TABLE OF CONTENTS *

OPENING STATEMENT, CHAIRMAN Harris Fawell, SUBCOMMITTEE ON Employer-employee relations, COMMITTEE ON EDUCATION AND THE WORKFORCE, U.S. HOUSE OF REPRESENTATIVES *

opening statement, minority ranking member donald payne, subcommittee on employer-employee relations, committee on education and the workforce, u.s. house of representatives *

STATEMENT OF ROBERT P. HUNTER, DIRECTOR OF PUBLIC POLICY, MACKINAC CENTER FOR PUBLIC POLICY, MIDLAND, MICHIGAN *

statement of john masiello, employee u.s. airways, mooresville, n.c. *

STATEMENT OF FRANK URY, COAUTHOR, CALIFORNIA REFORM INITIATIVE *

STATEMENT OF JOHN HIATT, GENERAL COUNSEL, AFL-CIO *

STATEMENT OF MORGAN O. REYNOLDS, DEPARTMENT OF ECONOMICS, TEXAS A&M UNIVERSITY *

STATEMENT OF JOHN C. McCRAE, 44-YEAR UNION MEMBER *

STATEMENT OF CHERI W. JAMES, PRESIDENT, VIRGINIA EDUCATION ASSOCIATION, Richmond, virginia *

STATEMENT OF MARK WILSON, POLICY ANALYST, HERITAGE FOUNDATION, WASHINGTON, D.C. *

Appendix A - OPENING STATEMENT, CHAIRMAN Harris Fawell, SUBCOMMITTEE ON Employer-employee relations, COMMITTEE ON EDUCATION AND THE WORKFORCE, U.S. HOUSE OF REPRESENTATIVES *

appendix b - OPENING STATEMENT, minority ranking member donald payne, SUBCOMMITTEE ON Employer-employee relations, COMMITTEE ON EDUCATION AND THE WORKFORCE, U.S. HOUSE OF REPRESENTATIVES *

appendix c - Mackinac center report "Compulsory Union Dues in Michigan: The Need to enforce union members’ rights, and the impact on workers, employers, and labor unions" by Robert Hunter *

appendix d - WRITTEN STATEMENT OF ROBERT P. HUNTER, DIRECTOR OF PUBLIC POLICY, MACKINAC CENTER FOR PUBLIC POLICY, MIDLAND, MICHIGAN *

appendix e - WRITTEN STATEMENT OF JOHN MASIELLO, EMPLOYEE, U.S. AIRWAYS, MOORESVILLE, NORTH CAROLINA *

appendix f - written statement of FRANK URY, COAUTHOR, CALIFORNIA REFORM INITIATIVe *

appendix g - Written statement of john hiatt, general counsel, afl-cio *

appendix h - Written STATEMENT OF MORGAN O. REYNOLDS, DEPARTMENT OF ECONOMICS, TEXAS A&M UNIVERSITY *

appendix i - written STATEMENT OF JOHN C. McCRAE, 44-YEAR UNION MEMBER *

The subcommittee met, pursuant to call, at 10 a.m., in Room 2175, Rayburn House Office Building, Hon. Harris Fawell [chairman of the subcommittee] presiding.

Present: Representatives Fawell, Ballenger, Souder, Payne and Owens.

Staff Present: Kevin Talley, Staff Director; Kathy Gillespie, Workplace Policy Counsel; Peter Gunas, Professional Staff Member; Rob Green, Professional Staff Member; David Frank, Professional Staff Member; Gary Visscher, Professional Staff Member; Bill McCarthy, Press Secretary; Marjorie Wasson, Staff Assistant; Broderick Johnson, General Counsel; Brian Kennedy, Minority Labor Counsel/Coordinator; Peter Rutledge, Senior Legislative Associate; Patricia Crawford, Legislative Associate; and Shannon McNulty, Minority Staff Assistant.

Chairman Fawell. The Subcommittee on Employers and Employee Relations will come to order. I welcome each of you to this hearing of the Employer-Employee Relations Subcommittee. I would like to give a special thanks to the witnesses for taking the time to come into Washington to be with us this morning.

We are here again to discuss the issue of mandatory, non-collective bargaining union dues. We want to arm workers with better information about their rights and obligations regarding non-collective bargaining union dues and to give workers more control over how a portion of their wages are spent by organized labor. Simply put, unions should be required to get written permission from union members before accepting payment of non-collective bargaining dues unrelated to collective bargaining and contract administration and grievance adjustment.

This is our sixth hearing on this issue in the past 2 years. We are making progress. My bill, H.R. 1625, the Worker Paycheck Fairness Act, has been marked up by the full committee and has been favorably reported to the House, and I am optimistic that the House will vote on this bill early this year.

Some of you might wonder why we continue to hold hearings on a bill that is basically ready for floor action. The reason is because this is a crucial issue involving what I consider to be constitutional rights of workers' free speech. In each of the previous five hearings, we have heard from worker after worker about one thing they want from their unions. I quote: "Just give me the respect," they have all said, "of asking for my permission before you divert money from my wages for purposes that are not related to collective bargaining."

This issue is thus, I think, a simple one. It is about the freedom of all men and women to make individual and informed choices about the political, social or charitable causes they support. We are not just talking about political funds here. We are talking about all portions of dues, which are not necessary for collective bargaining, which includes a lot more than just political funds.

Ladies and gentlemen, there is nothing so powerful basically as an idea whose time has come. I know this idea's time has come. We will continue to address this issue until something is done to correct the flawed current system. I simply invite unions to recognize that what we are doing with H.R. 1625 is making sure that where companies and unions negotiate a union security agreement, thereby conditioning employment on the payment of union dues, that wages cannot be diverted to pay for activities unrelated to union functions unless the worker simply gives his or her written permission.

Basically, what the Supreme Court said regarding the Beck case is that it is a constitutional right that dues required under a union security agreement does not include any dues which are not necessary for collective bargaining.

Make no mistake, current law is inadequate right now. Workers from around the country have described the incredible indignities they have to endure, including harassment, stonewalling, coercion, and intimidation, when they attempt to exercise their rights granted to them in the Supreme Court 1988 Beck decision. These same workers are unable quite often under current circumstances to be able to secure a refund of their own money, and they are never quite sure whether or not it does represent the non-collective bargaining portion of the dues anyway. It is very important to understand that until unions are required to first obtain the written consent of workers before using their dues for purposes not related to collective bargaining, the constitutional rights promised by Beck to America's workers will remain illusory.

H.R. 1625 also ensures that workers who exercise their rights under the statute cannot be retaliated against, including being forced to resign from the union. I think most of us recognize that that is one of the very first steps that the union takes. If you can muster up the courage to be able to say to the union, "I prefer that I do not want to pay the non-collective bargaining dues," almost always means that you are going to be driven out of the union. It takes a lot of gumption, therefore, to just try to exercise those constitutional rights.

Let me say that I applaud the hard work being done at the State level to safeguard the rights and paychecks of hard-working Americans. Last month in San Diego, the subcommittee heard from representatives from Washington State, California and Oklahoma. I am pleased that today we will hear from Mr. Ury of California, one of the authors of a campaign reform initiative which will be before the voters in June of this year. I assure you that some of us in Congress do hear the voices of the States, and we do share their same concerns.

The Worker Paycheck Fairness Act requires that workers operating under a union security agreement authorized by Federal law be given the opportunity to give their written consent for any portion of dues or fees which will be used by the labor organization for non-collective bargaining purposes. The bill calls for strong civil relief by allowing double damages and attorney fees and court costs, and that, by the way, is the very type of a remedy we use in the Family and Medical Leave Act. It also requires posting in the workplace of these rights. It requires more detailed financial reporting by the unions so the workers can understand what portion of the dues are collective bargaining in nature and non-collective bargaining in nature, and, as I have mentioned earlier, makes it unlawful for a labor union to coerce or retaliate against a worker for exercising the rights of the statute.

Just as it took civil rights legislation in the 1960s to deliver the rights afforded by the Supreme Court years before, it will take legislation to deliver the rights workers were afforded by the Court's 1988 decision.

[The statement of Mr. Fawell follows:]

WRITTEN OPENING STATEMENT, CHAIRMAN Harris Fawell, SUBCOMMITTEE ON Employer-Employee Relations, COMMITTEE ON EDUCATION AND THE WORKFORCE, U.S. HOUSE OF REPRESENTATIVES – SEE APPENDIX A

Chairman Fawell. I would now ask that the gentleman from New York, who is sitting in as substitute Ranking Democrat on the committee today, Mr. Owens, for his opening statement.

Mr. Owens. Thank you Mr. Chairman. Mr. Payne has been unavoidably detained and asked me to read his statement.

Mr. Chairman, today we will be having the second hearing this subcommittee has scheduled on H.R. 1625 during the current congressional recess. Perhaps I should remind you that the committee has already held hearings on this bill. In fact, the committee has already voted on H.R. 1625 and reported out the legislation on November 8 of last year. The redundancy of these hearings gives the appearance that Federal taxpayers money is being used to help finance campaigns for State initiatives on union dues.

H.R. 1625 and related State legislative efforts are part of an organized campaign to silence the voice of working people. In recent elections the labor movement has exercised its right to speak out against Republican efforts to undermine the rights of working Americans. Among other things, Republicans have tried to subvert the 40-hour workweek, gut the protections of OSHA, repeal Davis-Bacon, legalize company unions and raid employee pension funds. To a large extent, the labor movement has been able to successfully fight off these attacks.

Now it is payback time. Republicans cannot win the policy arguments, so they have apparently decided to silence their critics. This strategy, like the underlying legislation, is undemocratic and wrong. H.R. 1625 would muzzle the legitimate voice of representatives of working men and women who dare tell the truth about the Republican anti-labor agenda.

Mr. Chairman, the democratic principles embodied in the National Labor Relations Act are borrowed from the democratic process we use and honor all across the country when we elect our city councils, our mayors, our school boards and Members of Congress. Now the Majority is suggesting that this deeply rooted great American tradition of elected representation is repulsive when the representatives of working men and women advocate positions that challenge the misguided philosophy and distorted values of the Republican Party.

Mr. Chairman, this bill unfairly imposes onerous burdens on the labor movement that won't apply to corporations or to nonprofit groups such as the NRA and the Christian Coalition. No employee may be compelled to join a union. No worker is required to underwrite union political activity. Unions have a positive duty to inform employees that they are not required to pay full union dues for purposes unrelated to the provision of representation. Finally, those represented by unions typically have a choice of forums by which they may ensure their rights are protected. These existing protections for the rights of workers are more than adequate. This bill and related efforts to change State laws are clearly a gratuitous attack on the collective voice of working families.

In conclusion, Mr. Chairman, H.R. 1625 is as undemocratic and oppressive a bill now as it was when this committee passed it last year. We do not need any more hearings on H.R. 1625. Thank you.

Chairman Fawell. I thank my colleague, the gentleman from New York.

[The statement of Mr. Payne follows:]

WRITTEN OPENING STATEMENT, Minority Ranking Member Donald Payne, SUBCOMMITTEE ON Employer-Employee Relations, COMMITTEE ON EDUCATION AND THE WORKFORCE, U.S. HOUSE OF REPRESENTATIVES – SEE APPENDIX B

Chairman Fawell. I think the issues are clear, but my hope is that as we hold these hearings, people in general will begin to understand that there are some significant issues involved here. The more we talk about them, hopefully the clearer these issues become. Maybe even some degree of bipartisanship can creep in here, too. Although, I know that this is not easy when we have a labor issue because there are a lot of views that Republicans and Democrats just can't agree upon in those areas. I hope, though, that we may prove that to be wrong before we are done with this legislation and by the time it goes to the floor.

