Category: Unions

Unpaid Employer Contributions as Plan Assets: Expansion Of Liability Under ERISA (Employee Retirement Income Security Act)

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The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), requires trustees of multiemployer pension and benefit funds to collect contributions required to be made by contributing employers under their collective bargaining agreements (“CBAs”) with the labor union sponsoring the plans. This is not always an easy task—often, an employer is an incorporated entity with limited assets or financial resources to satisfy its contractual obligations. In some instances, an employer will resort to filing for bankruptcy to obtain a discharge of its debts to the pension or benefit funds.

In a distinct trend, federal courts have found that, depending on the text of the underlying plan documents, unpaid employer contributions due under a CBA may be viewed as plan assets, such that the representatives of an employer who exercise fiduciary control over those plan assets can be held individually liable for the unpaid amounts (together with interest and penalties) under ERISA. These cases will no doubt help plan trustees and administrators collect monies owed to the plan. They also should serve as cautionary warnings to contributing employers to ensure that they fully understand the obligations that they are undertaking when they agree to contribute to ERISA funds pursuant to CBAs.

Background

In the typical scenario, an employer will agree under one or more of its CBAs to make specified contributions to fund the pension and health and welfare benefits promised to plan participants under the trust fund’s plan of benefits. If an employer fails to timely remit those payments in violation of the CBA and the plan’s rules, the trustees of the fund have a legal duty to attempt to recover the unpaid contributions unless, after fully examining the facts and circumstances, the trustees conclude that the likelihood of recovery is outweighed by its costs. What happens if the trustees expend the fund’s resources to seek to collect the unpaid obligations and obtain a judgment against the employer, only to find the company’s coffers empty? Or what if the company files for bankruptcy?

Unlike employee contributions, which under U.S. Department of Labor regulations are explicitly deemed to be plan assets, employer contributions are typically found to be contractual obligations that do not become plan assets until such amounts are paid by the employer to the trust fund. Hence, while an employer’s failure to remit an employee contribution relegates the employer to the status of an ERISA plan fiduciary because it is has authority and control over plan assets, employer contributions have generally been held not to constitute plan assets. As a result, an employer who fails to make its contributions due under the CBA may have committed a contractual violation but has not breached an ERISA fiduciary duty.

The Potential for Individual Fiduciary Liability

Recently, courts have regularly carved out an exception to the general rule that unpaid contributions are not plan assets by finding that employer contributions are plan assets where the CBA explicitly defines them as such. In such cases, these courts will then proceed to consider the next question of whether the officers, directors or other representatives of such employer exercised a level of control over corporate assets sufficient to make them an ERISA plan fiduciary and thus individually liable for the contributions—effectively stripping them of the protections of the corporate form. Furthermore, if elevated to the status of a fiduciary breach, the debt may not be dischargeable in a bankruptcy proceeding. Thus, the plan could proceed to collect the unpaid contributions against the principals of the debtor personally.

For over a decade, some federal district courts in the Second Circuit have applied a two-part test in delinquent employer contribution cases to find that: (i) such contributions are plan assets when so specified by the CBA; and (ii) the principals of the employer are an ERISA plan fiduciary. More recently, the Second Circuit concluded that delinquent contributions were not plan assets where there were no provisions in the relevant plan documents that stated that unpaid contributions are assets of the plan. See In re Halpin, 566 F.3d 286 (2d Cir. 2009). The Court expressly stated, however, that “the trustees were free to contractually provide for some other result.” It further noted that merely finding that delinquent contributions constitute plan assets does not end the inquiry. A court must also determine whether an individual defendant has exercised sufficient fiduciary conduct over the unpaid contributions to be found to be a plan fiduciary under ERISA.

While the Court’s statements were extraneous to the holding of the case, some district courts within the Second Circuit have seized upon this language and have cited In re Halpin for the proposition that employer contributions can be plan assets where the plan documents so provide. See, e.g., Trustees of Sheet Metalworkers Int’l Assoc. v. Hopwood, 09-cv-5088, 2012 WL 4462048 (S.D.N.Y. Sept. 27, 2012); Sullivan v. Marble Unique Corp., 10-cv-3582, 2011 WL 5401987, at *27 (E.D.N.Y. Aug. 30, 2011).

