Can a NC regional transit authority sign a labor-protection agreement with a union as a condition of getting federal transit money?

Plain-English summary

The Research Triangle Regional Public Transportation Authority (TTA) sought federal funding to buy coaches for regional bus service. Federal grant conditions required fair and equitable arrangements protecting unionized transit employees who might be dismissed or displaced. TTA had negotiated with the Amalgamated Transit Union (ATU), and its attorney asked whether G.S. § 95-98 prohibited an agreement or made it unenforceable.

G.S. § 95-98 declares certain agreements between North Carolina governmental units and labor unions void. The AG noted that its wording appeared to cover unions acting for a unit's own public employees, but cited federal decisions suggesting the prohibition could reach further. Because ATU represented workers at mass transit providers operating in TTA's service area, the AG expressed "serious concerns regarding the enforceability of a contract between the TTA and ATU." The opinion did not declare the proposed contract void.

The opinion then quoted 29 C.F.R. § 215.3(a)(2). Where state or local bargaining restrictions apply, the Department of Labor may use special procedures to satisfy federal law. The regulation gives an example: protective terms acceptable to employee and applicant representatives may be put in a local government resolution. The AG said it knew of no legal prohibition against TTA adopting a resolution consistent with Section 5333(b). It did not evaluate a particular resolution or guarantee federal approval of one.

Currency note

This opinion was issued in 1994. For a current transit grant or labor arrangement, check the present text of G.S. § 95-98 and the applicable federal conditions. The opinion addresses the proposed TTA agreement as described then.

Background and statutory framework

TTA was organized under the Regional Public Transportation Act and had statutory authority to obtain federal grants. The opinion cites Section 5333(b) of the Federal Transit Act as requiring protective terms for affected unionized transit employees. Its legal question was the enforceability of an agreement with ATU in light of G.S. § 95-98.

The AG relied on Atkins v. City of Charlotte, Winston-Salem/Forsyth County v. Phillps, and North Carolina Prisoners' Labor Union v. Jones for concern that courts might read the state prohibition more broadly than agreements with a public body's own employees. The cited Labor Department regulation offered a possible route through a resolution rather than a union contract.

Common questions

Q: Did the AG decide that TTA could not sign any union agreement?

A: No. The opinion expressed serious concerns about enforceability under G.S. § 95-98. It did not give a categorical ruling on a completed contract.

Q: Why did TTA need employee protective terms?

A: It had applied for a federal grant to buy coaches. Section 5333(b) required fair and equitable terms to protect unionized transit employees who could be dismissed or displaced because of TTA's use of the grant funds.

Q: What alternative did the opinion identify?

A: Under 29 C.F.R. § 215.3(a)(2), protective terms acceptable to employee and applicant representatives may be incorporated in a local government resolution when bargaining restrictions apply. The AG knew of no legal prohibition against TTA using a resolution consistent with the federal requirement.

Q: Did the opinion guarantee that a resolution would secure the grant?

A: No. It cited a federal procedure and found no state-law prohibition against a consistent resolution, but did not decide whether any proposed terms would be acceptable to the Department of Labor.

Citations from the opinion

• N.C.G.S. §§ 95-98; 160A-608; 160A-610(18)
• Chapter 160A, Article 26 (Regional Public Transportation Act)
• 49 U.S.C. § 1601 et seq. (Federal Transit Act); § 5333(b)
• 29 C.F.R. § 215.3(a)(2)
• Atkins v. City of Charlotte, 296 F. Supp. 1068 (W.D.N.C. 1969)
• Winston-Salem/Forsyth County v. Phillps, 381 F. Supp. 644 (M.D.N.C. 1974)
• North Carolina Prisoners' Labor Union v. Jones, 409 F. Supp. 937 (E.D.N.C. 1976), rev'd on other grounds, 433 U.S. 119 (1977)
• Harker v. State Use Industries, 990 F.2d 131 (4th Cir. 1993), cert. denied, 114 S. Ct. 238 (1993)
• Franks v. Oklahoma State Industries, 7 F.3d 971 (10th Cir. 1993)

Source

• Landing page: https://ncdoj.gov/opinions/research-triangle-regional-public-transportation-authority/

Original opinion text

On behalf of your client, the Research Triangle Regional Public Transportation Authority ("TTA"), you have requested an opinion as to whether G.S. § 95-98 prohibits TTA from entering into, and/or prevents the enforceability of, an agreement with a labor union representing private or public employees working in the TTA's service area.

It is our understanding that TTA is a body corporate and politic organized pursuant to Chapter 160A, Article 26 of the North Carolina General Statutes ("Regional Public Transportation Act"). The purpose of TTA is to "finance, provide, operate, and maintain for a safe, clean, reliable, adequate, convenient, energy efficient, economically and environmentally sound public transportation system" for its service area. G.S. § 160A-608. Among the general powers of TTA is the power "to obtain grants, loans and assistance from the United States . . . ." G.S. § 160A-610(18).