I am going to just give a brief description of the witnesses who will be testifying today, and then we will move right along into that panel. When we are done, I invite comments back and forth from you folks there. You are on the front lines and this is your area of expertise. I guess we are on the 5 minute limit here, which is terribly short when you come right down to it, but we don't have a shepherd's crook that pulls you offstage once you may go over that a little bit. If you care to in the time that we have, and as questions come from Members of Congress, take the opportunity for that give and take, I think sometimes that is the very best part of these hearings.

Our first witness will be Robert P. Hunter, Director of Labor Policy for the Mackinac Center for Public Policy in Midland, Michigan. Mr. Hunter is former chief counsel to the Senate Labor Committee. President Reagan appointed Mr. Hunter as a member of the National Labor Relations Board in 1981, where he adjudicated more than 1,000 labor law cases.

Our second witness is John Masiello of Mooresville, North Carolina. Mr. Masiello is an FAA-certified air frame and power plant technician for U.S. Airways in Charlotte, North Carolina, and a 13-year member of the International Association of Machinists and Aerospace Workers.

Next will be Frank Ury, co-author of the California Reform Initiative, which has qualified for the statewide ballot in June in California. The initiative would require that employers and labor unions get written permission before they can take any money out of an employee's or member's paycheck which is to be used for political expenditures.

Our forth witness will be John Hiatt, who is general counsel for the AFL-CIO here in Washington, D.C.

Next will be Morgan O. Reynolds, Professor of Economics at Texas A&M University, director of the Criminal Justice Center of the Dallas-based National Center for Policy Analysis and editorial board member of the Journal of Labor Research.

The following witness will be John C. McCrae of Ridley Park, Pennsylvania, who is a 44-year member of Local Union 454 affiliated with the Philadelphia District Council of Carpenters. He is also involved in a group called Carpenters for Democracy in Unions.

Our next witness will be Cheri W. James, who has come in here just a little bit late, but we appreciate your taking the time to be here; a Richmond, Virginia, public schools mathematics teacher who is president of the Virginia Education Association. She is testifying this morning on behalf of the 2.3-million-member National Education Association.

Our final witness will be Mark Wilson, who is the Rebecca Lukens Fellow in Labor Policy of the Washington, D.C. based Heritage Foundation. Mr. Wilson specializes in workplace policy issues, examines the impact of labor market mandates and regulations and the role of government in labor management relations. For 13 years he was a senior economist at the United States Department of Labor.

So Mr. Hunter, if you would commence your testimony.

STATEMENT OF ROBERT P. HUNTER, DIRECTOR OF PUBLIC POLICY, MACKINAC CENTER FOR PUBLIC POLICY, MIDLAND, MICHIGAN

Mr. Hunter. Mr. Chairman, Members of the subcommittee, my name is Robert Hunter. I am currently the Director of Labor Policy for the Mackinac Center for Public Policy in Midland, Michigan.

I am very appreciative of your gracious invitation to be here today to testify on I believe, one of the most important workplace issues facing American and Michigan workers. That is the right to be free and protected from political and ideological exploitation by those very unions that represent them.

Beck rights are named after the U.S. Supreme Court's 1988 landmark decision in Communications Workers v. Beck, and they constitute a triumph, I believe, of individual rights over the political weight of union leaders. Yet while the establishment of these rights is well settled as a matter of American labor policy, they go largely unrealized for three primary reasons. First, workers simply do not know these rights exist. Second, when they are aware of these rights, they are forced to make a sometimes untenable choice of resigning from the union in order to exercise those rights. Third, there exists no effective practical enforcement mechanism available to a worker who is denied his or her Beck rights.

Union employers and governments have really not done a good job in informing workers of their so-called Beck rights. To remedy this, I have called upon Michigan Governor John Engler to issue an executive order to increase Beck rights awareness through notices in State public sector workplaces such as schools, and in workplaces of private-sector employers doing government contracting with the State of Michigan.

On behalf of the Mackinac Center for Public Policy, I have written a report on the subject of Beck rights and compulsory union dues in Michigan. I would ask that this report be made a part of my testimony in this matter and be incorporated in the record as a part of my testimony.

Chairman Fawell. Without objection, it shall be part of the record.

[The information follows:]

Mackinac center report "Compulsory Union Dues in Michigan: The Need to enforce union members’ rights, and the impact on workers, employers, and labor unions" by Robert Hunter – see appendix c

Mr. Hunter. Thank you, Mr. Chairman. In the interest of time I will try to summarize my testimony which indicates why I believe H.R. 1625 is a balanced, fair and, under the circumstances, necessary extension of fundamental employee rights.

Nearly 1 million Michigan workers are forced to pay hundreds of millions of dollars in annual labor union dues in order to keep their jobs. Unions spend a portion of this dues money on worker representation within the workplace, which is proper, but also much is spent in support of political, social and ideological goals outside the workplace. Workers covered by a union security clause must pay the dues that unions demand for collective bargaining activities, but it is clear that they are not required to financially support a union's political or ideological cause. In fact, workers are entitled to a refund of their dues used for purposes not related to collective bargaining.

Again, these rights largely go unrealized because of the failure of people, frankly, to know the rights exist. An April 1996 Luntz Research survey of 1,000 union members revealed that 78 percent of union members surveyed were not aware of their right to receive a dues refund under Beck for that portion of their monthly dues spent on political activities. In that same survey, one out of five union members said they would definitely request a refund, and an additional 20 percent said that they would be likely to do so. Moreover, a whopping 84 percent of those same union members surveyed said that their union leaders should be required to disclose exactly how they spend union dues.

The 1994 current population survey in Michigan indicates that there are 960,000 active union members employed within the State of Michigan. According to the Luntz survey findings, only 22 percent of union members know of their Beck rights. It can be presumed that approximately 493,000 Michigan private-sector workers are unaware of their rights under Beck, and some 257,000 Michigan public-sector workers are likewise unaware of their constitutional rights under similar U.S. Supreme Court cases.

Assuming the Luntz Research findings are accurate, and I do assume that based on my own personal experience in dealing with Michigan workers, 750,000 Michigan union members or agency fee payers are not aware of their right to reduce dues, and approximately 385,000 Michigan union members would be very likely to exercise rights if they were to be made aware of them.

Again, another factor indicating a hurdle with the Beck case is the difficulty of enforcing Beck by withdrawing from the union. There we see peer pressure and bullying tactics from within union ranks, often discouraging members from exercising their Beck rights. Objecting to paying full union dues may create an uncomfortable working environment and tension among coworkers who support the union's political and ideological causes. Other members may feel that the Beck objective is to shirk the full payment of dues while accepting the benefits of union representation. But that is really not true because nonmembers must pay for exactly those same services that union members receive, according to the union's duty of fair representation.

More often than not the primary reason that I found that rank-and-file union members are discouraged from exercising Beck rights is simply that they are pressured to avoid rocking the boat. Again, these factors among others make Beck rights more illusory than real.

If employees are left to seek redress through only private litigation, the realization of Beck rights will be slow. It will be expensive and unavailable except for the most courageous union workers. It is time, I think, to remove these obstacles that prevent most compulsory union dues-payers from exercising their statutory and constitutional rights. H.R. 1625, in my judgment, is an appropriate and balanced Federal response to addressing the adverse circumstances that frustrate the realization of these rights. In my mind, it is good for both workers and the unions that represent them.

I will stop now, Mr. Chairman. You are giving me the evil eye. After my long experience on Capitol Hill, I recognize it. I would like to be able to respond to some questions that you may have.

Chairman Fawell. All right. I didn't know it showed. Thank you very much for your testimony.

[The statement of Mr. Hunter follows:]

WRITTEN STATEMENT OF ROBERT P. HUNTER, DIRECTOR OF PUBLIC POLICY, MACKINAC CENTER FOR PUBLIC POLICY, MIDLAND, MICHIGAN – SEE APPENDIX D

Chairman Fawell. Mr. Masiello, please give us your testimony.

statement of john masiello, employee u.s. airways, mooresville, n.c.

Mr. Masiello. First I would like to take this opportunity to thank the honorable members of the Committee on Education and the Workforce for giving me this opportunity to speak on this issue. I would like to introduce myself and provide you with a brief history of who I am and enlighten you on past events that have brought us here today.

My name is John Masiello. I have been an FAA-certified mechanic since 1982, and I currently now work for U.S. Airways in Charlotte, North Carolina. I have been a member of the International Association of Machinists and Aerospace Workers for 13 years.

I would like to say I do believe that collective bargaining for a workforce that performs common services is a proper and efficient way to be represented for contractual matters. I also believe I am a client paying for a service_

Chairman Fawell. Mr. Masiello, you might bring that microphone still closer. Some are having a little bit of a problem hearing.

Mr. Masiello. I would like to reiterate that I am a client paying an association for a service, and as you will see, the IAM does not see it that way at all. Instead they assume the role of dictator, and I am a subject.

In 1995, I became aware of the union security clause. In this notice there was clear evidence that the union was overcharging dues by about 17 percent for expenditures that were nongermane to the collective bargaining process. This notice pointed out that the money was used for political purpose and legislative activity. To me this clearly abridges my political freedom of choice. What this means is the union could be and probably is spending money on political issues that I diametrically oppose. The end result of this practice would dilute the way I vote in elections. As it turns out, the only thing the security clause secures is the union's right to extort money from members without their knowledge and without their permission on how it is spent.

Fortunately, the notice described how to stop the overpayment that was funding these expenditures that were nongermane to collective bargaining. I immediately sent in a written request to the union to stop funding nongermane expenditures with my money. After approximately 3 weeks I received a letter from the general secretary/treasurer, Mr. Donald E. Wharton, stating that my request was granted.

What was to follow in the coming weeks and months was totally unexpected and an outrage. The local president, Mr. William Cashion, immediately started a campaign to discredit me and all other members who exercised their rights. He did this with slanderous lies and character assassination. Letters were hung all over the workplace claiming we objected to paying any dues, we were against unions, and they equated us with scabs.

They stripped me of my membership, told me I was in bad standing with the union, disallowed me of any and all voting rights, including voting on contractual matters and strike votes. I would like to know how anyone can legally enter into a contract with no disclosure and no vote? I would also like to remind all of you, I still pay the portion of my dues, which is 83 percent of what the union considers a full due. This amount is less the political donation. As you can see, I am still paying for all germane issues concerning the collective bargaining process. So why is it that I pay for a full service but I do not get one in full?

The next union meeting I attended after I exercised my Beck rights, I was told by the local lodge president, Mr. William Cashion, I could not stay and if I did not leave I would be removed physically. Bear in mind, this is the same local lodge president and union that I stood on a strike picket line with in 1992, and would do so today if the situation warranted it.

About a year and a half back I was hit with some devastating news. I was told the director of Charlotte maintenance would not allow any of the political objectors to participate in a voluntary program designed to help streamline production. His decision in this matter was brought on by union officials threatening to boycott and not cooperate in the program if I and other dues objectors were allowed to participate. This action diminished my voice in the workplace even further.

Months had gone by and harassment had not let up one bit. To make matters worse, I was still paying what they had considered a full due. Not one penny of overpayment was refunded to me. As an end result, I ended up taking Mr. Cashion to small claims court. It went to arbitration and the arbitrator in this case, when I informed him of the entire situation, the arbitrator told Mr. Cashion, and I quote, you have no right to hold his money. Here is an officer of our judicial system, one of the lower officers that understands individual rights, that nobody can hold somebody's money without an individual's permission. He then gave him 20 days to pay me the money that I was in arrears.

