4.32 - A. Procedural Matters

• Jurisdiction: New York

a. Procedural Matters

A charge against an agency fee procedure must specifically identify the part of the procedure that the charging party claims is illegal.²⁶⁸² In its first decision interpreting the state’s agency shop fee law, PERB ruled that an employee organization could not charge a nonmember for part of the costs of arbitrating disputes concerning the amount of an agency shop fee.²⁶⁸³ Furthermore, PERB ruled that an independent employee could not be compelled to rely upon the employee organization’s review procedure but had a right under the Taylor Law to appeal to the courts.²⁶⁸⁴ Finally, PERB held that the refund mechanism developed by an employee organization had to apply not only to the employee organization itself, but also to any affiliates of that employee organization to which it sent any of the agency shop fee moneys that it collected.²⁶⁸⁵

Anticipating the decision of the Supreme Court in Chicago Teachers,²⁶⁸⁶ PERB held that an employee organization must complete its review procedure following an appeal by an independent employee within a reasonable period of time, which it determined to be a maximum of one year from the time when the refund claim was first filed.²⁶⁸⁷ One may question whether this one-year period would satisfy the Chicago Teachers standard for a prompt determination.

Other procedural rulings made by PERB are that the employee organization must disclose the reason for the amount of the refund when the refund is due,²⁶⁸⁸ and that the information required under New York law,²⁶⁸⁹ which is equivalent to that required under the Landrum-Griffin Act,²⁶⁹⁰ would satisfy the information requirement.²⁶⁹¹

As to other employee organization duties to an agency fee payer regarding the processing of objections to the employee organization’s expenditures, in United University Professions (Barry),²⁶⁹² the Board determined that the employee organization’s refund procedure was improper and violated the Taylor Law in several significant respects: (1) there was no provision for an application for a refund until after the start of the fiscal year, which allowed the employee organization the use of the agency fee payments prior to any advance reduction; (2) no financial information was provided to the agency fee payers prior to an opportunity to object to the advance reduction determination; (3) there was no outside audit of expenditures and no appeal of the amount of the advance reduction; (4) the appeal procedure was not reasonably prompt and a 15-day filing period was unreasonably short; and (5) the requirement that objectors notify the employee organization by registered or certified mail at each step was unduly burdensome. The employee organization then revised its procedure to come into compliance.²⁶⁹³ Advance reduction is not required; an agency fee system where 100% of the deducted fees are placed in an interest-bearing account, even though it did not provide an opportunity to make contemporaneous objections to the initial deduction, is permissible where the employee organization would not have access to the funds until the period for objections and challenges had run.²⁶⁹⁴

In United University Professions (Eson),²⁶⁹⁵ the Board dismissed consolidated charges alleging that the employee organization violated the Taylor Law by amending its procedure during its fiscal year. Agency fee payers were given notice of the changes, which were made to conform to case law developments. The Board rejected the employee’s contention that the employee organization was required to reopen the objection period and redo all steps under the modified procedure.

An employee organization is obligated to publish or otherwise communicate its agency fee refund procedure to all agency fee payers. However, copies of the procedure need not be provided three months before any affected employee can first use them.²⁶⁹⁶

Employee organizations are required to furnish agency fee payers with an audited statement of chargeable and nonchargeable expenses before the payers must file their objections.²⁶⁹⁷ A three-month delay between the fee deduction and financial disclosure was not sufficiently egregious to establish a violation where the fees were placed in segregated, interest-bearing accounts.²⁶⁹⁸ The audit requirement is satisfied by a review by an independent accounting firm.²⁶⁹⁹ The agency fee refund procedure need not contain separately audited financial statements of chargeable and nonchargeable expenses,²⁷⁰⁰ but financial disclosure that provides no breakdown of chargeable and nonchargeable expenditures, or no explanation of methodology to calculate the breakdown, is insufficient.²⁷⁰¹ Breaking down chargeable expenses into 19 categories, similar to those approved by PERB in United University Professions (Barry, Eson, Gallop),²⁷⁰² has been held sufficient, particularly where the categories were accompanied by a two-page explanation of the types of activities considered chargeable and nonchargeable.²⁷⁰³ Furthermore, the information must disclose the appropriate affiliate expenditures.²⁷⁰⁴ It is not sufficient to simply break down affiliate employee organization expenses into nine broad categories.²⁷⁰⁵

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