Similarly, the Eleventh Circuit, in ITPE Pension Fund v. Hall, 334 F.3d 1011 (11th Cir. 2003), held that delinquent contributions can constitute plan assets when explicitly provided for in the plan documents and corporate officers are plan fiduciaries with respect to those assets. The Court demanded a high level of clarity in the plan documents, however, regarding the delinquent contribution’s status as plan assets. It explained that when a corporation is delinquent in its contributions, the fund “has a sufficient priority on the corporation’s available resources that individuals controlling corporate resources are controlling fund assets. This in effect places heavy responsibilities on employers, but only to the extent that . . . an employer freely accepts those responsibilities in collective bargaining.”

In addition, district courts in the Third, Fourth, and Ninth Circuits have found that employer contributions constitute plan assets when the plan documents so provide. See, e.g., Trustees of Construction Industry and Laborers Health & Welfare Trust v. Archie, No. 2:12-cv-00225 (D. Nev. Mar. 3, 2014) (holding that unpaid contributions were plan assets based upon the CBA’s language and finding that the company principals’ acts and responsibilities demonstrated sufficient control and authority over the company’s operations and financials to qualify as ERISA fiduciaries); Galgay v. Gangloff, 677 F. Supp. 295, 301 (M.D. Penn. 1987) (refusing to dismiss fiduciary breach claims for alleged failure to pay delinquent contributions based upon the “clear and undisputed language [of the agreement] stating that title to all monies ‘due and owing’ the plaintiff fund is ‘vested’ in the fund,” rendering “any delinquent employer contributions vested assets of the plaintiff fund.”; Connors v. Paybra Mining Co., 807 F. Supp. 1242, 1246 (S.D.W.V. 1992) (finding company officers personally liable for delinquent contributions that were plan assets based upon CBA’s language since they breached their fiduciary duty by exercising authority over those assets by favoring other creditors over the fund); see also Secretary of Labor v. Doyle, 675 F.3d 187 (3d Cir. 2012) (holding that district court erred in failing to determine whether payments collected from various employers were plan assets subject to ERISA).

District courts in the Sixth Circuit have even signaled support for finding that contributions are plan assets as soon as they become due, “regardless of the language of the benefit plan.” See, e.g., Plumbers Local 98 Defined Benefit Funds v. M&P Master Plumbers of Michigan, Inc., 608 F. Supp. 2d 873, 879 (E.D. Mich. 2009) (holding company principal personally liable for delinquent contributions since “the CBA and trust agreements . . . treat these unpaid contributions as inalienable plan assets” and signaling support for holding delinquent contributions plan assets “regardless of the language of the benefit plan.”).

In a related context, a federal bankruptcy court recently refused to discharge a debtor’s debt for delinquent contributions based upon the Bankruptcy Code’s “defalcation in the performance of fiduciary duty” exception. See In re Fahey, 494 B.R. 16 (Bankr. D. Mass. 2013). Although the court initially found that the debtor lacked the necessary discretion for fiduciary status under ERISA because the “option to breach a contract does not constitute discretion in the performance of one’s duty,” the United States Bankruptcy Appellate Panel for the First Circuit reversed. The Panel ruled that “even if an ERISA fiduciary does not per se satisfy the § 523(a)(4) requirement for ‘fiduciary capacity,’ an analysis of [the Debtor’s] control and authority over the plan in functional terms nonetheless yields the conclusion that he acted as a fiduciary of a technical trust imposed by common law.” On remand, the bankruptcy court found that the debtor prioritized payments that were personally beneficial over his obligations to the ERISA funds and, consequently, committed defalcation as contemplated by the Bankruptcy Code.

View from Proskauer

Although the general rule that employer contributions do not constitute plan assets until actually received by the trust fund continues, recent decisions indicate an increased willingness by courts to carve out an exception to this rule. Funds looking to protect their ability to collect contributions should explicitly define in the plan documents and agreements with employers that plan assets also include all unpaid contributions in the hands of the employer. Employers should be fully cognizant of these provisions; otherwise its officers, directors and other representatives who choose to pay other creditors rather than the trust fund might be held personally liable for the unpaid amounts and interest and penalties, and possibly be unable to escape this liability through bankruptcy.