As you can see from this testimony, the union has no concept of individual freedom. They seem to operate in their own little world with no regard for an individual's unalienable rights or the Constitution of the United States. They have lost focus on what the union's real purpose in the workplace is supposed to be. Instead of looking out for the benefit of the American worker, they view their own special interests and political agendas as the primary objective.

I know in my heart this is not God's will nor is it mine and I cannot conceive that anyone could willingly condone this type of behavior. I can only hope that this testimony will help convince members of the Committee, and eventually the Majority and all of Congress, that House Resolution 1625 must be enacted into law to return our constitutional rights.

Chairman Fawell. Thank you very much, Mr. Masiello.

[The statement of Mr. Masiello follows:]

WRITTEN STATEMENT OF JOHN MASIELLO, EMPLOYEE, U.S. AIRWAYS, MOORESVILLE, NORTH CAROLINA – SEE APPENDIX E

Chairman Fawell. Mr. Ury.

STATEMENT OF FRANK URY, COAUTHOR, CALIFORNIA REFORM INITIATIVE

Mr. Ury. Good morning, Mr. Chairman and members of the committee. Thank you for giving me the opportunity to appear before you today.

My name is Frank Ury. I am from Mission Viejo, California. Until 1996, I was a member of the school board for the Saddleback Valley Unified School District in Orange County, California. My experiences in winning election to, serving on, and leaving my local school board are at the root of what brings me here today.

In 1996, I was defeated for reelection to my local school board. This defeat was in large part because of the expenditure of over $75,000 by the Saddleback Valley Educators' Association, the California Teachers Association, and the Classified School Employees Union. Mr. Chairman, although these expenditures resulted in my defeat, I did not object to the unions participating in the political process, nor do I object to the unions participating in the political process today. Rather, as I reflected on my experience in the 1996 election, it was something else that caught my attention. It was that teachers who supported me, and they were many, and who helped support my reelection, were coerced into funding the campaign to remove me from office.

You see, Mr. Chairman, something struck me as un-American about a system whereby a labor union formed to engage in collective bargaining on behalf of its members could deduct money from a worker's check to support a political cause with which the worker disagreed. I discussed this concern of mine with two friends, Mark Bucher and Jim Righeimer, both of whom had experience in electing members to local school boards in Orange County. We discovered that it wasn't only labor unions but also employers who were deducting money from workers' paychecks for political purposes without first obtaining the workers' regular written consent. We found this to be appalling and in direct conflict with everything we believe about democracy in America.

When we approached some of our legislators in Sacramento we found that they had several concerns which led us to realize that they too were benefiting through this coerced contribution system.

Fortunately for the people of California, Mr. Chairman, our State's Constitution grants the people the power to put an idea up to a vote of the people when our elected officials fail to take action on an issue which is significant with a number of the people in California. As a result Mark Bucher, Jim Righeimer, and I formed the California Foundation for Campaign Reform to study the paycheck protection issue and to find a solution.

In the course of our research, we discovered a simple initiative enacted by the people of Washington State in 1992. That initiative required labor unions to report to their members that they have the right to opt out of supporting their union's political endeavors. It also required unions to obtain the annual written permission of their members before using any part of their paychecks or dues for political purposes. This initiative, passed by 72 percent of Washington State voters, gave us a starting point for our own initiative in California.

The Campaign Reform Initiative, our ultimate name for our reform proposal, makes what we believe are several improvements to Washington State's Initiative 134. First, our California initiative requires both labor unions and employers to obtain the annual written consent of workers before withholding any portion of their dues or their paychecks for political purposes. We felt it was important to apply our reform evenhandedly to both employers and unions. Earlier this year we were reminded how important this is when the Federal Election Commission fined United Parcel Service $6,000 for failing to inform managers that contributions to the company PAC were voluntary and not a precondition of employment.

Of course, Mr. Chairman, organized labor is no stranger to using compulsory dues paid by its members to fund the political escapades of union bosses. The most powerful recent example of this is the efforts on the part of the national Teamsters leadership to fund the campaign to legalize marijuana in California. According to the Associated Press and other reports, the Teamsters funneled $195,000 into the 1996 campaign to enact Proposition 215 in California, the Marijuana Legalization Initiative. How many Teamsters members do you suppose would want their hard-earned money going to a drug legalization campaign? How many Teamsters members would rather make up their own minds about deciding whether or not to fund such a campaign? Mr. Chairman, I believe it should be the individual workers, not the bosses in Sacramento or Washington, who make those decisions.

Because our initiative addresses how political campaigns are funded in California, we chose to take action against the problem of foreign influence in our electoral process by making foreign contributions to California local campaigns also illegal and, Mr. Chairman, I am pleased to report that the California Secretary of State has certified our initiative for the June 1998 ballot giving California voters the opportunity to restore some basic protections to California workers this year.

I am also pleased, Mr. Chairman, that our initiative is congruent, both in intent and effect, with H.R. 1625. Although there are some minor differences been the two, we believe both will greatly expand the rights of workers to decide for themselves which political causes they will support. Although the basic premise of H.R. 1625 and the California Campaign Reform Initiative are supported by over 75 percent of union members, the union bosses in Sacramento and Washington are vehemently opposed to our efforts. Why? Because both measures would expand the rights of workers at the expense of union bosses who today can use their members' dues to fund whatever odd ball political games they want to play.

Well, Mr. Chairman, when it comes down to choosing between union bosses and union workers, I will side with the workers every time. If in the process of expanding the rights of individual workers we force the union bosses to be more accountable to the people they purport to represent, so be it. Union bosses should no longer be permitted to take money out of a worker's paycheck without the worker's permission and use it to fund dumb ideas like drug legalization.

H.R. 1625 and our Campaign Reform Initiative reflect the time honored words of Thomas Jefferson who said, "To compel a man to furnish contributions for political purposes with which he disagrees is both sinful and tyrannical." Mr. Chairman, I agree with you, the time has come.

Chairman Fawell. I thank you. I think your testimony is especially apt in bringing out the point that nobody here is trying to say that unions should not participate in politics. We are only saying that first when there is a union security agreement, they ought to get written consent. That is all.

[The statement of Mr. Ury follows:]

written statement of FRANK URY, COAUTHOR, CALIFORNIA REFORM INITIATIVe – see appendix F

Chairman Fawell. Mr. Hiatt.

STATEMENT OF JOHN HIATT, GENERAL COUNSEL, AFL-CIO

Mr. Hiatt. Thank you. Mr. Chairman and members of the subcommittee, my name is John Hiatt. I am general counsel of the AFL-CIO.

I have to start by acknowledging that we approach this hearing with some degree of skepticism. While the labor movement would normally be four square in support of any inquiry into abuses of worker rights, it is our belief that the underlying motivation here is not any true concern for individual dissident union members as much as a perceived opportunity to silence a vocal and vigorous labor movement that has been speaking out against an anti-worker corporate agenda.

There is no question that worker rights under our Nation's labor laws today are being grossly abused. Former Secretary of Labor John Dunlop, heading a bipartisan commission that consisted of two other former Secretaries of Labor, as well as respected representatives from the labor management and academic communities, issued a report 3 years ago that described the most serious of these abuses after hearing months of testimony from unions, employers, and employees around the country.

We learned, for example, that some 10,000 workers are unlawfully fired each year by their employers simply for attempting to exercise their right to organize a union. We learned that thousands of charges over these firings are filed at an understaffed and underfunded NLRB which has insufficient resources to pursue them. We learned that the remedies that the labor board has available under the law are not even close to what is being proposed here. No liquidated damages, no double damages, no attorney's fees, no court costs, no direct class action access to court. We learned that disclosure requirements that would obligate employers to inform workers of their rights against discriminatory firings are nonexistent. No newspaper, no letter to new employees, no posting on company bulletin boards. And we learned that even when a majority of workers vote to have a union, one in three employers refuse ever to agree to a first contract. In many of these cases, the most basic of worker protections, the right to have good faith collective bargaining, is thwarted, again, with no recourse to remedies of any meaningful kind.

Where, we have to ask, is the congressional outrage over these well-documented, truly systemic abuses of workers' rights. Where are the hearings? Where are the bills to provide the kinds of notice and disclosure requirements and remedies with teeth that this committee proposes to impose only on unions? Incidentally, of all the abuses under the National Labor Relations Act, real and imagined, that were presented by witnesses to the Dunlop commission over those many months of hearings, enforcement of union dues objectors' rights was barely, if at all, raised by anyone. For good reason, since with all due respect there is probably no other area of the law that is already as heavily regulated as the use of union dues.

Under current laws, as we reminded this committee in several prior hearings on this subject, workers represented by unions already have a choice. Under current law no worker represented by a union in any State in this country can be required to subsidize the kind of efforts that the last witnesses referred to. No worker represented by a union in any State in this country can be required to join a union or to contribute toward the union's political or legislative activities over his or her objection. Because a union, unlike other kinds of voluntary democratic organizations, is required by law to provide work representation to all workers in a bargaining unit, both members and nonmembers, it is permitted in those States which allow for such arrangements to negotiate union security provisions which allocate the costs of that representation among all those who benefit. According to the United States Supreme Court, this has been viewed as a reasonable means of preventing free riders, those who would refuse to contribute to the union, while obtaining the economic benefits of union representation.

But in the long series of decisions stretching from the 1961 machinists case to the 1988 Beck decision, the court has made it clear that those workers who choose to be fee payers as opposed to full participating members cannot be forced to contribute to their union's political, legislative, or ideological activity unrelated to collective bargaining. By the same token, the Supreme Court has repeatedly cautioned that there has to be a careful balancing of the rights of dissent by these nonmembers on the one hand and the equally important rights of the union member majority not to have impinged their right of free association and expression such as their right to spend dues monies to lobby for a minimum wage increase, to educate members about congressional attempts to cut Medicare or pensions or role back health and safety protections, or to encourage voter registration among their members. And bear in mind, according to opinion polls of union members, overwhelming majorities of our Democratic and Republican union members alike approve the expenditure of union dues on these kinds of activities.

The proposed legislation would be completely destructive of a balance that has been carefully fashioned by the Supreme Court over the past 35 years. We respectfully maintain, therefore, that H.R. 1625, and similar bills and initiatives, do not represent an effort to expand workers' rights or to curb abuses, and they certainly do not reflect a grass-roots movement by union members. Rather, this is a concerted effort to retaliate against working families and their unions for opposing the corporate agenda in Congress and for energizing the public opinion that has blocked so much of that corporate agenda over the past 3 years.

We must not forget that, even with the more active role played by workers' unions in the political process over the past few years, they are still outspent by corporations by an 11 to 1 margin, according to the nonpartisan Center for Responsive Politics. Indeed, in the 1996 election cycle, corporate money accounted for more than 40 percent of the $1.6 billion raised by political candidates and parties while union contributions accounted for less than 4 percent. In soft money the gap is even wider: 19 to 1.

Obviously, new restrictions on union participation in the political and legislative processes will further tilt the balance of power in favor of corporations, those who are really behind the kind of initiatives that Mr. Ury favors. That is precisely what these bills and initiatives would do, singling out unions by proposing tight controls and extremely burdensome regulations that would not apply to corporations or any other institutions. Pure and simple, they are an attempt to silence the voices of working families and their unions, and we hope you will vote against them. Thank you.

Chairman Fawell. I thank you, Mr. Hiatt.

[The statement of Mr. Hiatt follows:]

Written statement of john hiatt, general counsel, afl-cio – see appendix G

Chairman Fawell. Professor Morgan Reynolds, the Chair recognizes you.

STATEMENT OF MORGAN O. REYNOLDS, DEPARTMENT OF ECONOMICS, TEXAS A&M UNIVERSITY

Mr. Reynolds. Good morning, Mr. Chairman and committee members. Naturally, I would like to thank you for inviting me to testify this morning.

