Ninth Circuit Finds California "Labor Neutrality" Law Preempted by Federal Labor Law
The U.S. District Court for the Central District of California found that the law was preempted by the NLRA because it undermined federal labor policy by altering the Congressional design for the collective bargaining process. Chamber of Commerce of U.S. v. Lockyer, 2002 WL 31207130, 170 L.R.R.M. (BNA) 3185 (C.D. Cal. Sep. 16, 2002). Specifically, the district court cited section 8(c) of the NLRA, the so-called "free speech" section, which provides that the "expressing of any views, argument, or opinion, or the dissemination thereof" does not violate the NLRA (provided that the communication includes no "threat of reprisal or force or promise of benefit").
In affirming the district court's ruling, the Ninth Circuit held that the California statute was preempted by the NLRA under the theory set forth by the Supreme Court in Machinists v. Wisconsin Employment Relations Comm'n , 427 U.S. 132 (1976). In Machinists, the Supreme Court ruled that state regulation of activities not explicitly protected or regulated by the NLRA is prohibited if Congress intended those activities to remain unregulated and to be left to the free play of economic forces. Because the California statute "both explicitly targets and directly regulates processes controlled by the NLRA" and "it interferes with an area Congress intended to leave free of state regulation," the Ninth Circuit found that the statute violated the Machinists doctrine. According to the Ninth Circuit, "the [California] statute has both the explicit purpose and the substantive effect of interfering with the NLRA's system for organizing labor unions." A state-imposed requirement of labor neutrality, the Ninth Circuit reasoned, is inconsistent with federal law "when it directly targets and substantially affects open employer discussion about unionization, even if such regulation comes in the form of a restriction on state funds."
The California Law contains provisions very similar to those contained in New York's "labor neutrality" law, an amendment to Section 211-a of New York's Labor Law, which went into effect in December 2002. See New York Labor Neutrality Law Enacted (October 7, 2002) and Bill Prohibiting Employers From Using State Funds To Oppose Union Organizing Passes New York State Assembly and Senate (July 23, 2002). The New York law prohibits employers who receive funds from New York State from using those funds to "train managers, supervisors or other administrative personnel regarding methods to encourage or discourage union organization, or to encourage or discourage an employee from participating in a union organizing drive." Significantly, this prohibition extends to the use of State money to "hire or pay attorneys, consultants or other contractors," and the use of State money to "hire employees or pay the salary and other compensation of employees whose principal job duties are to encourage or discourage union organization . . ."
It remains to be seen whether the courts will find that