Casinos Escape Make-Whole Order in Union Dues Dispute

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By Lawrence E. Dubé

Sept. 11 — A Las Vegas hotel and casino operator at the center of a 20-year-old dispute over union dues deductions violated federal labor law, but it won't be required to make the union whole for its losses, a divided National Labor Relations Board held Sept. 10.

The board has accepted a U.S. Court of Appeals for the Ninth Circuit ruling that Hacienda Hotel Inc. violated Section 8(a)(5) and 8(a)(1) of the National Labor Relations Act by unilaterally terminating dues checkoffs after the expiration of a union contract. However, NLRB Members Philip A. Miscimarra and Lauren McFerran said the employer was following settled board law when it acted, and they concluded a make-whole remedy would not be appropriate.

Dissenting from the denial of make-whole relief, Member Kent Y. Hirozawa said the board majority departed from “well-settled precedent” on the “standard remedy” for illegally terminating a dues checkoff arrangement, in which an employer deducts dues from employees' paychecks and remits them to the union.

Casinos Halted Checkoff in 1995

According to the decision and NLRB records, Hacienda Resort Hotel and Casino and the Sahara Hotel and Casino had contracts that expired at the end of May 1994 containing a checkoff provision for the deduction of union dues from the paychecks of employees who authorize it “for the term of this Agreement.”

In June 1995, the casinos notified the unions they were halting deductions. The unions filed charges alleging that the employers took unilateral action without the occurrence of a bargaining impasse and therefore violated the NLRA.

In a July 2000 decision, the board 3-2 agreed with an administrative law judge that the termination of dues checkoff is an exception to the act's general requirement that an employer may not make unilateral changes unless and until a bona fide impasse has followed good-faith negotiations with a union.

But the Ninth Circuit held that the board failed to provide a reasoned explanation for its decision and remanded for the board to articulate a reasoned explanation for the new rule or to adopt a different rule (309 F.3d 578, 171 LRRM 2146 (9th Cir. 2002). 

In September 2007, the board 3-2 dismissed the case again but relied on the ALJ's reasoning that the language of the dues-checkoff provision explicitly limited the employers' checkoff obligation to the duration of the overall contracts (351 N.L.R.B. No. 32, 182 LRRM 1486 (2007).

Latest Remand Directed Board to Decide Remedy

The Ninth Circuit held that the board erred in finding that the language in the collective bargaining agreements expressed a waiver of the statutory right to bargain. The appeals court remanded the case, stating that “the question squarely in front of the Board is whether dues-checkoff in right-to-work states is subject to unilateral change, or whether … dues-checkoff is a mandatory subject of bargaining”.

In August 2010, four members of the board were equally divided on whether to offer a new explanation or overrule existing precedent, but all agreed to dismiss the unfair labor practice complaint. 

The case again went to the Ninth Circuit, which held that “in a right-to-work state, where dues-checkoff does not exist to implement union security, dues-checkoff is akin to any other term of employment that is a mandatory subject of bargaining” (657 F.3d 865, 191 LRRM 2609 (9th Cir. 2011). The appeals court remanded the case to the NLRB “to determine what relief is warranted” in the case.

Majority Decides Against Make-Whole Order

Miscimarra and McFerran said they “accept as the law of the case the court's finding that the Respondent violated Section 8(a)(5) and (1) of the Act by ceasing dues checkoff without bargaining to impasse.”

The board members said Section 10(c) of the NLRA gives the board discretion to tailor remedial orders to the circumstances of cases before it. They found imposing a make-whole remedy in the Hacienda Hotel case “is not necessary to effectuate the purposes of the Act.”

For more than 50 years, Miscimarra and McFerran said, the board followed its ruling in Bethlehem Steel Co., 136 N.L.R.B. 1500, 50 LRRM 1013 (1962), that employers were not required to continue checkoff after the expiration of a contract.

“Although the validity of Bethlehem Steel had been called into question,” the board said, “the Respondents ceased checkoff off dues in 1995—approximately 16 years before the court finding” that their action was unlawful.

Stating “the Respondents believed, correctly, that they were following settled Board law at the time they acted,” the board said “we find that it would not be appropriate to order make-whole relief, which would carry with it a requirement that compound interest be paid on all amounts due.”

The board ordered the employer to cease and desist from unilaterally terminating checkoff and to bargain with the union before implementing any changes in checkoff arrangements.

Remedial Order Draws Partial Dissent

Hirozawa said the majority “fails to answer the court's question” and gave “no consideration whatsoever to the effects of the Respondents' unlawful conduct on the employees and the Union, much less what affirmative action by the Respondents would most effectively undo those effects and restore the status quo.”

The majority justified its denial of make-whole relief based on the employer's reliance on existing board law, Hirozawa said, but “[t]hat circumstance has never, as far as I can ascertain, been considered by the Board in fashioning a remedy.”

Hirozawa said the board “should just answer the question that the court of appeals has posed and order the standard remedy for the violation found first by the court, and now by the Board.”

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the opinion is available at http://www.bloomberglaw.com/public/document/NLRB_Board_Decision_Hacienda_Hotel__Casino_363_NLRB_No_7_2015_BL_.