My name is Morgan Reynolds. I am a professor of economics at Texas A&M University in College Station, Texas, and a Senior Fellow with the National Center for Policy Analysis, a private think tank headquartered in Dallas, Texas.

Much of my writing and research over the years has focused on labor issues. To put this in a more general context, over the last 65 years, Federal control over our labor markets, including the promotion of trade unionism and collective bargaining practices, has increased dramatically. It has been part of a broad-based expansion in Federal power.

One of the principal drawbacks of all this intervention is that it is so difficult to reverse the process or to begin undoing the harm that has been done, and continues to be done, on labor matters. The harm has taken the form of diminished freedom for working men and women and reductions in their labor productivity.

This year the Congress has an important opportunity to undo harm by sending the Paycheck Fairness Act, or a variation of it, to President Clinton for his signature. The heart of the bill would require unions to obtain written permission before spending a worker's compulsory fees or dues for political purposes.

The intent of such legislation is noble and hard to contest; namely, to ensure that no worker has wages diverted to political causes that she or he does not support. Such a revision or at least enforcement of the rules would empower workers as individuals. It would also begin the process of restoring unions to the same position before the law as the rest of civil society. That is, unionists would have to rely on persuasion rather than coercion to acquire support for their favorite candidates and causes.

Does the issue matter on a practical level? Yes, if only because there are important differences between the political views traditionally favored by organized labor and the politics of many of the employees it represents in the workplace. For example, unions collect about 10 percent of their money from 1.9 million reluctant nonmembers whose politics are bound to differ. As many as 4 out of 10 union members vote Republican or object to union efforts on behalf of candidates who favor more gun control, liberalized abortion, or other controversial positions.

In the interest of analytical clarity, however, I suggest that a paycheck consent act is a second best rather than a first best solution to the problem of union abuse of workers' paychecks.

The root cause is forced union dues themselves rather than their abuse or maladministration. To paraphrase the late University of Chicago economist, Henry Simons, monopoly power has no use other than abuse. No worker should be subjected to such involuntary association and the consequent confiscation of wages by such organizations. Labor unions, after all, are not governments. They are supposed to be private, unincorporated associations.

Now, in reply to this line of reasoning, of course, unionists point to the duty of fair representation, which I do not want to get into in any detail. But the answer to this flummery or bunkum is another solution, which I just offer up in the interest of clarity, that is, to repeal the exclusive representation privilege that Congress has extended or conferred on unions, especially section 9(a) of the National Labor Relations Act, or otherwise known as the Labor Management Relations Act, if it so burdens unions.

Is this politically impossible, too sweeping? Of course it is, although New Zealand did it back in 1991. So this is not to scorn the current legislation under consideration but rather to point to the real root cause.

Finally, we are a Nation dedicated to the idea of freedom. As long as unions collect compulsory dues from employees through employers, it will rankle a lot of Americans. All the more so when fewer and fewer believe that unions are necessary to obtain justice at work. What better stance than to oppose compulsory unionism and force diversion of wages into politics without the wage owners' consent?

I would like to thank the Chairman for his kind attention, and the committee members, and that concludes my remarks.

Chairman Fawell. I thank you very much, Professor Reynolds.

[The statement of Mr. Reynolds follows:]

Written STATEMENT OF MORGAN O. REYNOLDS, DEPARTMENT OF ECONOMICS, TEXAS A&M UNIVERSITY – see appendix H

Chairman Fawell. Mr. John McCrae.

Mr. McCrae. Good morning. I am going to read my statement, then I will have a few comments afterwards.

Thank you for giving me the opportunity to speak in favor of the Worker Paycheck Fairness Act. My name is John McCrae, and I was a member of Local Union 454 for 44-1/2 years, affiliated with the Philadelphia District Council of Carpenters. I was a business agent for Local 454, retiring July 1, 1987. I served 4 years in the Air Force, married for 43 years to the same girl, and I have nine children, seven sons and two girls. Thank God. Imagine if I had seven girls. I would be in the poorhouse.

Nevertheless, the Paycheck Fairness Act is a very important piece of legislation. I hope it will be passed and signed into law. It will give the workers the right to know how their money is being spent. Remember, it is the workers who are paying the freight, so to speak.

I, along with Bill Rugh, chairman of the Carpenters for Democracy in Unions, are members of Local Union 845 affiliated with the District Council in Philadelphia. We got involved with the Department of Labor after we received the LM-2 forms for the Carpenters' International for the years from the late '80s to 1996. I used my wife as a secretary. I told her to grab a pencil and start writing. You have to excuse the misspellings and the mistakes in grammar, but I want to make it clear, I feel this legislation is critical.

Mr. Rugh and myself spent much time on letters, phone calls, and on two separate cases sat down with Department of Labor officials in Washington going over the Carpenters' International Union's LM-2 form for the calendar year 1996.

Our group, Carpenters for Democracy in Unions and Return Our Vote, are having difficulties in trying to get answers from both our International and the Department of Labor. I can assure you that our group is treated with respect by the Department of Labor employees in contrast to our International officials who do not cooperate with the dues paying members throughout the country who are complaining about their voting rights being taken away from them.

We asked questions about monies spent in excess of several million dollars, legal settlements of $237,000 and $999,999 - I guess they did not want to put a million, it would be too big - plus many other questions too numerous to mention. Here are the answers we received.

One, I don't know if you are entitled to that information. Two, you should hire a lawyer and if you do not have money for a lawyer, then try to get a pro bono lawyer. Three, contact a newspaper, like The New York Times or The Washington Post, and get their investigative reporters to get the information you desire. Four, Congress is to blame for your problems because they failed to put teeth in their legislation. Bill Rugh and myself estimated we received answers to only 10 to 15 percent of our many questions.

Mr. Chairman, I can assure you that the LM-2 forms issued by the Department of Labor certainly need to be revised so that a member of a labor organization can get answers to the questions that he or she is entitled to have.

Section 6 of the Worker Paycheck Fairness Act, disclosure, is a very important section to the legislation. As an example, the LM form instruction booklet states at the top of the second page that the Department of Labor, under law, cannot extend filing time for any reason whatsoever. The Carpenters report for '96 was received by the Department of Labor on September 12th, five months and 12 days late, after the deadline on March 31, another reason the LM-2 certainly needs revisions.

Now, Mr. Chairman, I have a copy of the LM-2 right here. I want to point out what this BCC means - what does NY mean, what does RP mean, what does this T Square mean? Well, we tried to figure it out, and then it came to Billy Rugh. This is about real estate. Our international lost $100 million in real estate? No, they lost 90 million. No, they lost 80 million. What did they lose?

And we tried to get that information. I have the report here, Nyack Waterfront. Nyack? When I first looked at it I thought it was an Indian village. It is the hometown of our ex-general president. He built a $21 million high-rise condo which went down the tube. Henderson's Wharf, down the tube. Town Square, down the tube. They had, I think, seven real estate deals. Every one of them went down the tube. I suggested they try a condo in Tel Aviv for Arabs only, maybe they would have a chance. Everything went down the tube. Where is the money and what does it mean?

Mr. Chairman, I see the red light, I will try to conclude here. I want to make a couple of other comments. I'm sorry, I don't have a secretary.

Oh, they wrote a loan off; $4,900,000. Why did they write a loan off? For who? Nothing. I don't know if you are entitled to that. They mentioned U.S. Treasury notes of $12 million. Who did you pledge the $12 million to? I don't know if you can get that information.

So this is why it is very critical. But I have to say one thing. Some of the fellas here talked about authorization. I can assure you my union, they take a paycheck deduction out for political purposes, but you have to have an authorization. You must sign that before they can take a penny out. So we do have authorization.

And I have to say, who was it, Tip O'Neill, the Speaker, said politics begins on the local level? Absolutely. My district councilman and I have no criticism about. We have very good wages and we have a health care plan that I think is maybe better than Congressmen. We have dental, prescription, and we even have eye care. We get paid the difference between Medicare and Social Security. But we did that in 1962, '64, '66. We got nothing from the Department, our International Union.

They are coming in and merging. They took a local out of Allentown. They tell you ti go to Philadelphia. What for? Cause I said so, that is why. You can ask anybody, members, would you like to go to Philadelphia? We have Boston. We have the whole New England States, one district council. You know what that means? How about the poor guy up in New Hampshire or Vermont. He has to travel for 300 miles? No, 600 miles, because he has to go back home.

So, Mr. Chairman, I know I have the red light but I want to ask one question to Congressman Owens, if I may. All right?

Chairman Fawell. Well, we will have an opportunity for that after we have the opening statements.

Mr. McCrae. Can I do one thing, Mr. Chairman? I want everyone to look back here. Stand up, Mike, John. Stand up. See your shirt. Turn around. "Return Our Vote."

What I am talking about is democracy and justice. I have been voting for 44 years. I can't vote. I hope we will be here in the very near future. Thank you, Mr. Chairman.

Chairman Fawell. Well, thank you very much. People like it when you come to Washington, and you express yourself, I think, very well, and we got your message.

Mr. McCrae. I don't have a lawyer. I have don’t have a retainer or anything.

Chairman Fawell. I think we can improve the LM-2 so that there is more disclosure. There is nothing wrong with people knowing what's happening in regard to financial matters. And I thank you for your testimony.

[The statement of Mr. McCrae follows:]

written STATEMENT OF JOHN C. McCRAE, 44-YEAR UNION MEMBER – see appendix i

Chairman Fawell. Miss Cheri James, the Chair recognizes you.

STATEMENT OF CHERI W. JAMES, PRESIDENT, VIRGINIA EDUCATION ASSOCIATION, Richmond, virginia

Ms. James. Mr. Chairman and members of the subcommittee, on behalf of the 2.3-million member National Education Association, NEA, I thank you for the opportunity to speak to you today.

I am not a union boss, I am Cheri W. James. I am a schoolteacher. And with all due respect, I think teaching our children is one of the most noble professions around. I am a secondary mathematics teacher and I was chosen for this temporary assignment as president of VEA by over 56,000 of my fellow teachers and education workers, people who put our children and their education above everything else, including politics.

Politics, however, is a way of life in America and often the only way you get heard. So I am here to speak in opposition to legislation which would undermine the rights of teachers and education employees to form voluntary associations to represent their interests.

Further, this proposed legislation would also limit our association's ability to advance members' interest through our First Amendment rights of free speech, free association and the right to petition for redress of their grievances. And, folks, these are the rights that we teach our children that, as Americans, they have.

These bills are all based on faulty premises that union membership is coerced and that members are forced to pay for political activities to which they object. Membership in the VEA and the other NEA State affiliates is voluntary. No teacher or other school employee can be fired or subjected to any reprisal whatsoever for not joining. For those who do choose VEA membership, they alone determine VEA's operations and policies.

The VEA and NEA operate as democratically, little "d", run organizations whose members, or their elected delegates, determine dues, the budget policy positions, resolutions, legislative programs and the election of officers. Within the NEA there are State affiliates and right-to-work States, such as Virginia, and States where State law gives them the right to collectively bargain and the right to negotiate agency fees. However, our common bond is that we teach the children. We teach them that in America you can belong to organizations of your choice, whether for social, economic, job-related or even political reasons.

Since membership in NEA and its affiliates is voluntary, these bills blatantly infringe on the rights of our members to associate freely with those who share our common goals and to participate in activities not directly related to collective bargaining, such as community education, charitable activities, public relations and legislative advocacy.

As I said earlier, many of the arguments used by supporters of this legislation are based on erroneous premises that unions spend coerced dues on political activities. So let me briefly address those.

