Union and Its PAC Hit with Hefty Penalty for Unauthorized Deductions and Failure to Provide Required Notices
By: Matthew Petersen
A recent consent judgment issued by the U.S. District Court for D.C. provided a powerful reminder to corporate and labor union PACs that they must (1) obtain affirmative consent from employees before deducting amounts from their paychecks through payroll deduction systems (i.e., no “reverse checkoffs”), and (2) include the required notices on all PAC solicitations.
(The required notices disclose (1) the PAC’s political purpose; (2) the right to refuse to contribute without reprisal; and (3) that any suggested contribution amounts are mere suggestions, that one may give more or less than the suggested amount, and that the amount given, or refusing to give, will not benefit or disadvantage the person being solicited.)
The case before the court involved Plumbers and Pipefitters Local Union No. 9, which along with its PAC had previously entered into a conciliation agreement with the Federal Election Commission (FEC) and agreed to pay a $92,650 civil penalty to resolve violations of the affirmative consent and notice requirements described above.
The FEC brought a lawsuit to enforce the terms of the conciliation agreement when it received a complaint alleging that the union and its PAC were violating the agreement by continuing to deduct amounts not only from the paychecks of employees who had not given their consent but also from the paychecks of employees who had explicitly declined to participate in the payroll deduction program.
These violations of the conciliation agreement resulted in the court imposing a $240,000 civil penalty and permanently enjoining the union and its PAC from deducting amounts from employee paychecks without first receiving written authorization and providing the required notices.
The magnitude of the penalty in this case highlights the importance of corporate and union PACs carefully complying with the legal requirements that apply to payroll deduction systems and PAC solicitations. Please let us know if you have questions about how this decision might impact your organization and its PAC.
