Mr. Chairman and Members of the Subcommittee, I am pleased to be invited here today as you discuss the current status of workers' rights under the Supreme Court's Beck decision.
I am Ken Boehm, Chairman of the National Legal and Policy Center. My organization sponsors the Organized Labor Accountability Project which publishes the Union Corruption Update, a fortnightly summary of union corruption news and cases. Our web page, http://www.nlpc.org, provides an archive of union corruption cases, searchable by state and union, as a resource for policy makers, the media, the public, and union members fighting corruption within their own unions.
In 1988, the Supreme Court of the United States held in Communications Workers of America v. Beck that workers covered by the National Labor Relations Act can withhold compulsory dues from a union with the exception of the documented costs of collective bargaining. A special master assigned by the Court in the Beck case determined that the Communications Workers of America could only document that twenty-one percent of Harry Beck's dues went for collective bargaining purposes, resulting in a seventy-nine percent refund.
Despite a strong decision for workers' First Amendment rights against compelled speech in Beck, Supreme Court decisions are not self-enforcing. Just as the landmark decision of Brown v. Board of Education in 1954 on school desegregation did not stop the Alabama Governor from standing in the doorway at the University of Alabama nine years later to thwart the integration of that school, all too often Supreme Court decisions require laws, regulations, and administrative actions to ensure that individual rights are fully protected.
In the thirteen years since the Beck decision, the government has done very little to protect Beck rights recognized by the Supreme Court and much has been done by unions to thwart them.
Congress has not passed any law codifying Beck rights.
President George H. W. Bush issued Executive Order 12800 in April 1992 requiring federal contractors to inform workers of their Beck rights by posting notices in the workplace. President Clinton rescinded the executive order in 1993 within days of taking office. President Clinton's Secretary of Labor labeled the executive order "a burden without a benefit," apparently with the view that informing workers of a constitutional right is of no benefit to the workers.
Similarly, under President George H. W. Bush, the Department of Labor issued a proposed rule requiring unions to report expenditures according to how the funds were spent. More specific reporting would make it easier for workers to determine how much money was spent for collective bargaining as compared to political activities, lobbying, organizing, and other activities which workers exercising their Beck rights cannot be compelled to fund. As with the executive order, the proposed rule did not survive the opening days of the Clinton Administration.
On February 17, 2001, President George W. Bush issued Executive Order 13201 requiring federal contractors to post a workplace notice informing employees of their rights under the Beck decision. The order affects only a relatively small number of the approximately twelve million American workers forced to pay union dues as a condition of employment. Three unions and a union-established corporation filed suit in response to the executive order. Their complaint alleged that requiring notice of workers' Beck rights would impose "substantial administrative burdens" on businesses.
In the absence of congressional codification of Beck, the National Labor
Relations Board (NLRB) has the authority to enforce Beck rights.
However, the NLRB has done much to thwart the exercise of Beck rights.
The NLRB did not even issue its first ruling purporting to implement the
Beck decision until more than seven years after the decision when it ruled
in 1995 in California Saw & Knife Works, Inc. In the ruling,
the NLRB held that, contrary to the Supreme Court's 9-0 decision in 1986
in Chicago Teachers Union v. Hudson, workers are entitled only to a union's
"self-audit" of its non-bargaining expenditures. Essentially, this
decision allows unions to define their political expenditures virtually
any way they like and does not require anything remotely resembling substantiation.
The decision also allowed the union in the case to comply with the Beck
requirement of notice to workers of their rights to be satisfied with an
annual notice in a union magazine. Put simply, the NLRB used California
Saw more
to eviscerate Beck than enforce it.
At the same time very little was being done at any level of government
to enforce workers' constitutional rights under Beck, much was being done
by unions to undermine the ability of workers to learn about or exercise
their rights:
Accounting Schemes
While workers may not be forced to finance political activities of unions, there is no independent accounting information available to workers showing what percentage of fees goes for such activities. Unions have exploited this flaw by misrepresenting political expenditures in order to limit the amount due to workers who do not want to pay for their union's political activities.
