Courts must look behind California’s pretenses when the state channels money to union advocacy

In the aftermath of Janus v. AFSCME, states have come up with some pretty clever ways to funnel money to unions and union-supported speech.  Today, PLF asked the Ninth Circuit to strike down SB 954, a law that gives unions a huge fundraising advantage and makes it harder for contrary viewpoints to be heard.

Under California law, employers on public projects must pay employees what’s called the “prevailing wage,” an hourly wage determined by the Department of Industrial Relations.*  Employers can satisfy the prevailing wage requirement by using a combination of cash and other benefits, including alloting vacation time, contributing to healthcare and pension funds, and donating to apprenticeship, worker protection and other programs.  Employers can also donate to an “industry advancement fund,” that is, a non-profit that advocates for the betterment of the industry, and receive a prevailing wage credit.

Formerly, any industry advancement fund was eligible for a prevailing wage contribution.  Under SB 954, a fund may only receive a prevailing wage contribution if it is a beneficiary of a union-negotiated collective bargaining agreement (CBA).

In a brief filed today, PLF argues that this limitation has one purpose, and one purpose only: to channel prevailing wage contributions to union-approved advocacy to the exclusion of any other viewpoint.  As a practical matter, industry advancement funds that advocate contrary to union interests are no longer eligible for prevailing wage contributions—because a union will never make them a beneficiary of a CBA. The result is to discriminate in favor of union-favored viewpoints.

The state responds, however, that SB 954 is aimed at the “neutral” purpose of ensuring that employees consent to how their wages are allocated.  The problem is that the law is so ill-suited to that end that there’s good reason to doubt whether that’s the true objective. For example, SB 954 is wildly under-inclusive when it comes to “ensuring consent.”  Collective bargaining agreements don’t ensure actual consent.  At best, they serve majoratarian or representative consent.  Employees are not always entitled to vote on a CBA, and even when they are, only majority approval is required.  And when employees do vote, they can only vote up or down—they can’t veto or approve particular policies.  Some types of collective bargaining agreements, like project labor agreements (which are negotiated by unions and the government project owner prior to bidding), don’t require employee consent at all.  Moreoever, SB 954 is over-inclusive; it forbids prevailing wage contributions even where an employer gets actual, individual, consent from an employee if that employer did not negotiate wages with a union under a CBA.  This means that the only definition of “consent” under SB 954 is having prevailing wage contributions negotiated by a union.

The upshot is that SB 954 bears little relationship to ensuring employee consent, but is perfectly tailored to ensuring that prevailing wage contributions are channeled toward union-approved speech.

PLF brought suit on behalf of ABC-CCC, a non-profit advocacy organization that—prior to SB 954—received almost all of its funding from prevailing wage contributions.  Because ABC-CCC advocates in ways that unions do not like, it does not receive contributions under CBAs.  Since SB 954 has gone into effect, the organization has lost 99% of its funding.  We argued that SB 954 discriminates against organizations like ABC-CCC and in favor of union-approved speech in violation of the First and Fourteenth Amendments.  However, the district court dismissed on the basis that the law was “neutral” on its face (the law only explicitly mentions CBAs, not viewpoint), and a three judge Ninth Circuit panel affirmed.  PLF is now asking the full Ninth Circuit to reconsider.

In holding that courts cannot look behind a facially neutral law, the Panel has essentially given states free rein to discriminate against disfavored speech—so long as they can come up with some loose-fitting “neutral” facade.  That not only conflicts with Supreme Court and Ninth Circuit precedent, it is extremely dangerous.  Censorship is no less pernicious when it’s done under the guise of a “neutral” rationale. Once plaintiffs make plausible allegations of covert viewpoint discrimination, they must be allowed to gather discovery that supports their claims.

We’re hopeful that the Ninth Circuit will grant rehearing to correct this dangerous error, and restore plaintiffs’ ability to bring covert viewpoint discrimination claims under the First Amendment.

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*The state contends that prevailing wage laws are necessary to prevent the “unfair competition” that would result if cheap labor from distant areas were permitted to compete with local workers.  We’ll save debating the merits of that argument for another day, but suffice it to say that many believe that the prevailing wage requirement drives up the price of public projects to protect unions—who would otherwise be undercut by non-union employees who are willing to work for less.