The Worker Paycheck Fairness Act

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Mr. Chairman, distinguished members of the committee:

My name is Roger Pilon. I am a senior fellow at the CatoInstitute and the director of Cato's Center for ConstitutionalStudies. [1]

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

First Principles

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

The NLRA violates both of those principles. If a majority ofworkers in a "bargaining unit" votes to be represented by a union,minority workers are forced to a choice between being representedby that union before their employer or severing their relationshipwith their employer. They can enjoy their right not to associatewith the union, that is, only if they give up their jobs; thus,their right to directly associate with their employer is abridgedby third party interference. Likewise, the employer's right not toassociate with the union is abridged--or conditioned on his givingup his right to be in business; and his right to associate directlywith his employees is abridged as well.

Forced Association

Setting aside violations of the employer's rights--no smallmatter--employees in 21 states today can escape some of this forcedassociation by exercising their rights, under state right-to-worklaws, to be free from compulsory payment of dues. Such laws violaterights of association only in the rare case--perhaps a null set--inwhich an employer may want a fully unionized work force. Absentthat situation, they are efforts to right the wrong imposed by theNLRA in the first place--at least for employees.

In the rest of the nation, however, the forced associationimposed on minority employees by the NLRA takes three principalforms: (1) compulsory representation by the union of the employeebefore the employer; (2) compulsory payment of dues and other feesby the employee to the union; and (3) the use by the union of thosecompulsory exactions from the employee for purposes that amount tofurther forced association--to promote nonworkplace interests orvalues that may be inimical to the interests or values of thoseemployees, thus associating them, through their financial support,with those causes.

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

The Beck ruling is not self-enforcing, however, andtherein lies the immediate practical problem. Although some unionshave purported to be abiding by the requirements of Beck,the numerous complaints that have been brought before the NationalLabor Relations Board (NLRB) only confirm the March 18, 1997testimony of several witnesses before this committee's Subcommitteeon Employer-Employee Relations: across the nation, countlessemployees who assert their Beck rights are subject tounion dissembling, endless frustration, harassment, and evenphysical intimidation. [4] H.R. 1625 mayreduce that coercion as it attempts to eliminate the coercion ofcategory (3) above. It will do nothing about the coercion ofcategories (1) and (2).

H.R. 1625

The first substantive provision of H.R. 1625 requires a union toobtain affirmative authorizations from each employee before anyportion of his dues can be used "for activities not necessary toperforming the duties of the exclusive representative of theemployees in dealing with the employer on labor-management issues."That provision--requiring the union to obtain authorization ratherthan the employee to assert his rights--marks a significant changeover current practice. It implies that the money, and the controlof its use, belong in the first instance to the employee, not tothe union. It "unbundles" the dues, so to speak, right from thestart--distinguishing that portion that goes to collectivebargaining activities and that portion that goes to otheractivities. Regarding the latter, the employee is master.

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

The notice provisions of Section 4 (a)(2) and Section 5 are alsoa significant improvement over current practice. As the March 18hearings noted above made clear, many employees laboring under thecomplex regime of the NLRA, concerning which they have had no realsay, are simply unaware of their rights. H.R. 1625 addresses thatproblem 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 tobe stripped subsequently from the bill, however, I cannot imaginehow the average worker, absent pro bono assistance, couldvindicate his rights. It is imperative, therefore, that thisprovision be kept in the bill--not least because the bill arises inthe first place from the practical problems that surround theenforcement of Beck rights.

Finally, with respect to the accounting requirements of Section6, which amends the Labor-Management Reporting and Disclosure Actof 1959 by requiring unions "to attribute and report expenses insuch detail as necessary to allow members [and nonmembers?] todetermine whether such expenses were necessary to performing theduties" of the union, that is a commendable goal, but I wonder howrealistic it is.

One of the problems we have today, as the above-noted March 18testimony brought out, is in obtaining an accurate accounting ofsuch expenditures--not least because there is no bright linebetween collective bargaining and non-collective bargainingexpenditures. In the truly private sector, where association istruly free, this difficulty is addressed, as it must be, more as amatter of good will than of strict and precise accounting. Thus, acertain latitude is allowed in the accounting practices of a firmor an association; but if the practices grow too lax, people arealways at liberty to dissociate. Here, however, the parties arebound by statutory law alone. We have to strive for preciseaccounting, therefore, whatever the difficulties. We should notdelude ourselves about those difficulties, however, nor about theproper route around them--through privatizing the entire matter andallowing for truly private unions, unarmed with coercive power, toarise.

