Today, by a vote of 7-2, the Supreme Court overturned a California statute that prohibited employers from speaking out on issues relating to unions and labor policy. The restriction even applied to the payment of salaries, speaking about unions to employees working on state contracts, and meeting with employees on state property to discuss union-related issues. The statute, passed after intense lobbying by the AFL-CIO, applied to any employers who received over $10,000 in state program funds – including everything from MediCal reimbursements to payments for building roads and schools. The only significant exceptions all relate to employer speech favoring union activity.
Cato filed a brief supporting the petitioners in this case – the Chamber of Commerce and a group of small business owners – to argue that 1) the case should be decided on labor law grounds because the National Labor Relations Act (NLRA) clearly prohibits state regulations of this kind; but 2) if the Supreme Court reached the First Amendment issue that the Ninth Circuit took it upon itself to decide (and decide erroneously), the statute should be struck down because it imposes an unconstitutional condition on the receipt of state funds and burdens private speech in an area unrelated to the programs for which the funds are given. In the end, the Supreme Court correctly decided the case on NLRA preemption grounds – that California intruded on an area that is properly left to Congress’s authority – noting its own 1976 determination that Congress had left unionization activities to be “controlled by the free play of market forces.” As Justice Stevens aptly stated, California’s statute acted to regulate within “a zone protected and reserved for market freedom” and thus had to be struck down.