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New York Labor Neutrality Law Enacted

October 7, 2002

On September 30, 2002 Governor Pataki signed into law New York State Assembly Bill No. 11784 , amending Section 211-a of the Labor Law, to prohibit the use of State funds and property to encourage or discourage union organizing. The law, which will take effect on December 30, 2002, ninety days after its enactment, prohibits the use of State funds to train managers, supervisors or other administrative personnel regarding methods to encourage or discourage union organization. The prohibition extends to the use of State money to pay attorneys or other consultants or contractors, or to pay the salary and other compensation of employees whose principal job duties are to encourage or discourage union organization.

The law also requires employers who receive State funds to keep audited financial records for three years to show that state funds were not used to encourage or discourage union organizing. The Commissioner of Labor is to promulgate regulations governing the form and content of the financial records to be kept. The Attorney General or the State entity providing the funds may request these records, which employers are required to produce within ten days of the request.

The law is to be enforced by the Attorney General and does not include a private right of action. A court may order the return of the State funds and may impose a civil penalty not to exceed $1000. Where it is shown that an employer knowingly used State funds for a prohibited purpose, or where an employer has previously been found to have violated the law in the prior two years, a court may impose a civil penalty of $1000 or three times the amount of money unlawfully expended, whichever is greater.

As previously reported on this web site when this legislation was pending (Bill Prohibiting Employers From Using State Funds To Oppose Union Organizing Passes New York State Assembly and Senate [July 23, 2002]), there is a serious question as to whether the new law is preempted by federal labor law. In fact, in a suit filed by the U.S. Chamber of Commerce, a federal court recently struck down a similar measure in California on preemption grounds. Chamber of Commerce of U.S. v. Lockyer , 2002 WL 31207130 (C.D. Cal. Sept. 16, 2002). The Court stated that in enacting Section 8(c) of the National Labor Relations Act ("NLRA"), which provides that the "expressing of any views, argument, or opinion, or the dissemination thereof" does not violate the NLRA (provided that it includes no "threat of reprisal or force or promise of benefit"), Congress intended there to be "free debate" in the labor arena. A State-imposed requirement of labor neutrality, the Court reasoned, is therefore inconsistent with federal law.

According to news reports, the Healthcare Association of New York is considering filing a lawsuit challenging the New York law.