Labor Watchdogs Back Trump's Dues Skimming Crackdown

Proposed rule would close Obama era loophole, steer millions away from unions

SEIU union protest
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August 14, 2018

Labor watchdogs are praising the Trump administration for its proposal to prevent unions from siphoning off money meant to care for disabled Americans.

The Centers for Medicare & Medicaid Services issued a new proposal in July that would reverse an Obama era rule that allowed third parties such as unions to automatically deduct fees and dues from Medicaid reimbursements. Those reimbursements are generally intended to pay full-time home health aides for the disabled, which in many cases are people caring for relatives.

"This proposed rule would remove the regulatory text that allows a state to make payments to third parties on behalf of an individual provider for benefits such as health insurance, skills training, and other benefits customary for employees," the proposal says. "We are concerned that these provisions are overbroad, and insufficiently linked to the exceptions expressly permitted by the statute."

The move earned high praise from labor watchdogs, who have long objected to using Medicaid payments to enrich labor organizations. Trey Kovacs, a labor expert at the pro-free market think tank Competitive Enterprise Institute, said the rules are more in line with the spirit of supporting home health aides and caring for the disabled.

"The Trump administration rule-change will ensure Medicaid funds reach their intended destination and used exclusively to care for the elderly and disabled, not siphoned off to a labor union that may be unwanted by patients, families, and caregivers," Kovacs said in a statement.

Labor unions have been the chief beneficiary of these automatic dues payments. CMS estimates that third party organizations have collected $71 million from such dues skimming policies, while another analysis has found that unions have pocketed as much as $150 million from these types of payments. Vincent Vernuccio, a senior policy adviser at the State Policy Network, called these practices "deceptive" and said the lower reimbursements that come after skimming "reduces the quality of care that can be provided to people who need it most."

"No mother should be coerced into joining a union just to look after their child, and HHS’ proposed rule would ensure this never happens again," Vernuccio said in a statement.

This is not the first time such schemes have come under scrutiny. In 2014, the Supreme Court declared an Illinois dues-skimming policy unconstitutional because the union had no input over bargaining—such as asking for higher wages—since the federal government sets reimbursements, not the states. That ruling, however, only applied to Illinois. Trump's proposal is designed to avoid any potential work-arounds at the state or local level that would allow unions to continue collecting dues.

Labor unions that have used dues skimming in the past have accused the Trump administration of "silencing" workers. Service Employees International Union said the proposal could "endanger quality home care services" and would undermine attempts from home workers to demand higher wages or other regulations on working conditions.

"The proposed rule targets these home care workers and is designed to stop them from contributing their own wages to support their union," the union said in a July release. "This proposal is a transparent attempt to interfere with workers’ freedom to choose to join together in a union and advocate for higher wages, better training, and basic benefits like affordable health care and paid sick time that are crucial to ensure quality home care."

The National Right to Work Foundation helped to bring the suit that ended Illinois' dues skimming practice. President Mark Mix said in a statement that he hopes the new rule would settle the question and eliminate any future loopholes. He called on the agency to adopt the proposal "expeditiously."

"It is long past time that this outrageous attempt to create another exemption in federal law for union officials be ended," Mix said in a press release. "Despite the wishes of the politicians they back, union officials are not exempt from federal law. All the current proposed rule change would do is close the illegal loophole the Obama administration attempted to create."

The public comment period for the proposed rule ended Monday evening. The department will issue a final rule after reviewing the submissions, though no formal date for that response has yet been issued.

Published under: Unions