In order to purchase coaches for use in regional bus service, TTA has applied for a grant from the Federal Transit Administration and is attempting to satisfy the provisions of Section 5333(b) (formerly 13(c)) of the Federal Transit Act, 49 U.S.C. § 1601, et seq. Section 5333(b) requires, as a grant condition, the development of terms and conditions which are "fair and equitable" (as determined by the U.S. Department of Labor) in order to protect the interests of unionized employees of mass transportation providers operating in TTA's service area who are dismissed or displaced due to TTA's use of the federal grant money. This requirement is typically implemented by negotiated protective arrangements with local unions whose members may be negatively impacted by the grant. TTA has been so negotiating with the Amalgamated Transit Union ("ATU"). These negotiations relate to terms and conditions of employment, including hiring preferences for union members dismissed as a result of TTA's expansion of operations.

G.S. § 95-98 reads as follows:

Any agreement, or contract, between the governing authority of any city, town, county, or other municipality, or between any agency, unit, or instrumentality thereof, or between any agency, instrumentality, or institution of the State of North Carolina, and any labor union, trade union, or labor organization, as bargaining agent for any public employees of such city, town, county or other municipality, or agency or instrumentality of government, is hereby declared to be against the public policy of the State, illegal, unlawful, void and of no effect.

On its face, G.S. § 95-98 seems to invalidate only those agreements with unions acting as bargaining agent for the public employees of the governmental unit. However, judicial interpretations of the statute indicate a broad legislative proscription against contracts with unions.

In Atkins v. City of Charlotte, 296 F. Supp. 1068 (W.D.N.C. 1969), the U.S. District Court for the Western District of North Carolina, in upholding the constitutionality of G.S. § 95-98, stated that the statutory provision "simply voids contracts between units of government within North Carolina and labor unions and expresses the public policy of North Carolina to be against such collective bargaining contracts." Id. at 1077. Notably, although the facts of the case applied to public employees, the court appeared to apply the statutory provisions to all contracts between public bodies and labor unions and did not appear to limit the scope of the statute to contracts between a public body and its employees. We note that the employees for whom the ATU is negotiating may become public employees under the priority of re-employment provisions of Section 5333(b).

In Winston-Salem/Forsyth County v. Phillps, 381 F. Supp. 644 (M.D.N.C. 1974), the U.S. District Court for the Middle District of North Carolina explained that one rationale for prohibiting contracts between public bodies and public employee unions is that these contracts allow public employees to become part of the "political decision-making process" in a way that provides those employees an advantage over all other citizens. Id. at 647. The General Assembly's public policy determination that it is detrimental to the State's interests to allow the degree of intrusion into public decisions inherent in agreements with public employee collective bargaining units, weighs against adopting a different standard where negotiated agreements with private employee units are involved. Adoption of a different standard could, under the priority of re-employment provisions of Section 5333(b), allow collective bargaining units to achieve indirectly that which the General Assembly has prohibited them from achieving directly.

Citing Atkins, the U.S. District Court for the Eastern District of North Carolina stated that "[p]rison administrators may refuse to contract with any group or union of inmates; moreover, any such contract is void under the laws of North Carolina and of no effect whatsoever." North Carolina Prisoners' Labor Union v. Jones, 409 F. Supp. 937, 945 (E.D.N.C. 1976), rev'd on other grounds, 433 U.S. 119 (1977) (stating that "[c]ollective bargaining for inmates with respect to . . . terms and conditions of incarceration is illegal under N.C.G.S. § 95-98 (1975)." 433 U.S. 122 (n.1). Since inmates are not public employees, see Harker v. State Use Industries, 990 F.2d 131 (4th Cir. 1993), cert. denied, U.S. , 114 S. Ct. 238 (1993); Franks v. Oklahoma State Industries, 7 F.3d 971 (10th Cir. 1993), the court's statement suggests that the scope of the prohibition of G.S. § 95-98 against contracting with labor unions extends beyond contracts with public employee units.

Based on these cases, we have serious concerns regarding the enforceability of a contract between the TTA and ATU. We note, however, that the Department of Labor has anticipated the inability of some states to enter such contracts and provided in its regulations as follows: In instances where states or political subdivisions are subject to legal restrictions on bargaining with employee organizations, the Department of Labor will utilize special procedures to satisfy the Federal statute in a manner which does not contravene state or local law. For example, employee protective terms and conditions, acceptable to both employee and applicant representatives, may be incorporated into a resolution adopted by the involved local government.

29 C.F.R. § 215.3(a)(2). We are aware of no legal prohibition against TTA's adopting a resolution to provide protective arrangements consistent with Section 5333(b).

Andrew A. Vanore, Jr., Chief Deputy Attorney General

John R. McArthur, Chief Counsel