Bоth Babler Brothers and Dyad Construction filed suit in the District of Oregon to challenge the enforceability of an Oregon statute that requires contractors on public projects to pay time and a half for all hours worked in excess of eight hours per day unless the workers are covered by thе terms of a collective bargaining agreement. Or. Rev.Stat. § 279.334 (1991). Appellants, both non-union contractors, allege that the statute is preempted by the National Labor Relations Act (“NLRA”), 29 U.S.C. §§ 151 et seq., and violates equal protection by regulating only non-union contractors.
After a bench trial, the district court ruled against Babler Brothers in its suit against Mary Wendy Roberts, the Commissioner of
The Oregon statute at issue, Or.Rev.Stat. § 279.334, requires non-union employers, but not union employers, to рay overtime (time and a half) for any hours worked over an eight hour day.
Appellants argue that the statute is now used to discriminate against their performance of public contracts, which require apрellants to remove workers from highways between 3:00 P.M. Fridays and midnight Sundays or legal holidays. Because of these restrictions on highway work hours, appellants favor a four-day a week, ten-hour a day schedule (“4-10”). Because their employees must travel to different work sites, appellants claim that their employees also favor such a schedule, which allows them time at home. Appellants argue that the application of the statute places them at a competitive disadvantage with union employers, because the requirement to pay overtime aftеr eight hours results in a ten percent surcharge on non-union employers.
When Babler informed ODOT that it intended to utilize the 4-10 schedule without paying overtime, ODOT responded that it would withhold money from Babler, pay the money directly to Babler employees, find Babler in breach of contract, and disqualify Babler from public work contracts for up to three years. When Dyad actually refused to pay overtime to its 4-10 workers, the City of Portland withheld payments from Dyad.
Appellants contended in the district court that this statute is preempted both because federal law has occupied the fiеld of collective bargaining (Garmon preemption) and also because Congress intended to leave this area unregulated (Machinists preemption). See San Diego Bldg. Trades Council v. Garmon,
Appellants make the same arguments on appeal. First, they argue that under Gar-mon the Oregon statute encroaches upon the collective bargaining process because it penalizes non-union employers and favors nonunion employees. Although they acknowledge that the statute neither dictates terms of agreements nor regulates collective bargaining activity, appellants contend that it is an unfair intervention by the State of Oregon into the collective bargaining process itself because the law does not apply to union and non-union members equally.
Second, appellants argue that this statute is not a law of general application because it is not a minimum wage regulation under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. According to appellants, the statute regulates a field Congress intended to leave to market forces, and is not an exercise of the state’s prerogative to regulate wages and working conditions for all individuals. Appellants argue that the statute therefore fails the tests the Supreme Court applied in Metropolitan Life Ins. Co. v. Massachusetts,
The federal government retains exclusive power over certain areas of labor law committed to it by Congress under the NLRA. When state laws conflict with federal law in these areas, federal law preempts the state law. While the Supreme Court has recognized two types of prеemption, Garmon preemption and Machinists preemption, there remain many areas in which states may appropriately intercede in the relationships between employees and employers. The scope of federal preemption is continually evolving. The most recent Supreme Court discussiоn of these areas of labor law is Building & Constr. Trades Council v. Associated Builders & Contractors, Inc., — U.S. -,
We discuss first the appellants’ contentions with respect to Garmon preemption. Garmon preemption protects the primary jurisdiction of the National Labor Relations Board (“NLRB”) by preempting state regulation of conduct that is actually or arguably рrotected or prohibited by the NLRA. See Garmon, supra A statute falls within the scope of Garmon preemption when the statute’s terms encompass matters within either the provisions of section 7 or section 8 of the NLRA
Section 7 of the NLRA protects the rights of employees in collective bargaining, including their right to strike, their right to picket, and their right to join or not to join a union. In this case, the rights of employees to bargain collectively with employers are not affected under the Oregon statute. The Oregon employees remain free to bargain with employers, and to join or not to join a union.
Section 8 of the NLRA regulates unfair labor practices. In general, section 8 prohibits employers and labor organizations from interfering with the employee rights protected under section 7 of the Act. Section 8(a) prohibits unfair conduct by employers toward employees, including, for example, discrimination between union and non-union members. Section 8(b) of the Act regulates unfair labor practices by labor organizations. Unfair labor practices such as threats against employees, spying on employees, and discrimination between union and non-union members are prohibited by the requirements of seсtions 8(a) and (b).
