The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 6649 July 11, 1990 COLLECTIVE BARGAINING: Federal preemption of state law claims for wages and fringe benefits LABOR MANAGEMENT RELATIONS ACT: Preemption of state law wage and fringe benefit claims WAGES AND FRINGE BENEFITS: Federal preemption of state law claims Section 301(a) of the federal Labor Management Relations Act of 1947 preempts the Michigan Department of Labor from determining state law claims for wages and fringe benefits brought by employees under 1978 PA 390 where enforcement of the state law claim would require the interpretation of a collective bargaining agreement. Elizabeth P Howe Director Department of Labor 201 N. Washington, Box 30015 Lansing, MI 48909 Dear Ms. Howe: You have requested my opinion regarding a question which may be stated as follows: Is the Michigan Department of Labor preempted by section 301(a) of the Labor Management Relations Act of 1947, 29 USC 185(a), from investigating and resolving wage claims which require the interpretation of collective bargaining agreements? The Michigan Department of Labor has the duty to investigate and determine claims for wages and fringe benefits filed by workers pursuant to 1978 PA 390, MCL 408.471 et seq; MSA 17.277(1) et seq. You indicate that, in situations where the parties have entered into a collective bargaining agreement, it is sometimes impossible to resolve the worker's claim without referring to and interpreting the collective bargaining agreement. 1978 PA 390 does not make a contract for the parties. Rather, it provides a mechanism for enforcing the payment of benefits that the parties have already agreed should be paid. Carpenter v Flint School District, 115 Mich App 683; 687; 321 NW2d 772 (1982). An example of such a circumstance is where a collective bargaining agreement provides for differing rates of pay for certain types of work and further provides for compulsory arbitration in the event of a dispute as to the correct rate of pay for a particular task. In the event of such a dispute, the employer will sometimes pay the higher rate pending the outcome of arbitration. If the arbitrator rules in favor of the employer, the arbitration award will often authorize the employer to deduct the resulting overpayment from the worker's future wages at a specified amount per pay period. Arguing that, despite the arbitration award, the collective bargaining agreement does not expressly provide for such deductions, the employee will sometimes attempt to file and pursue a claim under section 7 of 1978 PA 390, MCL 408.477; MSA 17.277(7), which provides in pertinent part: "With the exception of those deductions required or expressly permitted by law or by a collective bargaining agreement, an employer shall not deduct from the wages of an employee, directly or indirectly, any amount without the full, free, and written consent of the employee, obtained without intimidation or fear of discharge for refusal to permit the deduction. ..."' Because such a claim would necessarily require the Department to interpret and construe the collective bargaining agreement, the question arises whether the Department is preempted by section 301(a) of the Labor Management Relations Act of 1947, 29 USC 185(a), from making such a determination. Section 301(a) of the Labor Management Relations Act of 1947 provides: "Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties."' The United States Supreme Court has long held that, pursuant to the Commerce Clause, US Const, art 1, Sec. 8, Congress has plenary power to regulate in the area of labor relations. NLRB v Jones & Laughlin Steel Corp, 301 US 1; 57 S Ct 615; 81 L Ed 893 (1937). The Court has also long held that Congress has the power to preempt state law under the Supremacy Clause of Art VI of the Federal Constitution. See, eg, Allis-Chalmers Corp v Lueck, 471 US 202, 208; 105 S Ct 1904; 85 L Ed 2d 206 (1985) and cases cited therein. In Teamsters v Lucas Flour Co, 369 US 95, 103; 82 S Ct 571; 7 L Ed 2d 593 (1972), the Court held that section 301(a) mandated resort to federal rules of substantive law in interpreting collective bargaining agreements. The Court reasoned that a uniform interpretation was required in order to promote peaceable and consistent resolution of labor management disputes. In holding that the subject matter of section 301(a) calls for uniform interpretation, the Court stated, at 369 US 103: "The possibility that individual contract terms might have different meanings under state and federal law would inevitably exert a disruptive influence upon both the negotiation and administration of collective agreements. Because neither party could be certain of the rights which it had obtained or conceded, the process of negotiating an agreement would be made immeasurably more difficult by the necessity of trying to formulate contract provisions in such a way as to contain the same meaning