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A law that bars employers receiving state funds from advocating for or against unionization was stricken this week by a federal court. Northern District Senior Judge Neal P. McCurn said the statute, known by some as the Employer Gag Law and others as the Union Neutrality Law, is pre-empted by federal statute. Healthcare Association of New York v. Pataki, 1:03-CV-0413, arose out of a lawsuit in which the Healthcare Association of New York State and four other health care organizations challenged �211-a of the state Labor Law. The law was enacted in 2002 at the urging of major labor organizations to bar any employer receiving state funding, including private healthcare organizations that accept Medicaid reimbursements, from either encouraging or discouraging union activities. It was drafted to ensure that scant state resources earmarked for “desperately needed social services” are not diverted for other purposes, such as promoting or opposing unionization. The state healthcare association and the four other plaintiffs — the New York Association of Homes and Services for the Aging, New York State Health Facilities Association Inc., NYSARC Inc. and United Cerebral Palsy Associations of New York State — attacked the statute, claiming violations of their rights under the First and 14th amendments. They also claimed pre-emption. The National Labor Relations Act does not specifically pre-empt. However, under Building Trades v. Associated Builders, 507 US 218 (1993), the U.S. Supreme Court articulated two distinct principles through which the act’s provisions may be pre-emptive. One, the so-called “Garmon preemption” (see San Diego Building Trades Council v. Garmon, 359 US 236 [1959]), bars states from regulating conduct subject to the jurisdiction of the act. Another, the so-called “Machinists preemption” (see Machinists v. Wisconsin Employment Relations Commission, 427 US 147 [1976]), prohibits state or municipal regulation in areas left “to be controlled by the free play of economic forces.” McCurn found that state Labor Law is pre-empted under the Machinists strand and therefore found no need to apply the Garmon standard or even constitutional analysis. The threshold issue was whether the federal act pre-empts state Labor Law. On that question, McCurn yielded largely to a year-old decision –which was recently recalled for reconsideration — from the 9th U.S. Circuit Court of Appeals in finding pre-emption. In Chamber of Commerce v. Lockyer, (364 F3d 1154 2004]), the 9th Circuit shot down a California union neutrality law that barred employers receiving state funds from using any of that money to “assist, promote, or deter union organization.” The 9th Circuit said the law conflicted with, and was pre-empted by, National Labor Relations Act provisions encouraging robust debate on unionization issues. It said that the California regulation was pre-empted under the Machinists pre-emption. McCurn ruled similarly in the state healthcare association case, even though the 9th Circuit has ordered a rehearing on Lockyer. EMPLOYEE RIGHTS McCurn said the National Labor Relations Act recognizes a broad range of employee rights, including the right to refuse to join a union. “It is difficult, if not impossible to see, however, how an employee could intelligently exercise such rights, especially the right to decline representation, if the employee hears only one side of the story — the union’s,” he wrote. “Plainly hindering an employer’s ability to disseminate information interferes directly with the union organizing process,” which the act recognizes. McCurn said the state’s argument that the act neither shields nor bars noncoercive employer communications “completely disregards” case law. He stressed, however, that the court is “not turning a blind eye to the fact that the state is financially strapped and that” �211-a was an attempt to preserve limited resources for social services. However, McCurn also said the state’s goal, however “laudable,” cannot be achieved by impermissibly treading in the federally protected universe of labor rights. Jeffrey J. Sherrin of O’Connell and Aronowitz in Albany appeared for the plaintiffs. Assistant Attorneys General Seth Kupferberg and Stephen M. Kerwin argued for the defendants. Daniel Sisto, president of the state healthcare association, said the ruling “is a victory for free speech and especially for health care workers weighing the pros and cons” of joining a labor union. “Now, hospitals and nursing homes will be free to speak to the people they employ, and health care workers will get to hear both sides of the unionization debate,” he said. Marc Violette, spokesman for the Attorney General’s Office, suggested yesterday that the case is not necessarily over. “We believe the law is constitutional, and we are considering our next steps,” he said. “This is not the end of the road on this issue.”

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