In a 7-2 opinion authored by Justice Stevens, the United States Supreme Court held that a California law that prohibits employers who receive state grants or program funds from assisting, promoting or deterring union organizing was preempted by the National Labor Relations Act ("NLRA"). This means that the California law is unenforceable.

At issue in Chamber of Commerce v. Brown was a California statute that sought to prevent employers from using state funds for the purpose of "influencing employees to support or oppose unionization." Despite seemingly neutral terms, the statute specifically exempted, and therefore permitted, employers' use of state funds to allow labor organizations to come onto their premises and/or to negotiate and enter voluntary recognition agreements with a union. Moreover, employers who used state funds to influence employee choices regarding unionization, or who simply failed to segregate state funds from funds used to deter union activity, would be liable for up to three times the amount of funds received plus attorneys' fees and expenses.

Because Section 8(c) of the NLRA specifically protects an employer's right to engage in non-coercive speech in opposing union organization efforts, and the California statute attempted to regulate employer speech regarding unions, the Supreme Court found the California statute is "unequivocally preempted" by the NLRA. The Court noted that because the statute had a negative restriction on employer speech regarding unionization, permitted the use of funds to promote unions while restricting uses in opposition to them, and imposed significant penalties for violating the statute in any manner, the statute necessarily operated to "chill" one side of the debate protected by the NLRA.

If you would like any further information regarding the Brown decision, please contact any member of Schiff Hardin's Labor and Employment Group.