Interpipe Contracting, Inc. v. Becerra, No. 17-55248 (9th Cir. 2018)
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Senate Bill 954, an amendment to the California labor code that imposed a wage-credit limitation on employers for payments to third-party industry advancement funds, was neither preempted by the National Labor Relations Act nor infringed plaintiffs' First Amendment rights. The Ninth Circuit affirmed the district court's dismissal of plaintiffs' complaint, holding that SB 954 did not frustrate the objectives of the NLRA and was not preempted under the doctrine in Machinists v. Wis. Emp’t Relations Comm’n, 427 U.S. 132 (1976). The panel explained that, by setting a floor for employee pay while allowing unionized employees to opt-out of a particular provision, California acted well within the ambit of its traditional police powers.
The panel also held that plaintiffs have no free-floating First Amendment right to "amass" funds to finance its speech and, to the extent SB 954 implicated plaintiffs' speech interests at all, those interests were not constitutional in nature because SB 954 merely trims a state subsidy of speech, and does so in a viewpoint-neutral way. Under rational basis review, SB 954 was rationally related to the legitimate government purpose of ensuring meaningful employee consent before employers contribute portions of their wages to third-party advocacy groups, and easily withstood scrutiny.
Court Description: Civil Rights The panel affirmed the district court’s dismissal of an action challenging a 2017 amendment to the California labor code that imposed a wage-credit limitation on employers for payments to third-party industry advancement funds (Senate Bill 954). Pursuant to the California’s labor code, employers must pay public works employees either the prevailing wage or pay a combination of cash wages and benefits. The list of eligible benefits includes employer payments to third-party industry advancement funds. Amendment SB 954 permits employers to take a wage-credit for advancement fund contributions only if their employees consent to doing so through a collective bargaining agreement negotiated by a union. Plaintiff is a contractor that favors open shop employment arrangements and opposes project labor agreements on public works projects. Prior to the amendment, plaintiff took a wage credit for its contributions to co-plaintiff ABC-CCC, an industry advancement fund that opposes project labor agreements and supports open shop arrangements. Since SB 954 went into effect, plaintiff has ceased making payments to ABC-CCC. The panel held that amendment SB 954 does not frustrate the objectives of the National Labor Relations Act and is not preempted under the doctrine set forth in Machinists v. Wis.
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