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Supreme Court strikes down California's labor "neutrality" law

A California law forbidding private-sector employers from using state grant monies to assist or deter union organizing is preempted by the NLRA, the US Supreme Court ruled 7-2, reversing an en banc Ninth Circuit decision. Writing for the majority, Justice Stevens noted that the Taft-Hartley Act amended the NLRA by adding Section 8(c), which protects from NLRB regulation noncoercive speech about labor organizing by both unions and employers. As amended, the section manifested a "congressional intent to encourage free debate on issues dividing labor and management" (Chamber of Commerce of the United States v Brown, Dkt No 06-939, 156 LC ¶11,043).

Background. The statute (Cal. Gov't. Code Sections 16645-16649) prohibited the use of state grants in excess of $10,000 in any calendar year "to assist, promote, or deter union organizing," which included any attempt by an employer to influence the decision of its employees or its subcontractors' employees regarding whether to support or oppose a labor organization that represents or seeks to represent those employees, or whether to become a member of any labor organization.

The statute did not apply to activities or expenses incurred in connection with the administration of a collective bargaining agreement or the adjustment of grievances; allowing a labor organization or its representatives access to the employer's facilities or property; performing an activity required by federal or state law or by a collective bargaining agreement; or negotiating, entering into, or carrying out a voluntary recognition agreement with a labor organization.

Employer groups led by the U.S. Chamber of Commerce challenged the law, which they argued violated the First Amendment and the free-speech guarantees of Section 8(c) of the NLRA, among other concerns. The district court enjoined enforcement, finding the statute preempted by the NLRA. A panel of the Ninth Circuit twice ruled that the law was preempted before the en banc Ninth Circuit concluded that it was not (see 153 LC ¶10,727 ).

Holding. Writing for the majority, Justice Stevens noted that in 1947, the Taft-Hartley Act amended the NLRA by adding Section 8(c), which protects noncoercive speech by both union and employers about labor organizing from National Labor Relations Board regulation. As amended, the section manifested a "congressional intent to encourage free debate on issues dividing labor and management." Justice Stevens stressed that "Congress' express protection of free debate forcefully buttresses the preemption analysis in this case."

Further, Stevens noted that "California's policy judgment that partisan employer speech necessarily interfere[s] with an employee's choice about whether to join or to be represented by a labor union . . . is the same [policy] that Congress renounced in the Taft-Hartley Act."

Dissent. Justice Breyer, with Justice Ginsburg joining, argued that the operative provisions of the law did not amount to impermissible regulation that interferes with the "free debate" policy as Congress intended it. Rather, the law "permits all employers who receive state funds to 'assist, promote, or deter union organizing.' It simply says to those employers, do not do so on our dime." Moreover, Justice Breyer stated that the statute would not "weaken or undercut any such congressional policy because Congress itself has enacted three statutes that, using identical language, do precisely the same thing." Breyer references the prohibition on recipients of Head Start, Workforce Investment Act, and National Community Service Act funds and from using those funds to "assist, promote, or deter union organizing."

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