Article By:

Neal S Schelberg
Aaron Feuer
Of:
Proskauer Rose LLP.

Northwestern Scholarship Football Players Found to be Employees Eligible for Union Representation

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Peter Sung Ohr, the Regional Director for Region 13 of the National Labor Relations Board issued a Decision and Direction of Election pertaining to the effort of the Northwestern University football players to unionize. The Regional Director found that scholarship football players at Northwestern University are “employees” within the meaning of the National Labor Relations Act and eligible for union representation. The Regional Director found appropriate a bargaining unit composed of “all football players receiving a grant-in-aid football scholarship and not having exhausted their playing eligibility.”

The Regional Director used the common law definition of employee in reaching his decision. Under the common law test, a person is an employee if he performs a service for another, under a contract of hire, for compensation, and is subject to the other’s right of control. He found the following:

  • The scholarship football players perform a service (playing football) for compensation (a scholarship)
  • The scholarship players’ commitments to play football in exchange for the scholarship constitutes a contract for hire
  • The scholarship players are under the control of the University for the entire year, including in-season and out-of-season workouts, restrictions on their entire personal life and detailed regulations players must follow at the risk of losing their scholarship

The Regional Director decided the NLRB’s 2004 Brown University decision, in which the NLRB found graduate assistants not to be employees of the university, to be inapplicable here because playing football is not part of the players’ academic degree program. However, he wrote that even if the Brown University test was applied, the scholarship football players would be found to be employees. He noted:

  • The scholarship players are not primarily students due to the 50-60 hours a week during the season that they devote to football
  • The scholarship players’ football “duties” do not constitute a part of their academic degree requirements
  • The academic faculty does not supervise the players’ football duties; rather, coaches who are not part of the faculty do so
  • The grant-in-aid football scholarship is not need-based like the financial aid other students receive but is given solely in exchange for playing football

The Regional Director rejected two additional arguments made by the University:

  • He decided the scholarship football players are not “temporary employees” (who are generally ineligible to participate in collective bargaining) because they work more than 40 hours a week during the season, work year round, expect to work for 4-5 years and play football as their prime consideration
  • He did not include the “walk-on” players in the bargaining unit. He found that they are not employees within the meaning of the NLRA because they do not receive a scholarship and are not subject to the conditions for its receipt

The University now has until April 9, 2014 to file a Request for Review to appeal the Regional Director’s ruling to the NLRB in Washington, D.C.

Article By:

Gregg E. Clifton
Paul V. Kelly
Of: 
Jackson Lewis P.C.

United Auto Workers (UAW) and Volkswagen (VW) Efforts to Establish First Works Council in the U.S. Fails

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The United Auto Workers (UAW), which already represents most of the largest carmakers in the United States, was unsuccessful in its efforts to unionizeVolkswagen’s (VW) plant in Chattanooga, Tennessee. What makes this noteworthy is that leading up to the February 14th representation election, the German company was actually campaigning for the UAW not against it in an employer-union alliance seldom seen in this country.

While the “big three” American carmakers (General Motors, Ford, and Chrysler) are all unionized, foreign carmakers have avoided unionization by locating their plants in Southern states with strong Right to Work laws. Volkswagen, however, considers the creation of a so-called “works council” a crucial element of its business. Works councils are common under German law, and Volkswagen has established works councils at all its foreign plants, with the exception of Chattanooga and China.

Under these works councils, all workers in a factory regardless of position and whether they are unionized or not, help decide things like staffing schedules and working conditions, while the union bargains on wages and benefits. They also have the right to review certain types of information about how the company is doing financially, which means that they tend to be more sympathetic towards management’s desire to make cutbacks during tough financial times. Each Volkswagen plant throughout the world sends its delegates to a global works council that influences which products the company makes and where. This arrangement would have represented a new experience for the UAW, unlike its relationship with Chrysler, General Motors and Ford, which would have involved sharing control with the works council.