It is well-established that union dues cannot be legally given to a candidate for Federal office. The claim that dues money is spent in direct support of candidates is false. Only separate voluntary contributions such as those made by NEA members to NEA-PAC may be used for contributions to candidates. And in my State the average is around $5 to $10 per member. And that is hardly big bucks.

These employee gag bills pending in Congress go well beyond limiting contributions in political campaigns. These bills would impose new limits on using voluntary dues money for lobbying, other advocacy activities, communicating with our own members, and even informing our members of Federal laws or regulations that directly impact them.

VEA has an ad hoc committee on special education. We are planning a workshop for our members about the proposed new Federal regulations under the Individuals with Disabilities Education Act, IDEA. This act directly impacts on how public educators provide education and related services to children with disabilities. Under this new legislation, our association could do this only after first obtaining express written consent of all members to use a portion of their dues for this activity.

Limiting our ability to share information with our members that would help them be more effective in the classroom goes against not only children but the public interest, and there is simply no justification for imposing such restrictions.

I also believe that these bills are not about true campaign finance reform, because if they were, the effective solution would apply to all entities, not just to unions, not just to teachers and school employees and their organizations, but also to wealthy individuals, corporations and other ideological groups. Since our membership is voluntary and no agency fees are spent on any political activities without a nonmember's consent, what is the motive behind all of this legislation? It appears to be the desire to silence unions and, more specifically, the NEA and its affiliates.

We have been the leading voice for children in public education for many years, and we have successfully advocated for the policies that benefit children health and safety, strengthen academic standards in schools, and help prepare students for jobs of the future. However, many critics of public education, those who support siphoning off public dollars for private and religious schools, those who support privatizing public education, and those who oppose ensuring a high quality public education for all children want to silence us. And for the children we teach and for our democratic society, I hope that day never comes.

The bottom line for me is that this legislation that you are debating seeks to take me, a public school teacher from Richmond, and teachers like me all over the country, out of the political process and denies us the voice that we have in the association and the freedom we share as Americans. And no matter whether you are a Democrat, a Republican, an Independent, an Independent Green, a businessperson, a worker, a farmer, a preacher, or a politician, a schoolteacher ought to always have the chance to be heard.

I urge you to reject these various bills that have been proposed under the guise of paycheck protection.

Thank you.

Chairman Fawell. I thank you very much, Ms. James, for your testimony.

[The statement of Ms. James follows:]

WRITTEN STATEMENT OF CHERI W. JAMES, PRESIDENT, VIRGINIA EDUCATION ASSOCIATION, Richmond, virginia – see appendix J

Mr. Fawell. Mr. Wilson.

STATEMENT OF MARK WILSON, POLICY ANALYST, HERITAGE FOUNDATION, WASHINGTON, D.C.

Mr. Wilson. Thank you, Mr. Chairman, members of the committee. Thank you for inviting me this morning here to testify.

Over the past 10 years, since the U.S. Supreme Court's landmark decision in Communications Workers v. Beck, the subject of union dues has been a continuing source of conflicting court and National Labor Relations Board decisions.

As recently as December 1997, the Supreme Court agreed to hear a case regarding whether or not employees who object to the calculation of their agency fees can take their case to court rather than proceed to arbitration. And just last week the U.S. Court of Appeals for the 7th Circuit issued a decision on the use of in-house union auditors for verifying the calculation of agency fees. Unfortunately, that decision directly contradicts a September 1997 decision of the U.S. Court of Appeals for the District of Columbia.

We have a situation presently where two different regions of the country are operating under two different interpretations of the National Labor Relations Act. Congress needs to settle these issues directly instead of having workers and unions fight them out in court only to have them fight them out again to have the decisions enforced.

As long as Federal law requires employers to bargain with unions and gives unions exclusive representation rights over employees, individual workers should have the freedom up front to decide if their hard-earned money should be used for noncollective bargaining purposes. I believe that H.R. 1625 accomplishes this objective. Further, it settles some of the shifting NLRB and court decisions and partly closes the substantial gap that has widened between the National Labor Relations Act and the plethora of court decisions that only serve to confuse workers.

In the limited amount of time today I want to briefly mention a few reasons why I believe current law is inadequate and why merely codifying the Beck decision is insufficient.

When it comes to the issues of payment of union dues, there is not a single independent source that workers can rely on for accurate information. It is difficult for labor lawyers, let alone workers, to keep up with all the court and NLRB decisions. Even the U.S. Court of Appeals for the 6th Circuit noted the line of U.S. Supreme Court cases has so widened the gap between what the NLRA authorizes and what the high court has held that the failure to incorporate these teachings in real life union security clauses can mislead workers. Yet just last year the U.S. Department of Labor refused two State requests to print the rights workers have regarding union dues on the posters that they currently require employers to post in every workplace. Most workers simply do not know about this Supreme Court Beck decision and, practically speaking, this denies them the ability to exercise their freedom to make informed decisions.

Mr. Ury mentioned the ballot initiative passed in 1992 in Washington State. The measure was popular. It passed by 70 percent of the State's voters. And the effect of the initiative since then has been dramatic. The number of State public employee union members willing to make political contributions to their union fell from over 40,000 to just 82, suggesting that workers want the freedom to determine how their paychecks are spent.

Mr. McCrae eloquently mentioned how many members do not even know how much their unions spend on noncollective bargaining activities and how difficult it is to get that information from the Department of Labor. You might be surprised to know that in 1993 the Department of Labor rescinded a proposed rule that would have enabled him and his fellow workers to obtain this information.

Federal law currently exempts unions from competition. The exclusive bargaining provision of the National Labor Relations Act means workers who lose faith in their union cannot form a new union and negotiate an independent contract with their employer. Given this 60-year Federal restriction on the freedom of voluntary private contracts embedded in the NLRA, Congress should ensure that this labor law also does not go so far as to infringe on the worker's freedom to exercise his or her political and religious rights.

In a nutshell, codifying Beck is inadequate because the bottom line is the Beck decision interprets the NLRA, the NLRA is the current law, and current law is clearly inadequate, given the testimony that this committee has received over the past year.

An important improvement that H.R. 1625 would make over current law is, clearly, its notice of disclosure provisions. Unionized employers would have to post a notice informing workers of their rights, and unions would now have to provide the information that would enable workers to determine what portion of their union dues are used for noncollective bargaining purposes. All workers would then know what their rights are and be in a position to make an informed decision.

The most significant improvement over current law, however, is that workers will no longer have to spend their dues for noncollective bargaining purposes unless and until they have approved it first. Union members will also have the ability to revoke that authorization with a 30-day written notice. Workers will no longer have the burden of spending more of their hard-earned money trying to stop unions from spending their dues in the first place on ways that they do not approve. Today, unions repeatedly give workers the indefinite runaround and often escape any accountability to their members.

One of the major issues I would like to point out that is not addressed by H.R. 1625 is the use of independent third-party audits in the calculation of agency fees. The decision I mentioned earlier, where we have two different laws, or two different interpretations of the National Labor Relations Act involves this issue. I would strongly recommend that the Members of this committee include a provision on third-party audits.

Thank you. I would be happy to answer any questions you might have.

[The statement of Mr. Wilson follows:]

WRitten STATEMENT OF MARK WILSON, POLICY ANALYST, HERITAGE FOUNDATION, WASHINGTON, D.C. – see appendix k

Chairman Fawell. I thank you. We obviously have some differences of opinion. It appears to me that those who oppose this legislation are basically saying that is designed to silence the union, and I can understand that reaction. It is a bit of a political reaction, but I can understand it. We are all human. But, that there is political retaliation involved and things of this sort?

On the other hand, Mr. Ury, I think, hit a tremendously important point when he said that I do not object to the unions being involved in politics. Nor do I. My wife taught for 25 years in the public schools. I have a high regard for the public educational system in America. It is much better than its critics say. So I have no problem with unions and politics in that regard.

What I want to emphasize is that this is a relatively narrow bill. I do not look upon it as campaign reform legislation. It stands on its own two feet in attempting to implement a Supreme Court decision in regard to constitutional rights, which the Supreme Court enunciated.

Now, we go a bit further. The bill also makes it clear that you cannot kick a man or a woman out of a union just because they have exercised their right of a constitutional nature to say I do not want to pay for noncollective bargaining dues.

Ms. James, you mentioned the fact that since membership is voluntary in your particular education association, then you should have no problem with this legislation because what we set forth in it is that it only affects those unions that do not have a union security agreement. There are a lot of unions that are not therefore affected by this legislation. When a union and an employer enter into a union security agreement, under collective bargaining, and the union wants to divert money from the wages of the workers, this is a legal right and we are not attacking that, though a lot of people here would like to attack it. I do not necessarily favor it, but I am not trying to attack it. The Supreme Court did not attack it either. It is lawful. And it is lawful that somebody can lose their job if they do not pay dues, even though they do not want to and even though they may have been against the union. We do not attack that.

All that we are saying is what the Supreme Court said; that in instances where you can end up losing your livelihood and no longer have a job if you do not pay dues, under those circumstances the court made it very clear that you do not have to pay the portion of the dues that are noncollective bargaining in nature. Now, therefore, what we are saying is to allow the worker to opt in before you divert those wages. Just ask in a democratic way: "Do you want to pay the portion of the dues which are noncollective bargaining in nature covering, among other things, political contributions, in addition to covering anything that is not necessary for collective bargaining?"

What the Supreme Court said, when we gave it that tremendously powerful piece of legislation under the National Labor Relations Act, was that a worker can lose his job if he does not pay dues. We said, and Congress said, it only pertains basically to collective bargaining dues, so do not go over the line. If people have the right to vote with their feet, as in the rest of civil society, as has been mentioned, then this legislation would not be necessary.

So let me ask this question, then, for any of you on the panel: is there an analogy in civil society to what we have with the National Labor Relations Act in regard to the union security agreement that says you’ve got to stay in this private organization, and if you do not stay in or if you do not pay your dues you cannot stay in; but you to work you have to be a member of the union? Is there an analogy to this in some other private organization? Because if there is, I would object to that, too. It is illegal for an employer to fire you if you do not make a political contribution. But, it is not there.

Perhaps Professor Reynolds or Mr. Wilson or Mr. Hunter, you are some of the legal eagles here, and also Mr. Hiatt, are we laboring in vain here? Are we missing something?

We are building this legislation on the union security agreement and just to make sure that the constitutional rights of the worker are not involved. Once that money goes to the union, they can use it for political purposes. We are not saying they cannot use it for political or soft money purposes. We are not even talking about PACs here.

Mr. Reynolds. I am not aware of a parallel in Federal law. And I might point out that the various Supreme Court decisions, beginning with Steele v. Louisville and Nashville Railroad in 1944, were the first to state the duty of the exclusive fair representation doctrine and repeatedly refer to Congress delegating this power to trade unions or labor unions as exclusive representatives with their power derived from Congress. So those expressions confirm the answer you were implying.

Mr. Hiatt. Mr. Chairman, to some degree I agree with Mr. Reynolds. What is unique about this arrangement goes to the fact that the union is under a duty to fairly represent all workers in the unit, members and nonmembers alike. And there is a system of exclusive representation that Congress decided on many years ago, and no one on either the Democratic or Republican sides of the aisle have seriously attempted to debate that away.

Mr. Reynolds may think this system needs a new look, but I respectfully submit that corporate America would probably be among the first to say we should keep this system of exclusive representation. Otherwise what you will find in a typical workplace is not an employer having to deal with one union, but with eight unions or ten unions.

Chairman Fawell. Well, I could buy that. I do not have a deep philosophical problem there. But their exclusive representation is, is it not, in regard to collective bargaining? We are talking about the union overreaching and saying, oh, we are also going to go into a business over here, we are going to do all kinds of things that are not necessary for collective bargaining.

