California And New York Mull State Labor Courts While NLRB on Ice

California and New York are close to passing legislation that would establish state-level labor courts to replace the National Labor Relations Board which remains in limbo without a quorum.

The bills: CA AB 288 and NY S 8034 would empower existing state labor boards to fully adjudicate unfair labor practice disputes, hold union elections, and certify union representation, among other actions – in essence, the authority to handle functions normally within the purview of the NLRB. Massachusetts is considering similar legislation.

• Both bills limit state labor board actions to situations where the NLRB has failed to assert jurisdiction.

• The California legislation is still being debated in the state assembly. New York passed its law which now awaits the signature of Gov. Kathy Hochul (D).

  • Gov. Hochul has until the end of the year to sign or veto the legislation – Hochul took business community concerns into account when she previously vetoed legislation that would have banned non-competes and she could similarly veto this bill in recognition of business community views, but her current position is unknown.

Direct response to NLRB inaction: Both bills — and their sponsors — make it clear that the legislation responds to the  NLRB’s current inability function due to a lack of quorum, a situation that is unlikely to change soon given that the Trump administration has yet to nominate replacements for the three vacant Board seats, with a fourth, that of current Chair Marvin Kaplan, set to expire in August.

What about preemption? The National Labor Relations Act and the NLRB have historically had broad preemption authority, meaning that any state or local  law falling within the NLRB’s jurisdiction is preempted and rendered invalid.

• Preemption authority has been significantly tested in recent years, as more and more states have passed labor laws or labor-adjacent laws, including a recent uptick in state captive audience meeting bans – all of which have gone largely unchallenged by the Board so far

  • Private parties can still challenge these laws on preemption grounds – and have, in the case of Connecticut’s captive audience meeting ban, with litigation still pending.

• The Board’s unwillingness to challenge such laws may be due to the desire to keep them on the books (for Republican Boards, this has included state secret ballot election requirements, for Democratic Boards, this has included captive audience meeting bans, among others).

Current bills raise preemption stakes: The California and New York bills would be the most blatant challenge to NLRA preemption yet – in both cases, a literal replacement of the NLRB with state-level equivalents.

• This would indicate that a legal challenge on preemption grounds would almost surely be successful. However, the bill’s provisions that limit state labor courts to asserting authority only when the NLRB declines, may temper those hopes.

Why it matters: The Trump administration has deprioritized labor issues and been slow to fill NLRB seats. The influence of the Teamsters has further complicated matters. Accordingly, a fully functioning NLRB remains a distant prospect, and state actions to fill the void, like the proposals in New York and California, are to be expected.

• A decentralization of labor law would add to the growing patchwork of state workplace laws further expanding compliance challenges for employers.

• The current administration has similarly made it clear that it will erode independent agency authority, like the NLRB, wherever it can. State labor courts may therefore be only the first domino to fall in a rush to replace federal agencies with state-level equivalents.