A tough question for Volkswagen and the UAW is whether a works council would be legal in the United States without a union. There is no provision in the NLRA for the kind of German-style works council Volkswagen seeks. Volkswagen’s best option for creating a works council would have been for its workers to accept UAW representation. Volkswagen must now rethink its options in seeking a way to create a works council. Options include talking with a different union that might be more popular with its workers or encouraging workers to organize their own independent union. Another option would be moving ahead without a union and risking an NLRB challenge.

After the UAW was defeated by a 712-626 vote in its bid to represent workers at the Volkswagen plant, the UAW promptly requested a new election claiming Tennessee politicians and outside organizations coordinated and vigorously promoted a coercive campaign to sow fear and deprive Volkswagen workers of their right to join a union. Senior state officials including United States Senator Bob Corker, TennesseeGovernor William Haslam, State House Speaker Beth Harwell, and State House Majority Leader Gerald McCormick, made statements in an effort to convince the workers to reject the UAW. The UAW’s alleges this was part of an unlawful campaign which included publicly announced and widely disseminated threats by elected officials that state-financed incentives would be withheld if workers exercised their right to join the UAW’s ranks. However, on February 25, 2014, a group of Volkswagen workers sought to intervene in the UAW‘s bid, and argued that the election results should stand.

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Michael Best & Friedrich LLP

Are Union-Free Strikes Protected? The NLRB (National Labor Relations Board) Thinks So.

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In June 2013, we issued a client alert discussing the efforts of unions and the National Labor Relations Board (NLRB) to target the primarily union-free big box retailer and fast food industries. After describing how Target had come under scrutiny from the NLRB, the client alert detailed how the United Food & Commercial Workers Union (UFCW) and the UFCW-backed group “OUR Walmart” had been coordinating strikes and filing charges with the NLRB against Walmart. The client alert then foreshadowed: “[g]iven the Board’s recent penchant for union activism, do not be surprised if it takes a close look at Walmart’s policies and practices in the coming months.”

As predicted, the Board filed a consolidated complaint against Walmart on January 14, 2014 alleging the union-free retailer violated workers’ rights in response to coordinated strikes across 13 states. The complaint alleges dozens of Walmart supervisors and one corporate executive threatened, disciplined, surveilled, and/or terminated more than 60 workers in response to the union-free strikes.

The complaint is significant for two reasons: (1) the Board is taking the position that union-free workers have a protectable right to strike; and (2) the Board is testing its position against the nation’s largest employer. The Board views the union-free strikes as a form of protected concerted activity, and its press release states that the National Labor Relations Act (NLRA) guarantees employees the right to “act together to try to improve their wages and working conditions with or without a union.” The complaint alleges Walmart violated the NLRA by maintaining a policy that treats absences for participation in strikes as unexcused. The complaint also details alleged retaliatory disciplinary actions taken by Walmart supervisors at particular store locations, though many of the listed locations involved only a single worker being absent.

From an employer perspective, the Board’s position raises many questions. For example, how is a supervisor to know whether a non-union worker is participating in a “strike” or just absent? Can a single worker go on strike, or is there a minimum number of strikers for the activity to be “concerted”? Can strikers be permanently replaced? Are “intermittent” strikes prohibited? It is easy to see why union-free strikes create tough questions for union-free employers.

The Board’s actions against Walmart are worth watching as they come amidst a larger backdrop of worker protests and political debates over minimum wage and working conditions that are likely to remain in the spotlight for the foreseeable future. How courts ultimately grapple with the Board’s position and the resulting questions could have far-reaching effects on the labor market in 2014 and beyond.

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Michael Best & Friedrich LLP

Federal Court Prohibits Union From Striking To Prevent Sale Of Business To Non-Union Employer

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Last week a New York federal district court granted a preliminary injunction against the Teamsters union after it threatened to go on strike against Will Poultry, Inc. if the company proceeded to sell its business to a non-union purchaser who had no plans of assuming the parties’ collective bargaining agreement (CBA).The parties’ CBA did not have a “successor clause” or any other language obligating a purchaser to assume or otherwise recognize the Teamsters union upon a sale. When the Teamsters demanded that Will Poultry modify the CBA to include a “successor clause” in advance of the sale or face a strike, the company filed for an injunction in federal court.

