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Vlink: Should unions charge free-rider fees for grievances?

March 23, 2016

vlink-david-mug Vlink

Much to the dismay of the labor community, Indiana has joined the 25 states with so-called “right-to-work” laws. Before getting to the point of this article, it’s important to dispel two common myths about these laws. Right-to-work does not guarantee employment, nor does it protect employees against compelled union membership. Even in non-right-to-work states, employees cannot statutorily or constitutionally be compelled to be a “member” of, or “join” the union at their workplace.

What employees in non-right-to-work states can be required to do is pay a “fair share” fee to the union that represents them. A fair share fee is the percentage of full membership dues that go toward negotiating and administering the collective bargaining agreement, but not the union’s political and fraternal activities.

In order to ensure that employees who enjoy the benefits of collective bargaining pay their fair share, unions have historically bargained for what are known as “union security” clauses in collective bargaining agreements. These clauses require all employees to pay their fair share, even those who choose not to join the union.

What right-to-work does is make union security clauses void and unenforceable. Employees in right-to-work states can decline to pay a nickel to the union that represents them, although a majority of the employees desire union representation. The union has a duty to fairly represent every employee regardless of their membership status.

The main concern with right-to-work laws is the free-rider problem they create, which threatens the financial viability of unions and undermines their ability to bargain effectively. (Most labor proponents believe this was the intention behind the law rather than an unintended consequence, but I digress).

Now that it appears right-to-work is likely to be a permanent part of the legal landscape in Indiana, the question is how can unions respond to the free-rider problem? The National Labor Relations Board recently asked for briefs on an interesting proposal: Can unions in right-to-work states charge free-riders a fee for processing their grievances? The grievance and arbitration procedures are among the most expensive aspects of the collective bargaining agreement, with arbitrations typically costing thousands and sometimes tens of thousands of dollars.

The NLRB’s invitation for briefs arose from the case of Steelworkers Local 1192, wherein a free-rider employee believed the employer violated the collective bargaining agreement when it used contractors to perform work he could have performed on overtime. The employee demanded the union file and process a grievance on his behalf. When the union declined unless the employee paid his fair share fees for the remainder of the collective bargaining agreement, the employee filed an unfair labor practice charge against the union.

An ALJ found in the employee’s favor based on NLRB precedent holding such policies to constitute an unfair labor practice. The union appealed to the full board, which asked for amicus briefs on whether it should change its policy forbidding unions from charging free-riders grievance processing fees. Before the NLRB could resolve this issue, however, the parties reached a settlement, which the NLRB approved and suspended its invitation for briefs, leaving the issue unresolved.

The question thus remains: Should the NLRB allow unions to charge free-riders for grievance processing? Those in the labor community generally say yes, for a number of reasons. While it is bad enough to allow employees to be free-riders, requiring a union to expend its resources to process grievances on behalf of employees who refuse to pay their fair share for the agreement under which their grievances arise adds insult to injury. If free-riders want to process the grievance without the union’s assistance, they should be free to do so; but the union should not be required to pay for it.

In addition to the equitable arguments in support of a change in policy, there is also legal support for the adoption of a new rule. While the National Labor Relations Act allows states to adopt right-to-work laws, it does not guarantee employees who elect to take advantage of those laws the right to have their grievances adjusted for free. The “duty of fair representation” is only breached where a union’s treatment of an employee is “arbitrary, discriminatory, or in bad faith.” There is nothing arbitrary, discriminatory, or in bad faith about requiring someone to pay for a service that they themselves are demanding.

Moreover, the NLRB’s current rule is outdated and simply incorrect. In Hughes Tool (1953) and Machinists Local 697 (1976), the board said charging free-riders a fee to process their grievances was discrimination tantamount to racial discrimination. This comparison is inapt because race is an immutable characteristic, while becoming a free-rider is a choice made by the employee. As the dissenting member in Hughes Tool noted, as long as the grievance processing fee is no more than what a member would be required to pay, there is no discrimination based on membership status. Further, the board’s rule was decided prior to CWA v. Beck (1988), wherein the U.S. Supreme Court recognized that charging fair share fees to nonmembers is not discriminatory. Unions in the construction industry cannot discriminate based on membership status as to whom they refer from their hiring hall, but they are permitted to charge nonmembers a fee proportionate to their share of the cost of operating the hall. The same rule should apply for grievance processing.

The NLRB should revisit the issue of allowing unions to charge free-riders fees for processing their grievances. When it does so, the board should overrule its past precedent and adopt a new rule permitting unions to implement policies requiring free-rider employees to pay the equivalent of fair share fees throughout the duration of the collective bargaining agreement for processing their grievances.•

David T. Vlink is an associate attorney at Fillenwarth Dennerline Groth & Towe LLP in Indianapolis, specializing in labor and employment law. He can be reached at dvlink@fdgtlaborlaw.com or 317-353-9363. The opinions expressed are those of the author.

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