And that is all the Supreme Court said: "Do not expect that you can, under force of having one lose one's livelihood, continue to think that the union security agreement covers anything you guys want to do." That is all the Supreme Court said.

Mr. Hiatt. That is exactly right.

Chairman Fawell. So what is wrong with simply saying that the union would have the person give his written consent and opt in? Now, that seems to be so simple. And when you see people in America vote on these questions, such as in Washington State, which was an education association, and 70 percent of the people said, no, one should not, under threat of losing a job, pay dues that are not even involved with collective bargaining.

So you lose me when you come in and talk about the fact that exclusive representation means that we are forced to represent everybody. And not only that, if I come to you and I say I do not want to pay the nonunion dues, what do you do? You kick me out of the union. You are supposed to be exclusively representing me. I still have to pay you to exclusively represent me. But, because I did not want to pay the noncollective bargaining fees, I get booted out of the union.

Almost all unions do that, do they not?

Mr. Hiatt. Only to the same extent that they do in the in States like Virginia, if individuals do not want to participate on the terms that the majority has decided upon. And do not forget, more than any other democratic voluntary institution in this country, unions are regulated and must give all workers in the unit the right to first of all choose whether to have a union in the first place, members are given the right to, or must be given a right to elect their leaders, to vote upon any kind of dues increases. There are already those kinds of protections.

And once a majority of the workers have decided to have a union, have decided on who the leadership is, what the dues should be, what programs and policies they are going to spend their money on, it is not at all unusual to say that that organization has the right to set the terms of membership, as long as it does not mean that somebody who does not choose to be a member of that organization loses their employment.

Now, in States like Virginia, you have agreed that that basic constitutional right of free association and expression, presumably, should mean that your bill does not apply. Why should that be any different in States like Illinois, where it is true that a member that does not want to participate on the same kind of terms that the majority of the members have decided upon, under the leadership that they have voted for, and the programs they have decided upon has the right not to remain as a participating member? But they are not going to lose their job any more than the worker in Virginia who decides not to participate.

Chairman Fawell. Well, the only point I make is the elementary one that in all other organizations where the majority makes the decision, that controls for everyone. I have no problem with that. But in all other organizations, I can walk with my feet. I can leave and I do not lose my job by doing that.

In unions the Supreme Court pointed out these men and women, as workers, are going to lose their job if they do not pay their dues. All the Court said was that workers still have to pay those dues, but just the collective bargaining part of the dues. The Court said that workers cannot lose their job for refusing to pay those dues that happen to be noncollective bargaining.

There is no other private organization that I know of in America that has that kind of power, which is all that we are saying.

Mr. Hiatt. That is really not what the Supreme Court said. With all due respect, the Supreme Court has said_

Chairman Fawell. In effect, that is what it said.

Mr. Hiatt. The Supreme Court said in those States that authorize these kinds of contractual provisions, and where an employer and the union, with the leadership that has been elected by the membership, negotiate a provision that says that all workers in the unit who are getting the economic benefits of that representation, for as long as the workers believe they are getting a benefit they have to pay a certain transactional cost, that is the cost of that representation that they are all getting. That is all the Supreme Court has said.

Chairman Fawell. But it did not cover noncollective bargaining dues. Workers do not have to pay that. They can refuse to do so.

Since the average member has no comprehension of what portion of his dues are collective bargaining in nature and what portion are noncollective bargaining, all we are trying to do is to say, all right, sir, the easiest way to take care of that, so that there is no problem, is to allow him or her to decide. Why put the burden on the worker to go out and hire an accountant and an attorney and go for months, maybe years, to try to protect his or her rights?

Mr. Hiatt. The burden is no more on him now than it would be under your bill, Mr. Chairman. Right now the Supreme Court has said there is a balancing act that has to be undertaken to protect both the rights of those individual members who might choose not to contribute to political or legislative or ideological activities on the one hand and the rights of the majority, and in most cases the overwhelming majority, that have selected the leaders and the programs and approve of those programs.

And, incidentally, the polls that we have cited to you in written testimony showed that the overwhelming majority of both Democratic and Republican union represented workers approve of the kinds of activities that unions are spending their political and legislative dollars on.

But in any event, the court has said there has to be a balancing test of not just the individual dissident worker's rights but also the rights of the majority not to have to go through all kinds of procedural hoops and expensive obstacles that are not imposed on corporations. They are not imposed on any other kind of voluntary democratic organization to make that kind of accommodation.

Chairman Fawell. They are, obviously, not imposed on anybody else because nobody else has that power. But I am sure I am not going to make my point with you, I gather.

My time is long past, but Mr. Ury, maybe you should have a chance.

Mr. Ury. Briefly, the only thing I can do is draw upon personal experience on a school board. I find it interesting Mr. Hiatt mentions the majority. In the school district I used to represent, the nonteaching employees had a union, but it was an open union. It was voluntary to join the union. And they had about 33 percent participation.

So what did the union do, and how do they do it in a lot of public sectors? They bankrolled their candidates and got their candidates elected. Subsequent to that, when we sat down at the bargaining table the following year, they wanted us, as a board, to make their union closed shop. Rather than put it to a vote of the union members, all they wanted was three to five board members to say this is now a closed shop.

What did they do? They gave to the school districts technically about a quarter of a million dollars worth of benefits on retirement. The school district, on a three-to-two vote gave them 100 percent mandatory closed shop union. In the process, their membership went from 33 percent to 100 percent, and the employees were out roughly about a half million dollars. That is exactly what happened in the school district I used to represent. So when you talk about the majority, I think it is rather interesting.

I also find it rather interesting that what the opponents to this measure seem to be talking about, and I think this is a key part of this, they talk as though there is just benevolence and good will on the part of the unions. Their premise is that members will not pay this money, otherwise they would not be concerned. That is the exact premise of where they are coming from.

Chairman Fawell. All right, thank you for that. Now, I am going to recognize the gentleman from New York. And, Mr. Hiatt, you may certainly be recognized by him, but I have strayed over my time. That is not unusual for me, but I am going to recognize the gentleman from New York and allow him to do some straying of time, too.

Mr. Owens. Ladies and gentlemen, before I yield to Mr. McCrae to let him ask me a question, I have a few questions I want to ask myself.

Mr. Hiatt. Professor Reynolds, made the statement that this bill will force the unions to join the rest of civil society.

I wonder. I think we are all aware of the fact that corporations spend enormous amounts of money influencing public opinion on a number of issues not related to their product. They spend that money. And do you know of any corporations that poll their shareholders?

We are talking about money. We are talking about income. Just as we talked about the income expected of workers, a shareholder may have a stock that is booming. He has a choice to walk away from it if his corporation is doing something he does not like. But is it fair to make him sell stock that is doing very well because a corporation is not doing something he approves of?

Plus, there is also the freedom of democracy. Corporations and boards can choose not to distribute their profits and divvy them up to the shareholders. Large numbers of corporations, with some of the best selling stocks in America, they buy back their own stock, which means that instead of distributing the profits to shareholders, they choose to buy it back through the corporation, limiting the income of the shareholders. The shareholders can walk away, you might say, but that is a hardship on them to give up the stock. Do we have any regulation protecting the shareholders?

Mr. Hiatt. I think that is a very good point, and I would take it a step further. Shareholders may be able to walk away. If they want to invest in corporations in this country, they may be able to walk away from one, but they cannot_there is no corporation that they could walk to and invest in and think they are going to have any more say in the kinds of political or ideological subsidies that that corporation is making. And, indeed, in some industries, as Mr. Reynolds knows, with respect to utility companies or telephone companies or many other companies, it is extremely hard for both shareholders and customers to think that they can walk away from one company in a particular industry and move over to some other.

Mr. Owens. Shareholders, of course, have elected a board of members in a democratic election, have they not? Do shareholders elect members to corporations?

Mr. Hiatt. The shareholders do. They do, but shareholders are not given any kind of analogous opportunity to have their dividends increased. If they wish to have their dividends increased or to pay less for their investment, if they wish to be mere feepayers rather than full participating members, that would be the analogy.

If these sponsors of these kinds of pieces of legislation were really looking for something analogous, that would be it.

Mr. Owens. So unions have to catch up with the rest of civil society.

Now, the portion of the civil society that relates to income, the dividends of a stockholder who has invested in the stock market, that relates very much to income.

Mr. Hiatt. Far from having the unions having to catch up to civil society, the effect of this, as I said, right now we have gone from being outspent_unions have gone from being outspent in the political process and having their voice heard in the political process by what was a nine-to-one margin in the last election cycle to an 11-to-1 margin in this election cycle. For all the talk some have made about that $35 million that the unions put into the 1996 election cycle, this was a tiny fraction of what corporations put in.

And as the sponsors of these bills know full well, this would just tilt the balance even further and would take us out of what a fundamental facet of civil society is all about.

Mr. Owens. Mr. Wilson, according to an attachment to your testimony, some 7 percent of the Heritage Foundation money in 1976 came from corporations. Do you feel that corporate managers should be able to spend stockholders' money for political purposes, such as funding the Heritage Foundation, without the prior approval of the stockholders?

Mr. Wilson. Stockholders and shareholders have in the choice in the contract. They can choose to enter into a contract to own stock or not to own stock. There are many mutual funds. Many investors chose not to invest in companies that did business in South Africa because of their views on apartheid. They chose not to do that.

Workers do not have this under the National Labor Relations Act. The private right to contract is infringed upon by the provisions granted by this Congress, previous Congresses, under the National Labor Relations Act. There is no similarity between the two.

Mr. Owens. For a stockholder to sell his stock because of the political position of a corporation, is that hardship any different from a hardship from a union member?

Mr. Wilson. No, but they at least have a choice. He or she, as the stockholder, at least has the choice; has the freedom to choose.

Mr. Owens. We need to have the ability of both the stockholders as well as the union members to have that freedom of choice; is that the logic that you are putting forth?

Mr. Wilson. Workers and stockholders should both have the freedom, that's right, to do that. The union workers should have the right to object, and stockholders currently do have the right to object. They can take their stock and sell their stock and invest it. If they do not like what the tobacco companies are doing, they can sell their stocks or shares in mutual funds in the tobacco companies and they can move it to some other companies they agree with. Many people did this because of their views on South Africa during apartheid.

Mr. Owens. We are going to have to follow through with corporations, too.

Professor Reynolds you said that unions are not needed to obtain justice in the workplace. Am I quoting you correctly?

Mr. Reynolds. No, sir. I said that fewer and fewer Americans believe that unions are necessary for justice in the workplace.

Mr. Owens. Fewer and fewer Americans believe in unions.

Mr. Reynolds. Yes, sir.

Mr. Owens. Do you have some research to back that up that you can submit to the committee?

Mr. Reynolds. Yes. For example, back in the 1980s, the AFL-CIO commissioned worker surveys and found that two out of three workers would vote against union representation.

But there is lots of evidence of this. That is the principal reason for the decline of union representation in the workforce. It is not so much employer opposition, which is out there to be sure, but rather employee opposition to union representation.

Mr. Owens. In fact, in some countries, where the steps in the process of recognizing the union is much simpler, they have a much higher number of unions and union members. And the impression and the tactics used by employees is the primary cause for low membership in unions.

Mr. McCrae, you wanted to ask me a question, but before I let you ask the question, can I ask you one?

Mr. McCrae. Certainly.

Mr. Owens. You were a supervisor for your union's health and welfare fund.

Mr. McCrae. Yes, for 15 years.

Mr. Owens. What was the reason for your leaving the position of supervisor for the union?

Mr. McCrae. Under the ERISA law, Mr. Owens. I had a conviction 27 years ago and I had to leave.

Mr. Owens. You were convicted?

Mr. McCrae. Yes.