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While the CBA did not contain an express “no strike clause,” it did have a grievance/arbitration provision, and the court held that constituted an “implied” no strike clause. Accordingly, the court issued an order prohibiting the union from striking in violation of the implied no strike clause, which almost certainly would have killed the pending sale.

While the New York federal court correctly found an implied no strike clause in this case, this case should serve as a reminder that you should always review your CBA in advance of successor contract negotiations to make sure any language issues (like the lack of a no strike clause) can be addressed.

The Teamsters have filed for an appeal of the decision, but a copy of the district court’s order can be found here.

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David J. Pryzbylski

Of:

Barnes & Thornburg LLP

Michigan Right to Work – What’s the Effect: A Data Point

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How Michigan’s Right to Work law would ultimately impact union dues payer rolls has been a topic of some debate. Now we have a data point, but it may not tell the whole story.

Michigan’s Right to Work law became effective March 28, 2013. The law gives employees the right to choose to join and/or financially support a union. In other words, it allows employees to retain the representational benefits of their union representation without paying dues. If an employee elects not to pay dues, the employee’s union still must represent the employee with respect to grievances and arbitration. Unions refer to this as “freeloading.”

There has been much speculation about what impact the passage of Michigan’s law would have on the number of dues paying members. Today, an article in the Detroit News reported that, according to the Michigan Education Association, Michigan’s 150,000 member teachers union, only 1 percent of its members have elected to exercise their rights under the Right to Work law and stop paying dues.

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This, however, likely only tells part of the story because the law does not impact union security provisions in contracts that have not yet expired and some contracts were “rush-renewed” to ensure that they would not be impacted by Right to Work for several more years.

In addition, the Right to Work law did not impact union “check off” provisions which are often tied to a card that is signed by a union member and authorizes the employer to deduct dues from the member’s paycheck and send them to the union. Such cards can serve as an impediment to a member desiring to stop paying dues because they can be irrevocable for a period of time, even if the employee revokes his or her union membership. These agreements, which can be irrevocable for up to a year under federal law, are a hurdle that trip up many employees trying to end dues payments immediately. However, while certain restrictions on dues check off authorizations have been approved under federal law, it is unclear whether the Michigan Employment Relations Commission (MERC) will find such restrictions lawful or violative of Michigan’s Right to Work law.

The point is, MEA’s 1 percent report is only one data point; it will take a lot longer to tell the impact on the number of dues paying members in the MEA and other unions.

See all our previous Right to Work coverage here.

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Michigan Supreme Court Won’t Give Advisory Opinion on Right-to-Work

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Saying simply that “we are not persuaded that granting the request would be an appropriate exercise of the court’s discretion,” the Michigan Supreme Court on Friday denied Gov. Rick Snyder’s request that the high court render an advisory opinion about the constitutionality of Michigan’s new right-to-work law.

Relying upon the provision in the state’s constitution’s that allows the governor to request the “opinion of the supreme court on important questions of law upon solemn occasions as to the constitutionality of legislation after it has been enacted into law but before its effective date,” the Governor had asked the Court for a ruling largely because the state’s public workers’ collective agreements are set to expire at the end of 2013. In a brief filed in support of the request for an advisory opinion, Michigan Solicitor General John Bursch said that an advisory opinion would prevent an “impasse at the negotiating table.”

Notwithstanding the Court’s decision, six lawsuits continue challenging the Act. Two of them are brought by unions or labor coalitions. Michigan State AFL-CIO v. Callaghan has been brought in federal court and challenges the constitutionality of the Act as to private sector workers. UAW v. Green, currently pending in the Michigan Court of Appeals, challenges the constitutionality as it applies to public sector workers. Here’s a helpful link to a chart describing the pending litigation.

SG Bursch also said in his filing with the Supreme Court that barring Supreme Court action, the state would consider filing a motion seeking an expedited ruling in the Green case.

The Detroit Free Press coverage on the court’s decision can be found here.

