On Thursday, September 21, 2006, a full panel of the Ninth Circuit overturned two previous federal court decisions and determined that the National Labor Relations Act does not preempt California Assembly Bill 1889. Chamber of Commerce of the U.S. v. Lockyer, No. 03-55166, (9th Cir. Sept. 21, 2006). The Ninth Circuit's decision clarifies that employers receiving state resources – including funds under the Medi-Cal program – must ensure that the funds are not spent in a way related to any labor dispute or union organizing campaign.
A.B. 1889, which was originally passed in September 2000 and became effective on January 1, 2001, prohibits any employer receiving more than $10,000 in state funds from using those funds on any union-related advocacy, whether in favor of or in opposition to employee organization and bargaining efforts. However, in upholding the law, the Ninth Circuit noted that A.B. 1889 does not require employer neutrality as a condition to receiving state funds, nor does it prevent an employer from using its own private resources on union-related activities.
The Ninth Circuit's ruling has important practical implications for covered California employers. A.B. 1889 requires employers to certify that no state funds will be used to assist or deter unionization efforts in violation of the statute, as well as maintain records showing that state funds have not been used for an improper purpose. Employers violating the statute are subject to penalties and fines, and may have a civil suit brought against them by any private taxpayer, or by the California Attorney General. This is a controversial decision and, given its history, it is possible that there will be further review by the United States Supreme Court.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