Objections

There are three principal objections to this bill. The first isthat even current rules, after California Saw, [5] "are far more elaborate than anything thatexists to protect, for example, dissident stockholders." [6] The proper response goes to the fundamentaldifference between dissident stockholders and dissidentemployees.

Stockholders freely buy and sell stock--through which acts theyassociate and dissociate with a company--mindful, in principle, ofthe corporation's articles of incorporation and bylaws, throughwhich the corporation governs itself. Securities law isdesigned--in significant part, at least--to enforce thoseessentially contractual relationships. [7] Labor law, by contrast, is meant not tosecure a contractual order predetermined by the parties themselvesbut to impose a legislatively determined set of relations that theparties themselves, presumably, would never have reached if left totheir own devices. Because it allows a majority of workers in abargaining unit to impose its will on the minority and on theemployer, it is coercive from the start. Given the coercion that isinherent in the situation, it is imperative, as with all governmentcoercion, that the rights of minorities be fully protected.

But the analogy between the labor and the political contexts canbe carried too far--or, better, misused--which brings us to thesecond objection. It is said, in complaint not simply about billslike this but about decisions like Beck, that "we in thelabor movement find ourselves called upon to justify the right ofdemocratically-elected labor leaders to decide, through democraticprocesses, to expend union revenues to advance the interests ofworking families." [8]

To respond, not even the federal government--operating, atleast, under a properly interpreted Constitution of delegated,enumerated, and thus limited powers--can expend public revenues onwhatever its democratically-elected leaders decide. If that is truefor the federal government, it is true a fortiori forlabor leaders, who are empowered, by statute, for a very limitedset of purposes.

Finally, it is objected that legislation is not needed becauseCalifornia Saw provides "a fully-developed set of rules toprotect the dissidents' rights" and that the real purpose of thisbill is "to foment dissent" and "to infringe the constitutionalright of the majority to associate freely to advance theirinterests." [9]

Two responses are in order. First, it is heartening to see alabor spokesman invoking the right of free association, even if hemisapplies it and, therefore, probably misunderstands it; fornothing in this bill infringes the right of the majority toassociate freely to advance their interests. They just can't do itusing the money of the minority. Thus, the bill does not fomentdissent; it accommodates it. Second, if this bill adds nothing tothe fully adequate regime we now have, why object to it? Clearly,either the present regime is not adequate--as earlier testimonybears witness--or there can be no objection to merely encoding itin statute.

Conclusion

As noted above, this bill should provide a marginal gain forworkers who today have limited and difficult recourse against laborunion abuses of their power to exact compulsory dues. It does notgo to the heart of the matter, however, which is to be found in thepower of exclusive representation itself. In fact, it would be atragic result if this bill were to be used to take pressure off themovement 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 whatyou were "hoping to accomplish at the hearing is to demonstratethat the current process by which individuals can be required topay union dues or their equivalent as a condition of employmentoperates to the detriment of working people." We cannot say that itoperates to the detriment of all working people. But I hope to haveindicated how it works to the detriment of those working people whowant simply to be left alone to associate, or to refrain fromassociating, with whomever they wish. That is what individualliberty is all about. That is what this nation is all about. Thatis the business this Congress should be about, toward which thisbill would be a useful first step.


Notes

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

[2] I havediscussed these issues more fully in Roger Pilon, "Discrimination,Affirmative Action, and Freedom: Sorting Out the Issues," 45American 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: FromHanson to Beck," Cato Policy Analysis No. 174,July 24, 1992.

[4] In securingthe Beck rights of employees, the NLRB has itself hardlybeen a model of neutral enforcement. Incredible as it may sound,the board's general counsel filed a complaint in Pittsburgh, PA, onMarch 14, 1996, alleging that an employer had committed an unfairlabor practice when he sent a letter to his employees advising themof their Beck rights. NLRB v. Beverly Health andRehabilitation Services, Case # 6-CA27453, argued before anALJ in Pittsburgh on June 25, 1997.

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

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

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

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

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

Roger Pilon

Committee on Education and the Workforce
United States House of Representatives