Continuing a string of pro-union decisions, the National Labor Relations Board recently overruled a 2019 Board decision and held that employers violate federal law if they fail to transmit membership dues to unions after the expiration of a collective bargaining agreement.

In its 2019 decision in Valley Hospital Medical Center, Inc., 68 NLRB No. 139 (2019) (Valley Hospital I), the NLRB held that employers had the right to cease contractual dues checkoff obligations after a CBA expired. There, the NLRB stated that dues checkoff provisions were mandatory subjects of bargaining that were exclusively created by a CBA and, therefore, were enforceable only for the duration of the CBA.

On October 3, 2022, the NLRB issued its decision in Valley Hospital Center, Inc. (Valley Hospital II), on remand from the United States Court of Appeals for the Ninth Circuit, finding that an employer may not unilaterally stop union dues checkoff after a CBA expires. In Valley Hospital II, the NLRB returned to pre-Valley Hospital I precedent, under which an employer, following contract expiration, must continue to honor a dues-checkoff arrangement established under the CBA until either the parties have reached a new agreement or the parties have reached impasse after bargaining, thereby permitting unilateral action by the employer. The NLRB also applied the new rule retroactively and concluded that the employer in Valley Hospital II should pay the union dues that were not collected after it ceased dues deductions.

Board Members John Ring and Marvin Kaplan dissented, citing long-standing precedent established in Bethlehem Steel, 136 NLRB 1500 (1962), under which employers were allowed to unilaterally cease dues deductions upon expiration of a CBA. Board Members Ring and Kaplan reasoned that checkoff provisions are unique and have a “special status separate from other terms and conditions of employment” because the duty to deduct dues arises directly from a CBA.

In light of this recent decision, employers should review their policies to ensure they continue to honor dues-checkoff agreements after expiration of a CBA until either (1) a new agreement is reached, or (2) the employer and union have reached impasse following a good-faith bargaining process. Employers can further protect themselves by inserting language into a CBA specifically providing that a check-off provision survives only for the duration of the agreement.