HR Management & Compliance

Unions: Ninth Circuit Invalidates California Law Requiring Employer Neutrality During Organizing Campaigns

A California law curtailing some employers’ rights to oppose their employees’ unionizing efforts is superseded by the National Labor Relations Act, the Ninth Circuit Court of Appeal has held. The ruling could bring welcome relief to employers facing union organization efforts.

Restriction on Use of State Funds Struck Down

Assembly Bill 1889, signed into law in 2000, forbade employers who received more than $10,000 in state grants or funds from using that money to “assist, promote, or deter union organizing.” Any employer that intended to oppose an organizing drive had to segregate all state funds and maintain records documenting that its efforts weren’t funded by state money.

The law specified that the unions or the state attorney general could sue an employer that didn’t comply with the prohibition on using state funds. If the employer was found to have used state funds for such efforts, or to have commingled state and private funds, it would have to return the expended state funds and pay a 200 percent penalty.

In 2002, a federal district court struck down the law and issued an injunction prohibiting the AFL-CIO or the state from acting to enforce the law. The state immediately appealed.

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Appellate Court Reviews State’s Role

Now, the federal Ninth Circuit appeal court has affirmed the lower court’s ruling. The appeal court first examined whether the legislation was a labor relations regulation or merely the state acting as a market participant. The federal National Labor Relations Act (NLRA) preempts state laws regulating labor relations, but it doesn’t supersede actions a state or local government takes as a market participant.

The court explained that when a state uses its spending power to shape the overall labor market in an essentially nonproprietary way, the market participant exception will not apply, and the state action may be subject to NLRA preemption. The court concluded that A.B. 1889 was “designed to have a broad social impact by altering the ability of a wide range of recipients of state money to advocate about union issues.” And the legislation “is on its face designed to interfere directly with the NLRA’s own system for the promotion or deterrence of union organizing by employers and employees.”

The decision is expected to affect the future of similar legislation in other states and calls into question a San Francisco ordinance that requires employers in certain industries to maintain union neutrality policies.

Responding to Organizing Efforts

Although the Ninth Circuit removed this latest roadblock to employer efforts to deter union organizing, there are still many rules employers must be aware of to avoid unfair labor practice charges when it comes to employee efforts to organize.

If you are facing an organizing campaign, make sure your managers understand what they can and cannot say and do. If you don’t have someone with labor relations experience in house who knows the restrictions, be sure to consult an outside labor relations professional.