The nation's highest court issued a ruling yesterday that may limit a state's ability to use its spending powers to circumvent federal labor laws, finding that a California law that limited the use of state funds was preempted by the National Labor Relations Act (NLRA). The Supreme Court, by a decision of 7-2, struck down a California law that prohibited state grantees from using state funds to "assist, promote or deter union organizing" on NLRA preemption grounds in Chamber of Commerce of the United States of America v. Brown. The Court explained that Section 8(c) of the NLRA, which protects speech by both unions and employers from regulation by the National Labor Relations Board, revealed congressional intent to encourage free debate on issues between labor and management and that this section expressly precludes regulation of speech about unionization, as long as the speech is not coercive. With similar legislation having been introduced in other states, this decision is applauded by employer groups because it confirms that employers have an equal opportunity to educate their employees about the impact of joining a union and signals that states will be limited in their ability to pass legislation that restricts these federally protected rights.

Ballard Spahr's Labor, Employment and Immigration Group can provide advice to companies that may be affected by this ruling. For more information, contact Brian D. Pedrow at 215.864.8108 or Shannon D. Farmer at 215.864.8221.

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