Testimony

The Worker Paycheck Fairness Act

Committee on Education and the Workforce
United States House of Representatives

Mr. Chairman, distinguished members of the committee:

My name is Roger Pilon. I am a senior fellow at the Cato Institute and the director of Cato’s Center for Constitutional Studies. [1]

I want to thank you, Mr. Chairman, for inviting me to testify before the committee on H.R. 1625, the Worker Paycheck Fairness Act. This is an important piece of legislation that should help to restore the rights of American workers to freedom of association. At the same time, we should not delude ourselves into believing that it goes to the heart of the matter. If employees, employers, and labor unions do not enjoy full freedom of association today, it is due to restraints that are imposed by the National Labor Relations Act (NLRA) and its progeny, which are the real source of the problem. This bill should address some of the problems created by the Act. It will not address the most serious problems.

First Principles

Freedom of association is our birthright as Americans. The right has two aspects: the right not to associate with others except on mutually agreed upon terms; the right to associate with others for peaceful purposes free from the interference of third parties. [2]

The NLRA violates both of those principles. If a majority of workers in a “bargaining unit” votes to be represented by a union, minority workers are forced to a choice between being represented by that union before their employer or severing their relationship with their employer. They can enjoy their right not to associate with the union, that is, only if they give up their jobs; thus, their right to directly associate with their employer is abridged by third party interference. Likewise, the employer’s right not to associate with the union is abridged—or conditioned on his giving up his right to be in business; and his right to associate directly with his employees is abridged as well.

Forced Association

Setting aside violations of the employer’s rights—no small matter—employees in 21 states today can escape some of this forced association by exercising their rights, under state right-to-work laws, to be free from compulsory payment of dues. Such laws violate rights of association only in the rare case—perhaps a null set—in which an employer may want a fully unionized work force. Absent that situation, they are efforts to right the wrong imposed by the NLRA in the first place—at least for employees.

In the rest of the nation, however, the forced association imposed on minority employees by the NLRA takes three principal forms: (1) compulsory representation by the union of the employee before the employer; (2) compulsory payment of dues and other fees by the employee to the union; and (3) the use by the union of those compulsory exactions from the employee for purposes that amount to further forced association—to promote nonworkplace interests or values that may be inimical to the interests or values of those employees, thus associating them, through their financial support, with those causes.

Over the years, through a series of Supreme Court decisions that culminated in 1988 in the Beck decision, [3] the Court has limited the coercion in the third category by finding that when a union uses compulsory dues for nonworkplace related purposes it violates its duty of fair representation under the NLRA. In Beck the Court found that only 21 percent of member dues went for collective bargaining, contract administration, and grievance procedures, entitling Beck and his co-plaintiffs to a 79 percent refund of their dues.

The Beck ruling is not self-enforcing, however, and therein lies the immediate practical problem. Although some unions have purported to be abiding by the requirements of Beck, the numerous complaints that have been brought before the National Labor Relations Board (NLRB) only confirm the March 18, 1997 testimony of several witnesses before this committee’s Subcommittee on Employer-Employee Relations: across the nation, countless employees who assert their Beck rights are subject to union dissembling, endless frustration, harassment, and even physical intimidation. [4] H.R. 1625 may reduce that coercion as it attempts to eliminate the coercion of category (3) above. It will do nothing about the coercion of categories (1) and (2).

H.R. 1625

The first substantive provision of H.R. 1625 requires a union to obtain affirmative authorizations from each employee before any portion of his dues can be used “for activities not necessary to performing the duties of the exclusive representative of the employees in dealing with the employer on labor-management issues.” That provision—requiring the union to obtain authorization rather than the employee to assert his rights—marks a significant change over current practice. It implies that the money, and the control of its use, belong in the first instance to the employee, not to the union. It “unbundles” the dues, so to speak, right from the start—distinguishing that portion that goes to collective bargaining activities and that portion that goes to other activities. Regarding the latter, the employee is master.

At the same time, it is unclear to me just how an employee’s refusal to give his authorization would be given effect under the bill. Will the union be foreclosed from collecting that portion of an employee’s dues not so authorized? Or will the union simply have to refund the portion after some period of time? As a practical matter, the difference in procedures might prove significant.

The notice provisions of Section 4 (a)(2) and Section 5 are also a significant improvement over current practice. As the March 18 hearings noted above made clear, many employees laboring under the complex regime of the NLRA, concerning which they have had no real say, are simply unaware of their rights. H.R. 1625 addresses that problem to a significant degree.

Similarly, the enforcement provisions of Section 4 (c), especially the provision for “fees and costs” of subsection (c)(3), are a welcome improvement. Were the “fees and costs” subsection to be stripped subsequently from the bill, however, I cannot imagine how the average worker, absent pro bono assistance, could vindicate his rights. It is imperative, therefore, that this provision be kept in the bill—not least because the bill arises in the first place from the practical problems that surround the enforcement of Beck rights.

Finally, with respect to the accounting requirements of Section 6, which amends the Labor-Management Reporting and Disclosure Act of 1959 by requiring unions “to attribute and report expenses in such detail as necessary to allow members [and nonmembers?] to determine whether such expenses were necessary to performing the duties” of the union, that is a commendable goal, but I wonder how realistic it is.

