Legal Alert: Federal Labor Law
Pre-empts California’s Prohibition on
Use of State Funds to Promote or Deter
Organizing
6/23/2008
The U.S. Supreme Court recently held that a California law that prohibits
employers who receive state funds from using those funds to “assist,
promote, or deter union organizing” is pre-empted by federal labor law. See
Chamber of Commerce v. Brown (June 19, 2008).
Background: AB 1889 forbids certain employers that receive state funds
from using such funds to “assist, promote, or deter union organizing.” See
Cal. Govt. Code Ann. §§16645 – 16649. The statute specifies that the
spending restriction applies to “any expense, including legal and consulting
fees and salaries of supervisors and employees, incurred for . . . an activity to
assist, promote, or deter union organizing.” §16646(a). Although it purports to
have a neutral purpose, the statute exempts activities performed or expenses
incurred in connection with undertakings that promote unionization.
The law requires covered employers to certify that no state funds will be used
for prohibited expenditures and to maintain and provide, upon request,
“records sufficient to show that no state funds were used for those
expenditures.” Violators are liable to the state for the amount of the funds
spent in violation of the law plus a civil penalty equal to twice the amount of
those funds. Suspected violators may be sued by the state attorney general
or any private taxpayer, and prevailing plaintiffs are entitled to recover
reasonable attorney’s fees and costs.
In 2002, several organizations whose members do business in California
sued the state to enjoin enforcement of the law. The Ninth Circuit held that
the National Labor Relations Act (NLRA) does not preclude enforcement of
the law. The Supreme Court overruled this decision.
Machinists Pre-Emption: The Court held that AB 1889 is pre-empted under
the Machinists pre-emption analysis. Machinists pre-emption forbids states
and the National Labor Relations Board (the Board) from regulating conduct
that Congress intended to be left unregulated and controlled by the free play
of economic forces. The Court found that the California law is pre-empted
under Machinists because it regulates within a zone protected and reserved
for market freedom.
In holding that the NLRA pre-empts the California law, the Court emphasized
that both the First Amendment and § 8(c) of the NLRA protect noncoercive
Legal Alert: Federal Labor Law
Pre-empts California’s Prohibition on
Use of State Funds to Promote or Deter
Organizing
6/23/2008
The U.S. Supreme Court recently held that a California law that prohibits
employers who receive state funds from using those funds to “assist,
promote, or deter union organizing” is pre-empted by federal labor law. See
Chamber of Commerce v. Brown (June 19, 2008).
Background: AB 1889 forbids certain employers that receive state funds
from using such funds to “assist, promote, or deter union organizing.” See
Cal. Govt. Code Ann. §§16645 - 16649. The statute specifies that the
spending restriction applies to “any expense, including legal and consulting
fees and salaries of supervisors and employees, incurred for . . . an activity to
assist, promote, or deter union organizing.” §16646(a). Although it purports to
have a neutral purpose, the statute exempts activities performed or expenses
incurred in connection with undertakings that promote unionization.
The law requires covered employers to certify that no state funds will be used
for prohibited expenditures and to maintain and provide, upon request,
“records sufficient to show that no state funds were used for those
expenditures.” Violators are liable to the state for the amount of the funds
spent in violation of the law plus a civil penalty equal to twice the amount of
those funds. Suspected violators may be sued by the state attorney general
or any private taxpayer, and prevailing plaintiffs are entitled to recover
reasonable attorney’s fees and costs.
In 2002, several organizations whose members do business in California
sued the state to enjoin enforcement of the law. The Ninth Circuit held that
the National Labor Relations Act (NLRA) does not preclude enforcement of
the law. The Supreme Court overruled this decision.
Machinists Pre-Emption: The Court held that AB 1889 is pre-empted under
the Machinists pre-emption analysis. Machinists pre-emption forbids states
and the National Labor Relations Board (the Board) from regulating conduct
that Congress intended to be left unregulated and controlled by the free play
of economic forces. The Court found that the California law is pre-empted
under Machinists because it regulates within a zone protected and reserved
for market freedom.
In holding that the NLRA pre-empts the California law, the Court emphasized
that both the First Amendment and § 8(c) of the NLRA protect noncoercive
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