Appellants argue that sections 8(a)(3) and 8(b)(2) of the Act prohibit the type of discrimination against non-union employees that the Oregon statute mandates. Under section 8(a)(3), an employer is not allowed to discriminate among employees on terms of em
At first blush, there is some plausibility to appellants’ argument that the statute discriminates between union and non-union employees and so violates these sеctions of the NLRA. However, sections 7 and 8 govern conduct within the collective bargaining framework. They regulate employers’ and unions’ dealings with employees about union membership and collective bargaining. In this case, the statute does not bring about employer or labor organization coercion that is illegal under the provisions of the Act. Nor is there interference in collective bargaining by employees. See M.W. Kellogg Constructors v. NLRB,
The second category of preemption identified by the Supreme Court, Machinists preemption, is based on the principle that the states should not regulate conduct that Congress has chosen to leave unregulated. In Machinists, an employer filed a complaint with the Wisconsin Employment Relations Commission, charging that a union’s refusal to work overtime was an unfair labor practice under Wisconsin state law. The Supreme Court ruled that such conduct is not subject to state regulation, because in certain areas “Congress meant to leave some activities unregulated and to be controlled by the free play of economic forces.” Machinists,
When states have enacted statutes intended to provide minimum-benefits to employees and not intended to interfere with the bargaining position of the parties, the Supreme Court has upheld state benefit statutes against Machinists preemption challenges. See Metropolitan Life, supra and Fort Halifax, supra; see also New York Tel. Co. v. New York State Dep’t. of Labor,
In Metropolitan Life, the Supreme Court upheld a Massachusetts minimum health care benefits policy. The insurance company argued that the minimum standards imposed a term on employers in collective bargaining agreements. The Court rejected that argument, holding that thе statute’s minimal substantive requirements were not incompatible with federal labor law. The health care policy did not upset the balance of power between labor and management, or undermine the equality of the parties. Id.,
The appellants contend that the statute interferes with collective bargaining relationships because it does not establish an across the board minimum standard applicable to all employers as was the case in Metropolitan Life. Nor does it permit individual employees to bargain with employers on an individual basis concerning the subject matter of the statute, as was the case in Fort Halifax. They contend that enforcing the statute in today’s world has the effect of making it
We believe that these concerns are adequately addressed by the Supreme Court’s recent decision in Associated Builders. As in Associated Builders, the state here has not endeavored to regulate the bargaining relationship of employers or employees. Rather, the state is enforcing proscribed working conditions on public projects in which the state and local jurisdictions have a proprietary interest. In Associated Builders, Massachusetts restriсted bidding to union contractors and subcontractors and the Court held the restriction was not preempted. The obstacle to non-union bidding under the Oregon statute cannot possibly be as great as the obstacle imposed in Massachusetts by the requirement that all contractors on the jоb be signatory to a collective bargaining agreement. Accordingly, we conclude that the Oregon statute is not preempted by federal labor law. Any remedy for the appellants is to be found in the legislature and not in the federal courts.
The district court also correctly ruled that the Oregon statute is subject to minimum rationality scrutiny for purposes of equal protection analysis. See Lyng v. UAW,
The judgment of the district court is AFFIRMED.
Notes
. The statute provides, in relevant part:
(1)In all cases where lаbor is employed by the state, county, school district, municipality, municipal corporation, or subdivision, through a contractor, no person shall be required or permitted to labor more than eight hours in any one day, or 40 hours in any one week, except in cases of necessity, emergency, or where the public policy absolutely requires it, in which event, the person or persons so employed for excessive hours shall receive at least time and a half pay for all overtime in excess of eight hours a day, and for work performed on Saturday and on the following legal holidays: [Sunday, New Years Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day].
(2) For the purpose of this section, each time a holiday, other than Sunday, listed in subsection (1) of this section falls on Sunday, the succeeding Monday shall be recognized as a legal holiday. Each time a holiday listed in subsection (I) of this section falls on Saturday, the preceding Friday shall be recognized as a legal holiday.
(3) Subsections (1) and (2) of the section do not apply to a contract for a public improvement if the contractor is a party to a collective bargaining agreement in effect with any labor organization. O.R.S. 279.334.