CA Charities Worried Prop. 226 Will Hurt Them FWD

Tom Boland (
Thu, 14 May 1998 11:40:01 -0700 (PDT)

San Francisco Chronicle  Thursday, May 7, 1998  Page A1


       Ilana DeBare, SF Chronicle Staff Writer

Proposition 226 would require labor unions to get their members' written
consent if any dues withheld from their paychecks are used for political
campaigns. But some fear the measure is so broadly worded it could apply to
all payroll deductions, including ones for charity, health insurance and
pension plans.

Proposition 226 critics -- and some people who normally wouldn't take sides
in a labor issue -- say the measure could produce paperwork and legal
hassles over routine payroll deductions.

The United Way of America issued a memo last month that didn't take sides
on Proposition 226 but did warn, ``The initiative is drafted so broadly
that it would cause a variety of adverse consequences for nonprofits.

``It is likely that Proposition 226 will lead to a substantial drop in . .
. charitable giving campaigns operated through payroll deductions,'' the
memo said.

``A lot of surprised nonunion employers will have to get their lawyers to
look at this, and say whether they can keep making deductions,'' said
Raymond Wheeler, an attorney with Morrison & Foerster in Palo Alto who
represents numerous Silicon Valley companies.

Proposition 226 supporters deny that the measure will affect paycheck
deductions for things like charitable giving or health insurance.

They insist that the measure's impact will be limited to its main goal --
requiring labor unions to get the signed consent of members once a year in
order to spend their dues money on political campaigns.

``These other kinds of deductions are not a real issue, and our opponents
know it,'' said Mark Bucher, an Orange County businessman who helped draft
Proposition 226. ``It's a flat-out non-issue. Their whole idea is to try
and get people to vote `no' by putting these doubts in their mind.''

The debate focuses on a section of Proposition 226 that would limit
employers' ability to deduct money from paychecks if it's going to be used
for political purposes.

The section reads:

``No employer . . . shall deduct any funds from an employee's wages that .
. . will be used in whole or in part as a contribution or expenditure
except upon the written request of the employee.''

The section also requires employers to use a specific form to get workers'
consent, specifying the total annual amount that will be withheld as a
political contribution.

Critics such as Oakland labor lawyer David Rosenfeld claim that this
wording could apply to other kinds of deductions, in ways that would be
virtually impossible for companies to administer. For instance:

-- An employee has a $45 payroll deduction for health insurance. The
insurance company spends a tiny portion of its multi- billion-dollar budget
on political contributions. Proposition 226 might require the employer to
figure out how much of the worker's $45 was going into politics each year
and get his or her written consent.

-- An employee gives $100 to the United Way. The United Way distributes $5
of that money to an environmental group that spends money on park bond
initiatives, $3 to a health group that spends money on anti-smoking
initiatives, and so on. Proposition 226 might require the employer to
figure out how much of the worker's $100 is going to park bond initiatives,
anti- smoking initiatives, etc., and then get written consent for it.

Some nonprofit groups worry that this kind of paperwork will make employers
put their workplace giving programs on hold -- either permanently, or until
the expected lawsuits over Proposition 226 are resolved.

Earth Share of California, a United Way-style group that raises workplace
funds for 88 environmental nonprofits, came out in March against
Proposition 226 for this reason.

``The worst-case scenario is that companies say, `This is too complicated
and political with all these disclosure forms,' and throw out their
workplace giving programs,'' said Gerald Meral, executive director of the
Planning and Conservation League, a Sacramento environmental group that
opposes Proposition 226 and raises about $25,000 from paycheck deductions
each year.

Not all legal observers think Proposition 226 will have such far- reaching
and unintended results.

They point out that federal pension law could pre-empt Proposition 226, so
employers wouldn't have to do such paperwork for pension and health
insurance deductions.

``The theory that this could affect other kinds of paycheck deductions
(besides union dues) is absolutely ludicrous,'' said Matthew Bartosiak,
senior staff consultant with the Employers Group, a statewide human
resources association with 5,000 member companies.

``It's hard for me to imagine that any court would read Proposition 226 as
radically as opponents are saying, especially since the organizers didn't
intend it to cover things like health plan contributions,'' agreed Jeff
Wohl, an attorney who represents employers with Orrick Herrington and
Sutcliffe in San Francisco.

But some other management attorneys see a legal risk for employers in
Proposition 226.

They acknowledge that the courts may eventually limit Proposition 226 to
the political use of union dues. But until that happens, they worry that
their corporate clients will end up in costly lawsuits over whether they've
properly handled other types of deductions.

``The opponents have raised enough issues that nonunion employers ought to
think twice about this,'' said Wheeler of Morrison & Foerster.

``There are two things in there that should be of concern to employers,''
said Fred Alvarez, a lawyer who represents Silicon Valley employers with
Wilson Sonsini Goodrich & Rosati in Palo Alto.

``One is that we're getting more government regulation of something as
routine as payroll deductions,'' Alvarez said. ``The other is that (union
lawyers trying to overturn Proposition 226) will file lawsuits saying,
`You're deducting health insurance premiums, and the health insurer is
paying for politics.' There is more of a hassle here than anyone


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