High Court Rules States’ Attempt to Control Spending Fails

by Mike Hall, Jun 19, 2008

The U.S. Supreme Court today overturned a 2000 California law that banned employers who receive state grants or other funding from using those taxpayer dollars to pay for “labor-related actives”—i.e. attempts to deter or promote union organizing drives.

The California law did not prohibit employers from engaging in anti-union, or pro-union activities; they just were not allowed to use state money to fund those activities. Backers of the law called it a “state neutrality” measure because the public’s money would not favor or oppose unions.

The Supreme Court ruled, 7–2, that the California law was pre-empted by federal labor law as states are not allowed to regulate employer conduct if it is determined Congress did not intend to put such limits on employers.

The Chamber of Commerce of the United States challenged the law in 2002 and won in Federal District Court. But in 2006, the 9th Circuit Court of Appeals overturned the ruling, determining that California’s law was not pre-empted by federal statute.

The Bush administration joined the Chamber’s appeal to the Supreme Court. The California Labor Federation (CLF) and the AFL-CIO assisted the State of California in defending the law.

Justice Stephen Breyer’s dissent—joined by Justice Ruth Bader Ginsburg—noted the California law does not interfere with federal labor relations policy because “employers remain free to spend their own money” for the prohibited activities. He wrote that the state was simply saying “not on our…dime.”

Breyer also pointed out that Congress itself has enacted statutes using identical language, specifically, in the Head Start program, the Workforce Investment Act and the National Community Service Act.

In addition, his dissent noted that states have “broad authority to decide how to spend the People’s money” and the right to decide not to fund activities even if they are otherwise protected.

The dissent asks: “Why should they [the states] be conscripted into paying” for expenditures related to management’s role in labor organizing contests?”

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