Mr. Owens. What were you convicted of?

Mr. McCrae. Of a check for $10,000. I was posting cash.

Chairman Fawell. Just a minute. This is really not a very relevant inquiry. If the gentleman would, I guess, insist that he would pursue it, but I quite_

Mr. Owens. Mr. Chairman, this is about abuse of workers' rights and Mr. McCrae has made a very eloquent and forthright sincere statement about the abuse of workers' rights.

Mr. McCrae. So what has this have to do with me 27 years ago? We could talk about how many Democrat Congressmen were convicted in the past 25 years, if you want to, but at the same time what relevancy does that have to do with this hearing?

And the question I wanted to ask you, Mr. Owens.

Mr. Owens. Let me finish my question first.

Mr. McCrae. Okay, sure.

Mr. Owens. Does this have anything to do with workers' rights? Was that money of the workers that you were convicted of embezzling?

Mr. McCrae. No.

Mr. Owens. It was not workers' money?

Mr. McCrae. No, employers. Employers and_

Mr. Owens. Employers' money. I would like to submit for the record_

Mr. McCrae. Go ahead.

Mr. Owens. _the United States District Court for the Eastern District of Pennsylvania, the record of your appeal of your conviction, in which you were denied.

Mr. McCrae. Yes. One word, denied.

Mr. Owens. I ask unanimous consent to submit that for the record.

Mr. Ballenger. I object. I do not think it is necessary.

Mr. Owens. He denies it has anything to do with his case, but I think it is irrelevant.

Mr. McCrae. I would like to discuss it, Mr. Chairman. I won an arbitration case. I was supposed to cash a check for $10,000, then all of a sudden, I was denied. After my denial, the vice president of Girard Bank came in and said, John, this guy is mad at you. Why? He asked me what I spoke about on the stand. Then he went into the bank, Congressman Owens, after my conviction, and they developed the film in the camera and McCrae did not appear in the bank and I won my arbitration case by Professor Charles Schwartz of Villanova Law School.

And I don't have to apologize to anyone. My family knows it and, in addition, I ran for election after that and the members dropped a secret ballot in the box and I was elected, after that conviction that I was not guilty. Why was I denied? That is the word. One word. Denied. I’ve got it on film. I was not in the bank. And I will give you documentation on that, too.

Chairman Fawell. The Chair is going to exercise discretion. This is way out of bounds. It is irrelevant.

Mr. McCrae. It doesn't matter.

Chairman Fawell. The unanimous consent has been requested by the gentleman from New York that a judicial record be put into this particular record. I am going to object to that. With all due respect to the gentleman from New York, I just believe that this is not what we are about, especially with an elected conviction that goes back 26 years. I think it is just not fair. We can do better than this, I believe.

The Chair continues to recognize the gentleman from New York.

Mr. Owens. Mr. Chairman, I yield to Mr. McCrae to ask his question of me, as long as it is relevant to the abuse of workers' rights.

Mr. McCrae. No, what does this legislation have to do with my conviction of 27 years ago?

Mr. Owens. You had a question of me?

Mr. McCrae. Yes, I wanted to know what you would do to accept this legislation. What would you amend?

In other words, you know the difficulty we have of getting information. Do you think as a union member we should have the right to know what $999,999 for legal settlements, that we should have the right to know what that is?

And, in addition, I am trying to get a letter here that I want to show you, Congressman. We wrote to our International. We had $500 million taken out of our pocket. It is called funeral donations. If you have over 30 years in the union, the donation pays the undertaker. I do not care - it is not a beneficiary, it is not a death. Whoever pays your funeral bill, would get $2500. For a man with less than 30 years he would be entitled to $1,000. Now, they eliminated the $1,000. It went from a thousand to zero. In addition, they took the fellows over 30 years from $2500 down to a thousand. So 495,000 members, if you push aside the 95, let's concentrate on the 400,000, that amounts to $400 million dollars.

Now, I have a copy of the Constitution. Here is a copy of the Constitution. This is what it says about funeral donations. First, you cannot eliminate funeral donations. Second, you cannot reduce funeral donations unless you have general creditors. So I wrote a letter with a copy of the Constitution asking who the general creditors are. I got a letter back which said, well, I received your letter on such and such a date. The last sentence read: I am denying your request because I can't do that; the Constitution won't let me. Come on.

Now, am I entitled? We took a bath on real estate, and all we want to know, what are you doing? Where is the money going? I want to know who got 999,000. I want to know who those lawyers are. But blank.

So this legislation is now our own. Our people want to know. We cannot get information, and when we try to get information and all we get is this, well, "it is Congress’ fault," or "get hold of The Washington Post or The New York Times." That's where we are supposed to get our answers? I was curious what you would amend to make this legislation favorable to you?

Mr. Owens. I think it is quite clear that there is already adequate legislation requiring full disclosure of the finances of unions. Unions are the most heavily regulated institutions in our society and they do require full disclosure of these kinds of matters.

You should be able to get those answers under the present laws. H.R. 1625, however, goes to the heart of our whole concept of representational democracy and does something very different by insisting that those who are elected to represent a body of people have to continually consult with that body of people about all the decisions they make.

My time is up, so I yield back time to the Chairman.

Mr. Masiello. Mr. Chairman, may I speak?

Chairman Fawell. Yes, Mr. Masiello, if would like to contribute something.

Mr. Masiello. I want to know what the opposition is, to Mr. Owens and Mr. Hiatt. What do they fear? What are their fears if this bill passes?

They keep speaking about how they are losing their voice. Mr. Hiatt says we are free riders, which is not the case. I still pay 83 percent, in my case, anyhow. I want to know what is their basic fear if this bill passes? Mr. Owens?

Mr. Owens. Mr. Chairman, my time is up. If you want to give me more time, I will tell you what my fear is. If you take this step against representational democracy, there will be others. The obvious next step would go to regulate corporations, then the next step would be to regulate the Red Cross and Girl Scouts and on and on we go into a situation which is chaos, chaos, and very much against the grain of anything we stand for.

Mr. Masiello. I don't recall getting any dividends from the IAM. Let's keep apples with apples here.

Mr. Hiatt. I will be happy to answer.

Mr. Ballenger. Mr. Masiello, I was going to give you a shot as soon as I was recognized.

Chairman Fawell. The Chair has recognized Mr. Ballenger.

Mr. Ballenger. I want to put in one thing. Somehow everybody seems to forget that the check, before it goes anywhere, belongs to the employee. And the employee should have the right. If you have a 401(k), the employee has a right to say how that money will be invested. If you have a health insurance program, generally speaking the employee can figure out what kind of program he wants out of that money. He generally has some control over what happens to the money that is deducted from his paycheck.

As far as I can see, this thing is as close to motherhood and apple pie as you can get. So I will turn to Mr. Hiatt and ask, what are you all scared of? What is wrong with an employee knowing what happened to his money?

Mr. Hiatt. There is absolutely nothing wrong with an employee knowing what has happened to his money, and it is our contention that the current system affords that notice. In fact, I think it is interesting that neither of the complaints that the two worker witnesses have raised here today would, as I understand it, be addressed one iota by your legislation.

In Mr. Masiello's case, if I understand correctly, he did receive notice of his Beck rights, his right to dissent to having monies spent on political and ideological activities.

Mr. Ballenger. But he had to go to court to get his money.

Mr. Hiatt. No. No.

Mr. Masiello. I did, too.

Mr. Hiatt. He testified he then filed his objection with the general treasurer of his international union.

Mr. Ballenger. But he did not get his money. He had to go to court. Why should an employee have to go to court?

I realize you lawyers need money but, my God, the man is just trying to get his money back. His dues. What's wrong with giving it to him without forcing him for two, three or four months appealing, appealing, appealing, then going to court to get it?

Mr. Hiatt. There is a system. I hear nothing about the bill that is being proposed that would be any different. Where there is a dispute over whether monies, whether certain dues are of a political or ideological nature or not, there is always going to have to be some procedure to determine whether monies are chargeable or whether monies are not chargeable, whether they relate to collective bargaining activities or do not.

Mr. Ballenger. Basically, you are agreeing with the bill.

Mr. Hiatt. I am saying there is nothing about the kind of complaint Mr. Masiello has raised that would be changed by this bill.

Mr. Masiello. Certainly would.

Mr. Hiatt. Mr. Masiello's basic complaint, and I don't mean to presume, but from what I heard, was the coercion and intimidation he maintains he was subjected to for being a dissenter.

Mr. Ballenger. I want to interrupt for a second. I am not a lawyer, but I know, having heard many of the employees that have complained about this in our hearings, you do not have to talk about politics, you can talk about other issues that the union takes very strong stands on; such as pro-abortion. Where I come from there's a whole bunch of people saying I do not want my money spent on something like that. That is not political, supposedly, and yet they have no control over that.

Mr. Hiatt. Not true, Congressman. Not at all true.

Mr. Ballenger. Now_

Mr. Hiatt. Under the Beck decision_

Mr. Ballenger. But the Beck decision has never been enforced.

Mr. Hiatt. Well, the Beck decision has been enforced. In fact under the_

Mr. Ballenger. George Bush tried to enforce it.

Mr. Hiatt. During the Bush-appointed labor board years there was very little activity. Under the Clinton labor board years, in the last three or four years, there has been a great deal of activity in Beck enforcement. The decisions have been coming out, and just last week_

Mr. Ballenger. I am going to cut you off. You have talked more than anybody else. I want to let Mr. Masiello say something.

Mr. Masiello. Mr. Hiatt seems to think that there is a conflict. The union readily acknowledges that 17 percent is being spent on nongermane expenditures, including legislative activities and political activities.

Now, he also mentioned in his little speech that, he mentioned free riders. I spend 83 percent still of my dues money on the collective bargaining process. Where am I a free rider? And where is the conflict? The union discerns where the money goes, the 17 percent, and they readily admit to it.

Mr. Hiatt. You are not a free rider.

Mr. Masiello. They readily admit that money is spent on political issues. No problem there. I am pulling it out, and I lose all my rights.

Mr. Ballenger. Mr. Hiatt, you are not debating. We are in charge of the verbiage here.

Mr. Hiatt. May I respond?

Mr. Ballenger. Mr. Hunter wants to get a word in.

Mr. Hunter. Mr. Hiatt said nothing in H.R. 1625 would give any relief to Mr. Masiello, and that is not true because, as his testimony reveals, Mr. Masiello had to go to court, ultimately arbitration, to get a return of that portion of his money which was taken from him involuntarily and to which he objected.

Under H.R. 1625 he would have at least a yearly opportunity, in a nonconfrontational, cooperative way within which to withhold that money before it ever got transmitted to the union via a payroll deduction. So that is a very major change which would have avoided Mr. Masiello's problem.

Mr. Ballenger. Mr. Masiello, let me ask you a question. Do you think if this bill were passed, that the head of your union, that person has given you a fit and blasted your name and called you a scab, and done everything else he could to blacken your reputation - do you think if we passed the law, it would give you some strength in being able to say that the other members that have been told that you are a scab and the rest of it, that they would have to remove that?

Surely there ought to be a legal defense for defamation of character or something like that where the union really has gone out of its way to blacklist you.

Mr. Masiello. Essentially that is what it is, blacklisting. The biggest thing here is what the bill would provide. I would be getting the service for my 83 percent. Right now I have literally no service whatsoever, and I think this is a theft of service.

I can't see how anybody can put a defense up for this type of behavior. Absolutely. This is not about corporations or stockholders. This is about individuals' freedoms. That is all it is about. How they spin the issue is beyond me. They immediately go into the rhetoric about corporations. And like I have said, I don't remember getting any dividends from the IAM. I am not a stockholder in my union. I am a member, and I want what I have coming to me.