Example: In the 1991 Supreme Court case Lehnert v. Ferris Faculty Association, the teachers union claimed only seventeen percent of the group's expenses were not attributable to contract administration, grievance adjustment and collective bargaining. Through discovery, it was learned that ninety percent of the union's expenses could not be attributed to contract administration, grievance adjustment and collective bargaining.
The lack of strict accounting standards and disclosure of financial information that plays such a major role in the current wave of union corruption has also acted to frustrate workers seeking to assert their First Amendment rights against compelled speech recognized in Beck.
Lack of Information on Workers' Beck Rights
A 1997 National Voter Survey poll showed 67% of union members were unaware of the Supreme Court's Beck decision. A national survey by Lutz Research in 1996 found 78% of union members were unaware of their right to a refund and dues adjustment for the portion of their dues spent on non-workplace activities.
There is no independent source of such information in the workplace. The modest effort of President George H. W. Bush to require federal contractors to post workplace notices was rescinded under President Clinton, and a similar executive order by President George W. Bush is being challenged in federal court by unions determined to see that workers receive as little notice of their Beck rights as possible.
Intimidation
When Rep. William F. Goodling chaired the House Education and the Workforce Committee, he held a series of hearings focusing on problems encountered by workers trying to assert their rights in the workplace. In a statement released on November 3, 1999, he summarized the results of those hearings by stating:
"We heard worker after worker testify about the incredible burdens they have faced trying to exercise their rights under current law and trying to recover their money"Rep. Goodling went on to state that the testimony of the workers:
"...often described stonewalling, harassment, coercion, and intimidation of workers who tried to recover what is rightfully theirs."The testimony of one worker, aircraft mechanic Kerry Gipe, at a March 18, 1997, hearing set forth the specifics of the intimidation he faced when he tried to enforce his rights:
"...the union began an almost immediate smear campaign against us...portraying us as scabs and freeloaders...We had our names posted repeatedly on both union property and company property accusing us of being scabs. We were thrown out of our union hall, and threatened with physical violence...We were accosted at work, we were accosted on the street. We were harassed, intimidated, and threatened. We were told our names were being circulated among all union officials in order to prevent us from ever being hired into any other union shop at any location."As a practical matter, the burden is on workers who wish to assert their First Amendment rights and not on unions which have a financial motive for denying the workers' First Amendment Beck rights.
Procedural Hurdles
Aside from outright intimidation, unions bent on thwarting Beck rights
have resorted to a tangle of procedural hurdles to make it burdensome for
workers to exercise their Beck rights.
Among the tactics employed have been one-sided arbitration requirements,
limited windows of time each year for workers to exercise their rights,
delays and outright refusals of union officials to respond appropriately
to requests submitted by workers.
Time and again, efforts by unions to frustrate the Beck rights of workers through procedural hurdles have been found unconstitutional. In a 1998 case, Shea v. Machinists, the U.S. Court of Appeals for the Fifth Circuit found that the union's requirement of an annual objection by workers, whereby they can opt out of full union membership only if they notify the union in writing each year during a 30-day window of time, violated the First Amendment.
The Labor Relations Institute, Inc. of Oklahoma recently collected and analyzed complaints filed with the National Labor Relations Board by workers against unions relating to Beck rights abuses. Complaint after complaint, many handwritten, described a litany of tactics used by unions to discourage workers from asserting their Beck rights. Workers complained of not being informed of their rights, not being given accurate financial information, being told they must go physically to union offices to get information, not providing underlying financial information supporting claimed amounts due for core activities, and simply ignoring requests by workers.
The unions have powerful financial incentives to ignore the Beck
rights of workers and workers have few practical ways to enforce their
rights.
The parallels between union efforts to frustrate efforts by workers to assert their Beck rights and what the New York Times recently called "the wave of union corruption" are striking.
Both problems have their greatest impact on workers.
Both problems involve the misdirection of millions of dollars of workers' money annually.
Both problems persist despite numerous court decisions underscoring the rights of workers.
Both problems persist, in part, because workers have very little meaningful or accurate accounting of how their union spends their money.
