Ninth Circuit Upends Idaho’s Anti-Union Law

(CN) - Since federal labor law controls what workers do with their pay, Idaho cannot block union contractors from using portions of wages as a subsidy to better compete for work, the Ninth Circuit ruled Wednesday.

Construction unions developed the strategy, known as "job-targeting" or "market-recovery" programs, as the percentage of workers they represent continued to decline.

The program involve unions collects funds from workers it represents and using those funds to subsidize bids by union contractors, "allowing the contractors to lower their labor costs and so more effectively compete with non-union contractors," a ruling from the Ninth Circuit says today.

When Idaho banned the practice with a law called the Fairness in Contracting Act, unions filed suit for an injunction.

Before the law could take effect in 2011, Chief U.S. District Judge Lynn Winmill ruled that the law conflicts with Section 7 of the National Labor Relations Act (NLRA).

An appellate panel with the Ninth Circuit in Portland, Ore., affirmed today.

In addition to private jobs, Idaho's law would apply to federal contractor jobs that are governed by the Davis-Bacon Act, a federal statute that determines labor and pay standards on federal projects.

"Unless Davis-Bacon purports to establish near-plenary regulation over what workers may do with their money after they have been paid - a goal that makes no sense at all, even assuming it would be permissible - it must be limited to the actual subject matter of the statute, namely, ensuring that workers are actually paid a prevailing wage," Judge Marsha Berzon wrote for the court.

"What workers do with their money at that point, either individually or collectively through a union, is of no concern to Davis-Bacon."

Idaho's law purported to penalize offenders with fines of up to $10,000 for a first misdemeanor violation, $25,000 for a second violation and up to $100,000 for subsequent violations.

It also established a private cause of action that would enable any interested entity or person, such as an Idaho taxpayer, to sue to enforce the act.

Noting that the criminal penalties were "more onerous than the federal statute's own civil and administrative provisions," Berzon called the scheme likely pre-empted by Davis-Bacon itself.

The act "singles out unions, seeking to ban a particular strategy they employ 'to avoid layoffs or expand job opportunities for represented employees'" and "cannot escape preemption as a purportedly even-handed wage regulation," she said.

It also can't escape NLRA regulations, according to the ruling.

"It is well settled that most of the conduct prohibited by Idaho's statue is protected by the NLRA," Berzon wrote.

Judges Stephen Reinhardt and Andrew Hurwitz concurred, and Berzon also supplemented the lead opinion with an eight-page concurrence.

Idaho Attorney General Lawrence Wasden was not immediately available for comment.

The Idaho Building and Construction Trades Council and Southwest Idaho Building and Construction Trades Council, both AFL-CIO affiliates, led the challenge.

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