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Big Box Retailers and Major Fast Food Chains Targeted by Unions and National Labor Relations Board (NLRB)

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The NLRB Rules Against Target

There are more than 1,750 Target stores nationwide, and none have been organized by a union. This fact was not lost on the National Labor Relations Board (the Board) when, on April 26, 2013, it affirmed the decision of an Administrative Law Judge that Target Corporation (Target)’s no-solicitation/no-distribution policy violated the National Labor Relations Act (the Act) and ordered Target to amend its policies nationwide. The consolidated cases, known as Target Corporation and United Food & Commercial Workers (UFCW) Local 1500, 359 NLRB No. 103 (2013), originated when the UFCW filed charges with the Board following an unsuccessful organizing campaign at a Target store in Valley Stream, New York.

The key issue addressed by the Board was whether Target maintained a no-solicitation/no-distribution policy that violated employees’ Section 7 rights under the Act. Target’s policy prohibited solicitation on the store’s premises at all times if it was for “personal profit,” “commercial purposes,” or “a charitable organization that isn’t part of the Target Community Relations program and isn’t designed to enhance the company’s goodwill and business.” The Board focused on the ban on solicitation “for commercial purposes,” finding that Target failed to define the phrase or provide illustrative examples to clarify what it meant. Because the phrase was undefined, the Board found that Target employees could have interpreted the phrase to ban solicitation and distribution on behalf of unions, which would violate the Act.[1]  

Ultimately, the Board ordered Target to rescind nationwide its no-solicitation/no-distribution rule and to:

[f]urnish all current employees nationwide with inserts for their current employee handbooks that (1) advise that the unlawful rules listed above have been rescinded, or (2) provide lawfully-worded rules on adhesive backing that will cover the unlawful rules; or publish and distribute to all current employees nationwide revised employee handbooks that (1) do not contain the unlawful rules, or (2) provide lawfully-worded rules.

The Board also set aside the union’s unsuccessful election attempt and ordered a new election to take place under the direction and supervision of the Regional Director.

Is Walmart The Next Target?

Walmart has more than 4,500 retail locations in the United States, and like Target, none are unionized. In recent months, the UFCW-backed group OUR Walmart has been advocating for strikes in several locations. On May 28, 2013, several media outlets reported a new round of strikes coordinated by OUR Walmart in advance of Walmart’s June 7, 2013 annual shareholder meeting.

In addition to the strike efforts, the UFCW, OUR Walmart, and Walmart have filed dozens of NLRB charges against each other in 2013. In May, the labor-backed group filed a new round of charges with the NLRB. Meanwhile, Walmart has filed lawsuits against the UFCW and OUR Walmart in Florida and California state courts in recent months alleging trespass and unlawful organizing activity on Walmart property.

Though the Board is currently under scrutiny based on recent court decisions invalidating the President’s recess appointments, the charges against Walmart provide it with another opportunity to make a nationwide statement against a non-union employer. Given the Board’s recent penchant for union activism, do not be surprised if it takes a close look at Walmart’s policies and practices in the coming months.

The Fast Food Industry

On May 15, 2013 hundreds of Milwaukee fast food workers walked off their jobs and launched a one-day strike demanding a raise to $15 per hour and the right to unionize without intimidation or retaliation. This was the fifth such strike in six weeks, following strikes in St. Louis and Detroit the week before, and in New York and Chicago in April. In each of those strikes, local groups organized fast food workers with support from the Service Employees International Union (SEIU), one of the nation’s largest unions. All of these strikes were preceded or followed by the filing of a slew of NLRB charges against the employers, alleging myriad unfair labor practices.

These strikes share several common characteristics. Each was a one-day strike by fast food workers, backed by ad hoc coalitions of unions and community groups. In the case of the Milwaukee strike, the organizing group was called “Wisconsin Citizen Action,” and the campaign was called “Raise Up, MKE.” The St. Louis campaign was called “STL Can’t Survive on $7.35,” and Detroit’s was called “D15.” These strikes have all been part of “minority unionism” campaigns, where the focus is on staging actions by a minority of the workforce designed to inspire their co-workers, rather than waiting until they have gained support from a majority of the workers. The short duration of the strike is calculated to minimize the risk that striking workers will be replaced by their employers after walking off.

