New Law on Organization Fee Paycheck Deductions

The Kentucky General Assembly overrode Governor Andy Beshear’s veto of Senate Bill 7 on March 29, 2023. Senate Bill 7 prevents public employers, like cities, from deducting labor organization membership fees from employee paychecks. This bill contained an emergency provision making it effective after the veto override.

The key component of this legislation is found in the amendment to KRS 336.134 which now states, “[a] public employer shall not deduct from the wages, earnings, or compensation of any public employee for: (1) [a]ny dues, fees, assessments, or other charges to be held for, transferred to, or paid over to a labor organization; or (2) [p]olitical activities”.

This language replaced the previous version of KRS 336.134 which came into effect in 2017 which stated:

A public employer or a labor organization representing public employees shall not deduct membership dues of an employee organization, association, or union from the wages, earnings, or compensation of a public employee without the express written consent of the public employee. This consent shall be made prior to any deductions being made and may be revoked by the public employee at any time by written notice to the employer.

Senate Bill 7 removes the permissive opt-in language in the former KRS 336.134 for a public employee to have their membership dues withheld from their paycheck.

As a further step, Senate Bill 7 adds the newly created KRS 336.133 which states, “[a] public employer shall not assist, directly or indirectly, any labor organization, person, or other legal entity with the collection of dues, fees, assessments, or other charges, or political activities or personal information related to those activities.”

Not only is a public employer forbidden from withholding any labor organization membership dues for an employee, but the public employer is also forbidden from providing that employee or labor organization, directly or indirectly, with this membership dues collection.

Interestingly, Senate Bill 7 created a carve out for law enforcement, jail and corrections officers, or active fire suppression or prevention personnel labor organizations. “Labor organization” is defined under Senate Bill 7 at KRS 336.180(10) as, “any organization of any kind, or any agency or employee representation committee, association or union which exists for the purpose, in whole or in part, of dealing with employers concerning wages, rates of pay, hours of employment or conditions of work, or other forms of compensation.”

The very next sentence of KRS 336.180(10) from Senate Bill 7 acts as the carve out. It states, “[e]xcept, for the purposes of KRS 161.158, 164.365, 336.133, 336.134, 336.1341, 336.135, or 336.990, “labor organization” shall not include organizations which primarily represent public employees working in the protective vocations of active law enforcement officer, jail and corrections officer, or active fire suppression or prevention personnel.”

This carve out allows membership dues for these public safety-related labor organizations to be withheld under Senate Bill 7.

Senate Bill 7 also created a temporary grandfather provision at KRS 336.1341 allowing deductions from a public employee’s pay under an existing joint wage agreement or collective bargaining agreement in effect prior to the enactment of Senate Bill 7 on March 29, 2023. The prohibitions on withholding labor organization membership dues found in KRS 336.133 and KRS 336.134 will apply to any joint wage agreements or collective bargaining agreements entered into after March 29, 2023.

Litigation arguing that the carve out for the public safety labor organizations violates the equal protection of law guaranteed by the Kentucky Constitution among other legal challenges quickly followed the enactment of Senate Bill 7.

On July 3, 2023, Jefferson Circuit Court Judge Brian Edwards issued a temporary injunction against the enforcement of the provisions of Senate Bill 7. Judge Edwards is presiding over a lawsuit brought by several local Louisville labor unions. Senate Bill 7 has several provisions impacting the Kentucky Education Association and that organization has filed a similar suit in Franklin Circuit Court.

The enforcement of Senate Bill 7 is stayed while the injunction is in effect. The League is closely monitoring all aspects of these legal challenges and we will update our members as these cases evolve over the next months.

If you have any questions about Senate Bill 7, please contact the KLC Municipal Law Department.