Vindicating the free speech rights of California employers, the United States Supreme Court, in a 7-2 decision, has overturned California laws that unlawfully interfered with every employer’s constitutionally protected right to engage in a free debate about the question of union representation under the National Labor Relations Act. The Court reached its decision in the case of The Chamber of Commerce of the United States of America, et.al. v. Brown (Opinion No. 06-939, June 19, 2008).
The US Chamber of Commerce and others challenged enforcement of California Assembly Bill 1889 (AB 1889). This law prevented private employers that received more than $10,000.00 in state funds in any year from using the state’s funds to “assist, promote, or deter union organizing.” (California Gov’t Code §§ 16645-16647(b)(d)).
The State of California claimed that its prohibition on the use of state funds to oppose unions promoted its policy of neutrality on the question of unionization. However, AB 1889 was clearly another example of state sponsored, pro-union, anti-employer legislation. AB 1889 specifically allowed expenditures of state funds for certain activities that promoted unionization, such as the use of state funds to provide union access to the employer’s property, or the use of state funds for activities in any way associated with the employer’s voluntary recognition of the union (California Gov’t Code § 16647(b)(d).
With AB 1889, California created a comprehensive enforcement scheme designed to intimidate California employers and extinguish their right to free speech. Its broad prohibition against the use of state funds to oppose unionization included employer expenditures for legal fees, consulting fees, and even the payment of salaries of supervisors or other employees whom an employer might utilize to oppose a union.
Employers were required to maintain records and also certify that state funds had not been used to oppose unionization. A false certification could expose the offending employer to criminal prosecution. If an employer commingled state funds in any way with other funds used to deter union organizing, AB 1889 created a conclusive presumption that the employer had used state funds for an unlawful purpose. Violators were subject to civil penalties amounting to treble damages, plus attorneys’ fees and costs. This law was another invitation to sue employers that opposed unions. The enforcement action could be brought by either the state attorney general or any private taxpayer, including a union engaged in a labor dispute with an employer receiving state funds.
As part of its decision, the U.S. Supreme Court emphasized that the National Labor Relations Act favors an uninhibited, robust and wide-open debate in labor disputes, stressing that the freewheeling use of the written and spoken word has been expressly fostered by Congress and approved by the National Labor Relations Board. The Court reversed the Ninth Circuit Court of Appeals judgment and remanded the case for further proceedings consistent with its opinion.
The Court’s ruling appears to pave the way for California employers who receive state funds, such as hospitals or other state licensed facilities, to use such funds to oppose unionization of their employees by all legal means, without violating California state law. It appears that the record-keeping and certification requirements of AB 1889 are also voided by the U.S. Supreme Court’s ruling. California employers that receive state funds will no longer face the specter of civil or criminal prosecution for exercising their constitutionally protected right to engage in a partisan debate about unionization. The Court’s ruling also invites further legal challenges to the validity of similar laws in other states.