Why Nonprofits Should Care about “Paycheck Protection” Bills

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March 12, 2013; Source: St. Louis Business Journal

The decision of the Missouri State Senate to pass “paycheck protection” legislation should be seen as a little shot across the bow for nonprofits, not just labor unions. The legislation prohibits unions from deducting dues from employees’ paychecks. It remains to be seen whether Gov. Jay Nixon, a Democrat despite his iconic Republican surname, may issue a veto. Next door, Kansas is considering its own paycheck protection bill that Kansas Democrats say has basically been drafted upon a model created by the American Legislative Exchange Council (ALEC).

As most people know, unions devote part of the dues money they receive from members to political advocacy, including endorsing candidates in elections. This gets to the heart of the paycheck protection legislation. The Missouri bill, amended by Democrats after a 10-hour filibuster, not only requires annual approval from employees for deductions, but approval from public sector union employees if their dues are used for political donations

Why should nonprofits be concerned about paycheck protection legislation? In 2004, we wrote about the danger this practice poses to nonprofits. Remember that public sector union employees, including employees at the state level, typically participate in charitable giving through payroll deduction programs administered by organizations such as the United Way, America’s Charities, Earthshare, and a variety of local funds. Every once in a while, states expand their concern about the use of paycheck deductions from unions to charities, suggesting that donors might not know about (or might not want to support) the public policy advocacy conducted by recipients of payroll deduction donations. This has happened before, as state managers of charitable giving campaigns have suddenly, inexplicably decided that some previously eligible charities were suddenly ineligible due to their public policy—read: political—advocacy.

It’s not a big leap to extend concerns about the political uses of funds by unions to concerns about advocacy uses by nonprofits. Over the years, some of the paycheck protection legislation that has surfaced in state legislatures has been so loosely drafted as to make restrictions on nonprofits a possibility, while other proposals that have been floated have specifically targeted payroll deductions for nonprofits that engage in advocacy and lobbying.

Nonprofits may look at Missouri’s “paycheck protection” bill and confidently assume that, since they are not unions, they aren’t going to be hit by these punitive new statutes. Think again. It might be more appropriate for nonprofits to consider that there but for the grace of the legislature’s focus on 501(c)(5) labor unions go my 501(c)(3) public charity and I. –Rick Cohen

  • Sean Dwyer

    Funny how these same legislators and their ALEC sponsors have no corresponding plan for a Price Protection law that would require consumers’ approval before corporations use retail profits for public advocacy.

  • Frank Monti, CPA

    I think you are reaching on this one. The non-voluntary union dues paycheck deduction cannot be compared to the voluntary charity paycheck deduction.

  • Peter Hudson

    Non profits ought to be concerned about the so-called paycheck protection bill for a lot more reasons than the possiliity that it is the thin edge of a wedge leading to a ban on automatic deductions for charitable purposes. Surely there can be no doubt that these measures, wrapped up deceptive phraseology suggesting a wonderful benefit to workers, are just another move in the general assault on unions beginning in the early 1980s? “Right to work” legislation is one other, of many examples which has led to union participation being at its lowest in more than half a century, and a labour force which is insecure stressed, and loosing ground daily in terms of wages and working conditions. Why should we be concerned? A recent book to LIve and Die in America: by Robert Chernomis and Ian Hudson, Pluto Press and Fernwood Publishing, documents very clearly the social and economic inequalities which arise when the balance of power between labour and capital is even more skewed than it was in the era from about 1950 to 1980. In turn, the general wellbeing of the wage and salary worker suffers. The book compellingly argues that the union movement has been a force for bettering these conditions, and their erosion is consequently not to be seen as a beneficial trend – not for the 99% anyway.

  • rick cohen

    I’d like to think you’re right, Frank, but it has happened. Take a look at this article I wrote in 2004 as it affected payroll deduction campaigns involving government employees: http://www.nonprofitquarterly.org/philanthropy/742-the-cutting-edge-of-exclusion-how-government-is-disqualifying-charities-it-doesnt-like-from-state.html

  • michael

    Let’s admit it, unions are competition for the nonprofit sector, not its allies. When it comes time to carve up the budget pie, well financed unions use the political muscle and $$$ from dues to ensure they get to gorge themselves at the trough. It is only then nonprofits are invited in to scrounge for the leftovers. Unions also use regulations to ensure they see no competition from the creative minds in the nonprofit sector. Consider how the teachers union repeatedly gun down nonprofit charter schools