I pay 83 percent of the $42 a month and I should get all my voting rights that are for issues that are germane to the contractual matters. I have no voting rights. How can I enter into a contract and have absolutely no say-so?

Mr. Ballenger. There is also in this bill an anti-retaliation clause. I have talked to a bunch of guys from Charlotte, in fact I was with four of them last night in Charlotte. There is an awful lot of heat and pressure applied. And in this bill there is an anti-retaliation clause, in it that would give you some defense.

Mr. Masiello. That would be welcome. The retaliation I can handle, it's the actual, the voting rights and the service. Basically, I want my service returned.

Now, I could agree to, maybe, if we are in a union meeting and a political issue comes up, maybe to send someone to Washington to lobby for something, fine, I will not vote on that issue. But I want to vote on issues that I pay for. I want my service back. That's what I want.

Mr. Ballenger. The PACs got thrown in here by Mr. Ury, and where the UPS got sued because they were giving money to a political campaign without telling the people who were donating to the PAC. Do you all have a PAC, as far as your union?

Mr. Masiello. We absolutely do. Of course we do.

Mr. Ballenger. So there is a method at the present time.

Mr. Masiello. You can dump half your paycheck into the PAC and any member that wants to, agrees with their voice that is going to be stolen here. If they agree with it, boom. Go for it.

Mr. Ballenger. In other words, there is a way for the union to get political money. And I realize it is hard money rather than soft money, but the thing is there is a method there already. And, well, let me ask you. Do you donate to that PAC?

Mr. Masiello. At one time I did, when I believed, or actually when I first hired on and I was probably not given all the facts. And for a few years I participated. And as time went on, and I got more politically active, especially in issues that pertained to my personal life, I deemed they were not dealing in my best interest. So I withdrew from that PAC.

And then later on, a couple of years later, I saw all the soft money that was coming through the back door. So we looked into this and we realized that Beck in 1988 had taken the communications union to court in a landmark case and gave us the leverage to exercise the right to pull this money out.

And we, myself and 21 other individuals currently, believe it is ironic, that they say the majority is against all this. We have a lot of members that are for it and give us verbal support but somehow just cannot muster up the courage to fight the opposition, and I can't blame them in a way. But I think this is how anything in this country that is going to get done, this is how it is gets done, and I am not going away. This is going to get passed.

Mr. Ballenger. Mr. Ury.

Mr. Ury. Just very quickly, it goes even beyond a mechanism whereby an employee can donate to a PAC. The reality is when an employee decides that they want part of their paycheck to go to union or to a PAC, most often, and I cannot cite an example now where this is not the case, the government entity does all the financial bookkeeping, the tracking, the transfer of funds, all of that. We are already subsidizing.

So right now this is one of the reasons they are so concerned. The process is seamless for them because unions have to sit around, and every first of the month they sit down and say how much was deposited. They do not have to solicit the funds, they do not have to collect the funds, they do not have to verify funds. They do not have to go back after bad checks. They do not have to do any of the procedures that any other agency would have to under collections.

We are already subsidizing it. We are not even talking about that. There are definitely protections in there for the union currently to transfer as much money as the employee would like above and beyond their current dues.

Chairman Fawell. The Chair would recognize the Ranking Democrat of this committee, who was unfortunately delayed, but Mr. Payne from the State of New Jersey.

Mr. Payne. Thank you very much Mr. Chairman. I have browsed through the testimony of the members of the panel and certainly was caught by surprise to find that you are once again convening a hearing at the last week of the home work period on this issue that we just voted on in November. I suppose it is an issue that gets a little attention back home.

This debate has been framed as a need to protect individual expression. However, there is nothing about this whole question other than an attempt, it seems to me, to punish unions who have in the past been politically active on behalf of their membership. It ignores the fact that unions are voluntary organizations, the fact that they are democratically elected, that they are democratically controlled, and more importantly that union members by law set the union dues level and democratically vote on how the money will be disbursed. So in a country where we talk about democracy, unions run on the basis that a majority of the people decide a certain issue. In this country, majority rules.

As a matter of fact, I will divert myself a minute about the question of majority rule because, as you know, the House controlled by our Republican colleagues, and as a result they have the right to reorganize committees and workers. And just today I read in the paper that five veteran employees of the House Legislative Resource Center have been terminated, just told yesterday they have no more jobs. Each of these persons has been here for over a decade. Of course, in the House of Representatives, you don't have any labor protection. Just so happens that of the five laid off, one happened to be a Jewish person and the other four happened to be African Americans. Since the new Majority has taken over, 75 percent of the African American workers have been terminated. That is just an example. It doesn't have to do with union dues, but it shows that in the absence of protection of workers, this is what goes on right here in the seat of democracy. So I was reading that on the way back.

But my point here is that this is just a continual attack on workers. First, we talked about the 40-hour work week and the comp time legislation. That means you don't get paid for overtime. Next thing we are talking about the Team Act. Let the boss pick the negotiating team. That is great. As a former coach, I wish I could pick the players on my opposition's team. I would have picked Georgetown's players last night, and then I would have won.

The Davis-Bacon Act, we certainly need to repeal that, my colleagues on the other side say. They were opposed to the increase in the minimum wage, but finally decided that most Americans felt that a minimum wage was at least the minimum that we could do. There is a move to reduce workplace health and safety by cutting funds for OSHA.

It just goes on and on. I am not surprised at the inconvenient time this hearing is being held. I am not surprised because we have continually seen this attempt to continually take away the rights of working people, people who are struggling to make ends meet, and also to try to be punitive as it relates to people who have a different opinion.

The other thing I would like to mention, and it is certainly highly unusual, is that for the first time, I witnessed the chairman denying the right to have some public information included in the record. This is not some secret information, but the record that Congressman Owens asked to be included in the record. I don't know why you would want something excluded from the record, if it was not something that you felt you didn't want to be made public. So it is highly unusual. I am kind of shocked that unanimous consent was not allowed, that is very rare. I guess we are certainly seeing a lot of firsts as we continue with this leadership.

Let me ask a question to Mr. Hiatt. According to Mr. Fawell, H.R. 1625 requires a union to extend full membership to those who do not pay full union dues. Unions were originally formed and continued to exist to represent workers not just at the workplace, but in the political arena as well. Having the weekends off, for example, is the result of union political activity. In your view, what right does Mr. Fawell have under the first amendment to dictate who can be a member of a labor union?

Mr. Hiatt. I think that is a good point, Congressman, and that is the point that we have been trying to advance as well. Just as with the ABA, or the National Rifle Association, or with the Right to Life Association or any other organization, individuals should make their own decision. And with respect to labor unions, if they do not wish_if even after a majority of their coworkers have decided that they want to have a union representing them, and after all of that a majority of their coworkers have elected leadership whose views they do not agree with, and after all that a majority of their coworkers have decided to support programs and activities that they do not agree with, they should be free to either join the union and work to change it and vote out the leaders and vote in new leaders next time, or they should have the right, as they do under the existing law, to simply not be members of the union. And as long as they pay their representational fee, which, again, the law for years and years has said was reasonable, to be a nonmember, they should not be subject to intimidation or coercion for making that decision.

And as Mr. Masiello describes what has happened to him and other coworkers who have made that choice in his plant, that is wrong. And the law as it now stands provides a remedy for that. He could file charges, perhaps he has, with the labor board. There is already a no retaliation provision in the law. Mr. Ballenger says the new law, the bill, would have a no retaliation provision - fine. The existing one does, and I would be curious whether Mr. Masiello or any others in that situation have filed charges under the existing law because it is now clear that whether you choose to be a member or a nonmember, you cannot be retaliated against, you cannot be intimidated, you cannot be coerced, and that is the right of the individual.

Mr. Payne. And it is clear, thank you very much, that even when a strike is called, you don't have to strike if you don't want to. A person has a right to work if they feel like it. I appreciate that response.

I have another inquiry, again, Mr. Hiatt. There are a number of these statewide initiatives going on around the country, this assault on union dues, trying to influence State legislatures. Do you have any idea where the funding for these State initiatives is coming from?

Mr. Hiatt. Our information, Congressman, is that this is certainly not a grass-roots, worker-led initiative by any means. There is apparently, in fact, a press conference being held today or an announcement today by Grover Norquist of the Americans for Tax Reform, which is a Republican-funded organization that has been extremely antiunion and has been helping to advance the corporate agenda, that he and others have been seeking to have these same kinds of initiatives that individuals have been introducing in California in all States. They are very up front about saying that their goal is to force unions to lose funding, either to lose these initiatives and thereby lose the ability to engage in the political process, or, if they succeed in defeating these initiatives, to have to spend all this money and time and resources in fighting them. This comes from Patrick Rooney of the Golden Rule Insurance Company, the American Legislative Exchange Council. These are not individual citizens. These are corporations and big corporate interests that are seeking to tilt the balance even further and to weaken the voice of unions and working families.

Mr. Ury. A couple things to point out. Number one, Pat Rooney is an individual. But I think it is also important to understand where all the money will come to fight these initiatives. They will be coming from organized labor. I would challenge both Mr. Hiatt and possibly you, Congressman, will you be willing to ask your union members if they would like to put the money in to fight these initiatives? That, to me, would be a true test of democracy.

Mr. Payne. Well, I think that when you are attacked, the only thing you do is to try to protect yourself. The question is where do these attackers come from? That is the question, and that is the issue. Of course, it would be ridiculous not to assume that you will then bring money up to defend yourself against these initiatives.

We are running out of time. Chairman Fawell is going to have to leave, so we are going to conclude the meeting in a second. I will limit my statement and will conclude.

Once again, as I have indicated, this is a continued attack. The AFL-CIO gave, I think, 35 million in contributions to the 1996 election campaigns. The corporations gave eight times more. No one is investigating them.

I might just say, since we would like to have hearings on workers' rights, Mr. Fawell, I might suggest that maybe you might request and convene a hearing on the firing of these five minority people, the four African Americans, which leaves just several left, and to just see whether there is a litmus test on an organization that is supposed to be nonpolitical and nonpartisan in a legislative arena.

Chairman Fawell. I thank the gentleman. I thank all of the witnesses. You can see it is an ongoing debate. I am hopeful that where we probably will get clearance is from the voters, who, no matter might be financing for or against this issue. I think that when the voters do speak, that will help Members in Congress to realize that this is an issue that is awfully important to the people.

In the final analysis, I can only say that all this legislation is asking for is the basic civil right of workers. In regard to whether they must pay non-collective bargaining dues, if we can simply say, let them opt in, and get their written consent, I think that is good for the unions. I think that is good for the workers.

Indeed, when all the other very important civil rights issues came before this Congress in the 1960s, imagine if we had simply said, "Oh, no, the Supreme Court passed upon this, and they made some kind of an issue in regard to nondiscrimination on the basis of race or gender or foreign birth or whatever, so we are not going to implement and utilize any legislation whatsoever to see that these rights can actually be easily utilized by the people." That would have been pretty sad.

For us to obfuscate here and not want to do this is unfortunate. These issues long ago should have been brought up, but a change of Congress has occurred, and at least we are able to bring them up. I think it is good that the people have been able to watch this hearing, because in the final analysis, they are going to make the decision, and their feelings are going to be, I think, brought to Congress. I think that by the time the California provision is voted upon, we will have some pretty strong bipartisan sentiment that we ought to take this step. I think the President, too, will ultimately agree that it is only fair and it is only right that we do so.

Thank you very much, all of you folks who have taken your time to be here. I wish, especially with some of the legal experts here, we could utilize you and sit down for a longer period of time. Thank you very much for being a part of this.

[Whereupon, at 12:15 p.m., the subcommittee was adjourned.]