under two or more systems of law which might someday be invoked in enforcing the contract."' In Allis-Chalmers Corp v Lueck, supra, a unanimous Supreme Court made clear that Sec. 301(a) preempts any state claim arising from a breach of a collective bargaining agreement. In Lueck, the plaintiff sought a Wisconsin tort remedy for the bad faith handling of an insurance claim. The insurance plan provisions were included as part of plaintiff's collective bargaining agreement. The Court held that the state claim was preempted by section 301(a). The Court reasoned that the basis for the breach of the duty, necessary for the Wisconsin tort claim, must be implied from the express terms of the collective bargaining agreement. The Court held, at 471 US 210-211: "If the policies that animate Sec. 301 are to be given their proper range, however, the pre-emptive effect of Sec. 301 must extend beyond suits alleging contract violations. These policies require that 'the relationships created by a [collective-bargaining] agreement' be defined by application of 'an evolving federal common law grounded in national labor policy.' Bowen v. United States Postal Service, 459 U.S. 212, 224-225 (1983). The interests in interpretive uniformity and predictability that require that labor-contract disputes be resolved by reference to federal law also require that the meaning given to a contract phrase or term be subject to uniform federal interpretation. Thus, questions relating to what the parties to a labor agreement agreed, and what legal consequences were intended to flow from breaches of that agreement, must be resolved by reference to uniform federal law, whether such questions arise in the context of a suit for breach of contract or in a suit alleging liability in tort. Any other result would elevate form over substance and allow parties to evade the requirements of Sec. 301 by relabeling their contract claims as claims for tortious breach of contract. "Were state law allowed to determine the meaning intended by the parties in adopting a particular contract phrase or term, all the evils addressed in Lucas Flour would recur. The parties would be uncertain as to what they were binding themselves to when they agreed to create a right to collect benefits under certain circumstances. As a result, it would be more difficult to reach agreement, and disputes as to the nature of the agreement would proliferate. Exclusion of such claims 'from the ambit of Sec.301 would stultify the congressional policy of having the administration of collective bargaining contracts accomplished under a uniform body of federal substantive law.' Smith v. Evening News Assn., 371 U.S. 195, 200 (1962)."' In the recent case of Lingle v Norge Division of Magic Chef, Inc, 486 US 399; 108 S Ct 1877; 100 L Ed 2d 410 (1988), the Court had occasion to further elaborate on the principles announced in Teamsters v Lucas Flour Co and Allis Chalmers v Lueck. The Court stated, 486 US at 405-406: "Thus, Lueck faithfully applied the principle of Sec. 301 pre-emption developed in Lucas Flour: if the resolution of a state-law claim depends upon the meaning of a collective-bargaining agreement, the application of state law (which might lead to inconsistent results since there could be as many state-law principles as there are States) is pre-empted and federal labor-law principles--necessarily uniform throughout the nation--must be employed to resolve the dispute."' (Footnotes omitted.) Later in the same opinion, the Court reiterated this principle, stating: "Today's decision should make clear that interpretation of collective-bargaining agreements remains firmly in the arbitral realm; judges can determine questions of state law involving labor-management relations only if such questions do not require construing collective-bargaining agreements."' 486 US at 411. (Emphasis added; footnote deleted.) The Lingle Court concluded its unanimous opinion by holding: "In sum, we hold that an application of state law is pre-empted by Sec. 301 of the Labor Management Relations Act of 1947 only if such application requires the interpretation of a collective-bargaining agreement."' 486 US at 413. (Footnote omitted.) Applying the principles developed in these cases, it is clear that state laws affecting labor management relations may be enforced only if such enforcement does not require the interpretation of a collective bargaining agreement. If one must look to the collective bargaining agreement in order to enforce the state law, the state law is preempted. It is my opinion, therefore, that section 301(a) of the federal Labor Management Relations Act of 1947 preempts the Michigan Department of Labor from determining state law claims for wages and fringe benefits brought by employees under 1978 PA 390 where enforcement of the state law claim would require the interpretation of a collective bargaining agreement. Frank J. Kelley Attorney General