The high-profile corruption involving unions and their leaders is beyond debate:
The right of access to independently audited financial information is essential to any meaningful enforcement of Beck rights because workers must have such information to know whether any refund of dues and fees not associated with collective bargaining is accurate. At the same time, the right to access to independently audited union financial information will help curb the epidemic of corruption cases in which union funds have been illegally taken for personal use.
Any overall remedy to the current situation in which First Amendment Beck rights are not easily exercised has to address each of the major hurdles which now exist. Legal scholars and jurists have often declared that a right without a remedy is no right at all.
Unfortunately, Beck rights do not currently have meaningful remedies.
The objective of any reform is to ensure that First Amendment rights of workers recognized by the Supreme Court in Beck do have remedies. While reasonable people may disagree as to how to best protect these First Amendment rights, there should at least be a consensus that workers are entitled to these rights, that these rights should not be difficult or costly to assert, and that the burden of proof should be on those who seek to thwart these rights, not, as now, on those who seek to exercise them.
Meaningful remedies must ensure the following:
While the best guarantee that Beck rights are honored would involve the codification of those rights into law by Congress, there are some reforms that can be undertaken by the Department of Labor which could incrementally assist in the honoring of those rights.
An added benefit to some of these Department of Labor reforms would be to make it more possible for workers to know exactly how their unions are spending their dues and fees. This outcome would help curb corruption which has flourished due to the secrecy and inaccessibility of union financial information.
The major drawback of any reliance on mere regulatory actions to enact reforms is that such reforms may also be more readily undone by some future Department of Labor less committed to Beck rights or thwarting corruption.
Under the Labor-Management and Disclosure Act of 1959 (LMRDA), popularly known as the Landrum-Griffin Act, labor organizations file annual financial reports, called Labor Organization Annual Reports or LM-2 Forms, with the Secretary of Labor. Unfortunately, there are many weaknesses with respect to what is included within these forms, how often they are required, and their general lack of specificity with respect to expenditures.
Many of these weaknesses have been documented extensively. The U.S. House Education and the Workforce Committee, Oversight and Investigations Subcommittee, Public Policy Recommendations in the American Worker Project Report, as reprinted at Daily Labor Report (BNA) No. 149, at E-9 (August 4, 1999) shed light on the internal inconsistencies found in LM-2 reports:
"[T]he current version of the LM-2 makes it impossible to discern the costs of travel by any union officer. The form requires direct reimbursements for travel costs to be itemized by an officer (or employee). On the other hand, travel expenses accumulated by union officers that the union directly pays for, such as through a union credit card, are not listed by employee; instead, the form merely directs the union to list the total amount of their travel expenses. Thus, the LM-2 Form may only include one-quarter, or even one-tenth, of an employee's actual expenses."While the Secretary of Labor has authority under Title II, Section 201 of Landrum-Griffin to require new categories to be applied to the specifications of LM-2 Form disbursements, the many other flaws of the reporting regime, especially the lack of independent audits, limit the effectiveness of reforms based solely on administrative action.
Drawing on his experience as editor of Union Corruption Update since its inception, Michael Nelson, Director of National Legal and Policy Center's Organized Labor Accountability Project, authored a law review article examining policy options available to curb union corruption (Slowing Union Corruption: Reforming the Landrum-Griffin Act to Better Combat Union Embezzlement, 8 George Mason Law Review 527 (2000)). Several of the policy options examined deserve attention as reforms to better enforce Beck rights:
Require Annual Audits and Quarterly Reports
Amending Landrum-Griffin to require annual audits and quarterly reports similar to those of the Securities Exchange Act of 1934 (SEA) would increase the probability of detecting embezzlement as well as acting as a deterrent. The accounting standards should also incorporate the distinction found by the Supreme Court in Beck between collective bargaining and other such core activities on the one hand and other non-core activities such as electioneering, lobbying, organizing, and political actions.
