding for mental healthcare services at three facilities at which the Union has bargaining units.

The majority believed that “relevant Supreme Court and lower court precedent compels holding lobbying costs are not chargeable as incurred during the union’s performance of statutory duties as the objectors’ exclusive bargaining agent.” They noted that “the Court has consistently treated the limits on compulsory union dues as rooted in the union’s duty of fair representation regardless of the legal basis for challenging an expense. Consequently, the union’s authority to compel nonmembers’ financial support under the ‘free riders’ rationale cannot go beyond the expenses necessary to ‘performing the duties of an exclusive representative.’”

The Board majority also held that it is not enough for a union to provide objecting nonmembers with assurances that its compilation of chargeable and nonchargeable expenses has been appropriately audited. Citing the “basic considerations of fairness” standard adopted by the Supreme Court, the Board held that a union must provide independent verification that the audit had been performed. Failure to do so violates the union’s duty of fair representation. The majority reasoned as follows:

We … conclude unions must provide audit verification to adequately assure the reliability of the financial information provided to objectors. The Board in KGW Radio and Safeway has already made clear that the financial information provided to Beck objectors must be independently verified by an au­dit. It inevitably follows from this precedent that we should explicitly hold that unions must take the modest additional step of supplying verification from the auditor that the provided financial information has been independently verified. Just as requiring objectors to simply accept the union’s financial figures without an audit is unfair, so too would be requiring objectors to accept the union’s bare representations that the figures were appropriately audited. Independent verification by an auditor is essential information objectors need to decide whether to challenge the propriety of the union’s fee.

Chairman John F. Ring was joined by Members Marvin E. Kaplan and William J. Emanuel in the majority opinion. Member Lauren McFerran dissented.