One of the problems we have today, as the above-noted March 18 testimony brought out, is in obtaining an accurate accounting of such expenditures—not least because there is no bright line between collective bargaining and non-collective bargaining expenditures. In the truly private sector, where association is truly free, this difficulty is addressed, as it must be, more as a matter of good will than of strict and precise accounting. Thus, a certain latitude is allowed in the accounting practices of a firm or an association; but if the practices grow too lax, people are always at liberty to dissociate. Here, however, the parties are bound by statutory law alone. We have to strive for precise accounting, therefore, whatever the difficulties. We should not delude ourselves about those difficulties, however, nor about the proper route around them—through privatizing the entire matter and allowing for truly private unions, unarmed with coercive power, to arise.

Objections

There are three principal objections to this bill. The first is that even current rules, after California Saw, [5] “are far more elaborate than anything that exists to protect, for example, dissident stockholders.” [6] The proper response goes to the fundamental difference between dissident stockholders and dissident employees.

Stockholders freely buy and sell stock—through which acts they associate and dissociate with a company—mindful, in principle, of the corporation’s articles of incorporation and bylaws, through which the corporation governs itself. Securities law is designed—in significant part, at least—to enforce those essentially contractual relationships. [7] Labor law, by contrast, is meant not to secure a contractual order predetermined by the parties themselves but to impose a legislatively determined set of relations that the parties themselves, presumably, would never have reached if left to their own devices. Because it allows a majority of workers in a bargaining unit to impose its will on the minority and on the employer, it is coercive from the start. Given the coercion that is inherent in the situation, it is imperative, as with all government coercion, that the rights of minorities be fully protected.

But the analogy between the labor and the political contexts can be carried too far—or, better, misused—which brings us to the second objection. It is said, in complaint not simply about bills like this but about decisions like Beck, that “we in the labor movement find ourselves called upon to justify the right of democratically-elected labor leaders to decide, through democratic processes, to expend union revenues to advance the interests of working families.” [8]

To respond, not even the federal government—operating, at least, under a properly interpreted Constitution of delegated, enumerated, and thus limited powers—can expend public revenues on whatever its democratically-elected leaders decide. If that is true for the federal government, it is true a fortiori for labor leaders, who are empowered, by statute, for a very limited set of purposes.

Finally, it is objected that legislation is not needed because California Saw provides “a fully-developed set of rules to protect the dissidents’ rights” and that the real purpose of this bill is “to foment dissent” and “to infringe the constitutional right of the majority to associate freely to advance their interests.” [9]

Two responses are in order. First, it is heartening to see a labor spokesman invoking the right of free association, even if he misapplies it and, therefore, probably misunderstands it; for nothing in this bill infringes the right of the majority to associate freely to advance their interests. They just can’t do it using the money of the minority. Thus, the bill does not foment dissent; it accommodates it. Second, if this bill adds nothing to the fully adequate regime we now have, why object to it? Clearly, either the present regime is not adequate—as earlier testimony bears witness—or there can be no objection to merely encoding it in statute.

Conclusion

As noted above, this bill should provide a marginal gain for workers who today have limited and difficult recourse against labor union abuses of their power to exact compulsory dues. It does not go to the heart of the matter, however, which is to be found in the power of exclusive representation itself. In fact, it would be a tragic result if this bill were to be used to take pressure off the movement now in Congress to enact a national right-to-work law, which would go much further, absent abolition of the NLRA itself, toward the heart of the matter.

In your letter of invitation, Mr. Chairman, you wrote that what you were “hoping to accomplish at the hearing is to demonstrate that the current process by which individuals can be required to pay union dues or their equivalent as a condition of employment operates to the detriment of working people.” We cannot say that it operates to the detriment of all working people. But I hope to have indicated how it works to the detriment of those working people who want simply to be left alone to associate, or to refrain from associating, with whomever they wish. That is what individual liberty is all about. That is what this nation is all about. That is the business this Congress should be about, toward which this bill would be a useful first step.


Notes

[1] A biographical sketch is attached. Pursuant to House Rule XI, clause 2(g)(4), neither I nor the Cato Institute receives any federal funds.

[2] I have discussed these issues more fully in Roger Pilon, “Discrimination, Affirmative Action, and Freedom: Sorting Out the Issues,” 45 American University Law Review 775 (1996).

[3] Communication Workers of America v. Beck, 487 U.S. 735 (1988). For a useful summary of those decisions, see Charles W. Baird, “The Permissible Uses of Forced Union Dues: From Hanson to Beck,” Cato Policy Analysis No. 174, July 24, 1992.

[4] In securing the Beck rights of employees, the NLRB has itself hardly been a model of neutral enforcement. Incredible as it may sound, the board’s general counsel filed a complaint in Pittsburgh, PA, on March 14, 1996, alleging that an employer had committed an unfair labor practice when he sent a letter to his employees advising them of their Beck rights. NLRB v. Beverly Health and Rehabilitation Services, Case # 6-CA27453, argued before an ALJ in Pittsburgh on June 25, 1997.

[5] California Saw & Knife Works, 320 NLRB No. 11 (1995).

[6] In the above-noted March 18 hearings, see the testimony of James B. Coppess, attorney for the Communications Workers of America, p. 6.

[7] I have discussed the theory of those matters in detail in Roger Pilon, “Corporations and Rights: On Treating Corporate People Justly,” 13 Georgia Law Review 1245 (1979).

[8] Coppess, supra note 6, p. 2.

[9] Id., pp. 6-7.