Yet, labor unions oftentimes keep the details of their finances under wraps and are less than transparent about how they spend fees collected from workers they represent. This lack of financial disclosure makes it difficult for non-members to know if their union is charging too much or spending their agency fee payments on appropriate activity.
Last Friday, a National Labor Relations Board (NLRB) ruling reinforced that labor unions must provide a verified accounting of how they spend fees to non-members and prohibited agency fees from being spent on certain union political expenditures.
A recent NLRB decision, on a nine-year old case brought by Rhode Island nurse Jeanette Geary, involved the rights of non-members who are represented by a union with a union-security requirement, or forced union dues, in place. In summary, “Jeannette Geary and several other members of the United Nurses and Allied Professionals union resigned their union membership and objected to the assessment of dues and fees for activities unrelated to collective bargaining, contract administration, or grievance adjustment on the basis of their Beck rights.”
The right of non-members to object to certain dues payments flows from a 1988 U.S. Supreme Court case, Beck v. Communication Workers of America. In Beck, the court ruled that under the National Labor Relations Act (NLRA), “the most that nonmembers can be required to pay is an agency fee that equals their share of what the union can prove is its costs of collective bargaining, contract administration, and grievance adjustment.” If a non-member suspects that their union is charging too high an agency fee, which covers more than the cost of representation, then they can object to the union’s calculation of the agency fee and seek a refund on the portion of agency fees that were charged for non-representation activity.
A key part of the Beck decision is that labor unions must provide proof to non-members on how much it costs them to provide representation. Costs related to union representation are generally considered “chargeable” expenditures. Whereas, union political activity is a “non-chargeable” expenditure. Requiring labor unions to provide a verified accounting of how dues are spent is a crucial aspect of the decision, and without it, the requirements of Beck would be toothless. How on earth would a non-member know to challenge the union’s fee calculation if the union was not required to provide non-members with a statement that shows how they calculated the agency fee?
In Jeannette Geary’s case, the NLRB ruled on two issues related to workers’ Beck rights and brought clarity to how unions may spend agency fees. The NLRB ruled that the United Nurses and Allied Professionals union violated the NLRA “by failing to provide Charging Party Jeanette Geary with an audit verification letter in support of the Union’s claim of expenses chargeable to a Beck objector. The second issue concerns whether the Union unlawfully charged the Charging Party for expenses the Union incurred while lobbying for seven bills pending in the Rhode Island and Vermont legislatures.”
This ruling is a long-awaited victory for worker freedom and boosts union accountability to non-members who are forced to accept union representation. First, Geary and all similarly situated non-members will be reimbursed for “the amount of the dues collected from them that were spent on lobbying activities.” Second, the union must provide non-members with “verification from the auditor that the financial information disclosed to them had been audited.”
While this ruling is a hard-fought victory for Jeanette Geary, the real problem is that under the National Labor Relations Act, non-members are forced to accept union representation. Congress should consider eliminating what is known as “exclusive representation,” which provides labor unions with monopoly power over a workplace. By making labor unions members-only organizations, labor unions would not have to worry about what is a “chargeable” or “non-chargeable” expense and non-members would be free to negotiate directly with their employer.