Union financial reports modeled after the Securities and the Exchange Commission's Form 10-K would have to be certified by an independent accountant and unions would be required to undergo an annual audit conducted under generally accepted accounting standards. Illegal acts uncovered by auditors would have to be reported to the union, its board and the Department of Labor. Quarterly reports, the equivalent of the SEC's unaudited 10-Q form, could supplement the flow of unions' financial disclosure.
If workers are to have any real chance to assert their Beck rights, they need accurate financial data The government has to do more to ensure that workers have such accurate data.
Improved Enforcement
Landrum-Griffin has long had enforcement deficiencies. One measure to strengthen enforcement would be to allow the Department of Labor to sue under Section 501(b). Currently, union members are granted a cause of action to sue when union officials breach their fiduciary duties under Section 501(a). This reform would allow the Department of Labor to proceed when union members are unable to pursue their causes of action.
Support for this proposal can be found in the testimony of Kurt W. Muellenberg, the court-appointed monitor of the Hotel Employees and Restaurant Employees Union from 1995 to 1998. On July 21, 1999, he testified before Rep. Boehner's subcommittee, stating:
"My experience as a Monitor suggests that the LMRDA's reliance on private suits by members to compel adherence to Section 501(a) is impractical. Few members have the interest, tenacity, sophistication and wherewithal to investigate and assemble the circumstantial evidence necessary to pursue a claim under 501(a)"Similarly, workers who encounter intimidation, harassment, delay, or any of the other tactics used by unions to obstruct a worker from asserting Beck rights, should have the option of allowing the Department of Labor stepping in to enforce their Beck rights. The burden is presently on the shoulders of the individual worker whose Beck rights are ignored. Such a reform would be a deterrent to unions who presently have a financial incentive to obstruct workers seeking a refund of dues and fees for non-collective bargaining purposes.
Impose Civil Money Penalties
Congress should consider amending Landrum-Griffin to allow the Department of Labor to recover civil money penalties for breaches of fiduciary duty (Section 501(a)) and violations of the disclosure measures (Title II). These reforms are modeled after the SEC's rule, 15 U.S.C. § 78u-2, which penalizes willful violations of the statute, inducing or procuring violations by any other person, and the willful making of false statements. Under this rule, penalties are established based on the gravity of the violations.
Congress has already empowered the Department to impose civil money penalties in other areas of labor law, such as ERISA and child labor. There is no good reason the Department should not have this power to enforce Landrum-Griffin disclosure provisions and Beck rights.
Similar sanctions should be considered as a deterrent to unions which
willfully obstruct workers' exercise of their Beck rights.
Any codification of Beck rights by Congress should also address the
following issues which have arisen since the Supreme Court handed down
its decision in 1988:
Workers who belong to unions or pay agency fees have a fundamental right to know how those funds are spent. They have a First Amendment right against being compelled to support political causes with which they disagree.
But rights, like the Supreme Court decisions that support them, are not self-enforcing. In the absence of remedies to ensure those rights, recent history suggests that unions whose interests are threatened by workers exercising their rights will do their utmost to undermine those rights.
The weight of evidence suggests that the "wave of union corruption" described by the New York Times is occurring because of weaknesses in the system of laws meant to prevent, detect, and punish those crimes. Workers whose hard-earned money is being stolen through union corruption deserve the protection of the law. No credible argument can be made that workers should have less legal protections against corruption than shareholders have against unscrupulous corporate officers. The policies modeled after the Securities and Exchange Commission's safeguards will promote more disclosure, better accounting and a more credible deterrent to union corruption than now exists.
The Supreme Court decisions repeatedly recognizing the rights of workers against compelled political speech are the law of the land, yet those rights are elusive without meaningful remedies. Workers who have no access to reliable information as to what portion of the funds they provide to unions go for collective bargaining as opposed to politics are poorly equipped to exercise their First Amendment rights, especially in the face of harassment, retaliation, and the studied indifference and delay of government bureaucracies to their plight. Congress has the power to provide a workable, reasonable, mechanism to ensure that the constitutional rights of workers are honored. It just needs the will and political leadership.
If First Amendment rights and deterring financial corruption are not
worker rights worth protecting with legislation, what are?
Organized Labor Accountability Project