Company Payments to Union Steward upheld by Ninth Circuit Court of Appeals

The Ninth Circuit Court of Appeals upheld a provision in a collective bargaining agreement which required a company to pay salary and benefits to an employee who was working full time as chief steward for his union.  The case is International Association of Machinists and Aerospace Workers v. BF Goodrich, which was decided on November 1, 2004. 

The company had challenged the contractual provision on the basis that the provision violated section 302(a)(1) of the Labor Management Relations Act (“LMRA”) which makes it illegal for any employer to “agree to pay, lend, or deliver, any money or other thing of value…to any [union] representative[.]”  While the Ninth Circuit conceded that the chief steward was a “union representative” within the meaning of this section, the court concluded that the contractual provision requiring payments to the steward came within a statutory exemption under section 302(c)(1), which exempts employer payments to “any employee …of such employer, as compensation for, or by reason of, his service as an employee of such employer.”  

Although the chief steward’s work consisted primarily of investigating and prosecuting grievances on behalf of his union, the circumstances under which he performed these functions established, at least to the court’s satisfaction, that an employment relationship existed between him and the company, not the union.  Among the pertinent factors relied on by the court were the following: the chief steward reported to the company’s personnel department; that department approved any overtime, sick leave, and vacation days he wished to take; he did not receive work assignments from the union, nor did he make frequent reports to it; and “most important to [the court’s] determination,” he worked from an office located on the company’s work floor, under the direct and immediate supervision of the company, as opposed to the union hall. 

The Goodrich court distinguished the facts in that case from other cases in which company payments to union stewards were found to have violated the LMRA.  Under those cases, the ultimate question is whether the steward’s duties are performed under the control and supervision of the company.  If so, the payments would be considered as compensation for services as a company employee.  Conversely, if the steward’s duties are performed away from the company premises, and are otherwise not subject to the company’s control and supervision, such payments would be illegal. 

A violation of LMRA section 302 is a federal crime; thus, employers who have collective bargaining agreements requiring some form of compensation to stewards or other union representatives should consider reviewing those agreements to satisfy themselves that the pertinent provisions conform to the law.

Persons wishing further information or who have questions or comments about either this case or any of the cases that have appeared on this website can contact any of the attorneys at Epstein, Turner & Song.