The spread of these fast food strikes, as well as strikes by non-union workers in retailers like Walmart, comes amid a long-term decline in strikes in the U.S. Both the fast food and retail industries are overwhelmingly not unionized. The strategy pursued by the groups organizing these strikes is thus one of spectacle or demonstration, calling attention to the wages and working conditions of the employees in these industries.

[1] Oddly, the Board overruled a second finding by the Administrative Law Judge that a policy instructing employees to report unknown persons seen loitering the parking lot also violated Section 7 of the Act. The Board noted it would not conclude that a reasonable employee would read a rule to violate Section 7 simply because the rule could be interpreted that way.

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Under Pressure: Unions Espouse New Organizing Models and Take Action

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Back in March, AFL-CIO President Richard Trumka summarized his view of the state of union representation in America: “To be blunt, our basic system of workplace representation is failing to meet the needs of America’s workers by every critical measure.” Last week in a Washington Post Op-Ed, this view was echoed by columnist and long-time advocate of big labor’s policies Harold Meyerson. Meyerson identified an “existential problem” facing unions, which are continuing to see membership numbers decline.

It is not difficult to understand the concern. Membership decline means one thing for unions: less dues. Measures that weakened public sector unions in Wisconsin and passage of right to work legislation in traditional union Midwest strongholds of Indiana and then Michigan, along with ever-shrinking private sector union membership, have forced labor into a place of critical self-evaluation. And what is emerging from this self-evaluation is a dedication to expanding the scope of union organizing.Union membership decline

In March, Trumka highlighted new targets of organizing that are being explored – non-traditional targets. Trumka noted home care workers, taxi drivers and others who don’t fit neatly into the traditional models of unionization will be targets. The point is: unions are increasingly setting their sights on individuals who “do not neatly fit the legal definition of an employee.” And businesses and employers who before may have not traditionally considered themselves targets for big labor should be paying attention.

Such efforts are not just anecdotal.  As we saw in Michigan with home health care unionization, these non-traditional unionization efforts can have a lot of upside for unions, even if they are not ultimately successful in keeping their representative status. SEIU collected $34 million in dues from more than 59,000 home health care workers in Michigan before it was ultimately forced to end its status as bargaining representative in 2012.

Meyerson also points out the recent one-day strikes of fast-food workers in New York and Chicago as evidence of a changing model. Workers in other cities, including St. Louis and then Detroit this past weekend, have followed suit. Employers will be mindful to pay attention to such trends.

Meyerson explains the AFL-CIO’s plan too. And, it starts with seeking more political power – not necessarily more dues paying members. As Meyerson explains: “The first part of this plan is to expand its Working America program, a door-to-door canvass that has mobilized nonunion members in swing-state working-class neighborhoods to back labor-endorsed candidates in elections in the past decade.”  Phase Two, according to Meyerson quoting Trumka, is “we’re asking academics, we’re asking our friends in other movements ‘What do we need to become?’” And Phase Three: “We’ll try a whole bunch of new forms of representation.  Some will work; some won’t, but we’ll be opening up the labor movement.”

Where all of this ends up is anyone’s guess – but this is clear: the model of unionization is changing.  Change means new challenges. The bottom line for employers: Be Prepared.

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But Wait! There’s More: The 11th Right to Work Misconception

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We’ll take the liberty of adding an 11th item to Scott Witlin’s excellent list of the top-10 most common right to work misconceptions.

11.  Right to work laws do not necessarily allow employees to immediately stop paying dues.

The devil’s in the details. In numerous Indiana union shops, workers asked to be freed from their dues-paying obligations after Right to Work was enacted. Michigan employers may be experiencing this already as well. Some Indiana employers stopped deducting their union dues. But it’s not the simple. As we have discussed before in this blog, employers must retrieve their employee’s dues authorization cards before they can stop taking union dues from their paychecks. As the NLRB has previously held in several cases, the language in the dues authorization cards control as to when and how an employee can revoke his or her consent to the dues deductions.

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