FREQUENTLY ASKED QUESTIONS
Q 1 – What would be the Union’s status if not a tax exempt non-profit corporation?
A. The Union’s status would be that of an Unincorporated Association (UA). That is the
traditional status of unions throughout the country and the one held by other unions in
Oregon including SEIU Local 49 and the American Federation of Teachers (AFT)
Oregon.
As a UA, the Union would be governed by its Bylaws, Administrative Policies and
Procedures and other governing documents as well as Federal Labor Laws that govern
unions including the National Labor Relations Act (NLRA) and the Labor Management
Reporting and Disclosure Act (LMRDA). Other State and Federal laws applying to
matters like election activities and holding property would continue to apply.
As a UA and labor organization, the Union would continue to be tax exempt under
Section 401(c)(5) of the Internal Revenue Code for Federal tax purposes an ORS
317.080(1) for Oregon tax purposes.
Q 2 -- What rules or procedures in the statute are in conflict with our Union’s Bylaws?
A. There are many, but some of the major differences are:
The NPC statute [ORS 65.201(1)] and can be read to
require, at great cost to the Union, that the Union hold
meetings of the full membership (tens of thousands of
members) every year;
Under the Union’s rules and Federal law, any member can
bring a law suit to recover monies improperly spent by the
Board or Officers (derivative suits); under the NPC statute
(ORS 65.174), only “members having two percent of the
NPC’s voting power or 20 members, whichever is less” can
bring such a law suit;
The NPC statute (65.254) allows two or more members to
enter into “voting agreements” with other members that are
binding for up to 10 years and can be on any subject. Under
the Union’s rules, no individual can bind others to vote in
any particular way for any period of time;
The NPC statute [65.324(2), (4) and (5)] makes it much
harder to remove directors for inappropriate actions and, in
some instances, would require the vote of the entire
membership;
Q 3 – Are there protections/benefits for either the Union as an organization or Union
members, officers and agents that would be lost if we ceased to be a NPC instead of a
UA?
No. The major protection provided by a NPC structure is the protection of members,
officers and directors from personal liability for actions taken by the corporation/union.
Concerning personal liability concerns, federal labor law applicable to Local 503
provides at least the same sort of protection from personal liability that the State
corporate law provides. Thus, Section 3(b) of the National Labor Relations Act provides
that “[a]ny money judgment against a labor organization in a District Court of the United
States shall be enforceable only against the organization as an entity and against its
assets, and shall not be enforceable against any individual member or his assets.” The
United States Supreme Court has given the statute a more expansive reading, stating that
§ 301(b) “evidences ‘a congressional intention that the union as an entity, like a
corporation, should in the absence of an agreement be the sole recovery for injury
inflicted by it.’” Atkinson v. Sinclair Refining Co., 370 U.S. 238, 249 (1962). These same
protections apply to state lawsuits as well as federal lawsuits. Evangelista v.
Inlandboatmen’s Union of the Pacific, 777 F.2d 1390, 1400 (9th Cir. 1985) In fact, the
U.S. Supreme Court has held that the same sorts of protections can apply to members,
officers and agents of a union even if the union has not authorized the actions undertaken
by the member, officer or agent. See, Complete Auto Transit, Inc. v. Reis, 451 U.S. 401
(1981) (no personal liability for unauthorized strike activity).
In short, the protection/benefit provided to Union, its members and agents under NPC
status are also provided under federal labor law. In addition, a review of the applicable
corporate status reveals that the statute provides no added protections and/or benefits that
are not already provided by the Union’s Bylaws and the provisions of federal labor laws.
A. Q 4 -- Why is it not in the Union’s best interest to continue wholly as a NPC?
In 1945, it made perfect sense for the Oregon State Employees Association (OSEA) –
which was not a Union at the time – to incorporate as a non-profit, tax exempt
organization. Doing so provided its members with protection from personal liability and
allowed the organization to operate as a tax exempt entity. Over the years, however,
OSEA became a labor union – first as a public employee union and later as a union that
represents private sector employees as well – and thereby came to be governed by the
whole array of Federal and State laws that apply to labor organizations.
As explained in Question 1 above, the protections that once were dependent on corporate
status are now available to the Union regardless of whether or not it is an NPC or a UA.
And, as explained in Question 2 above, the Union’s corporate status creates significant
conflicts between the corporate statute and the Union’s own governing documents.
Continuing to operate in that situation is not in the best interest of the union for at least
two major reasons.
First, it is plainly in the Union’s and its members’ best interest to be governed by its own
policies, rules, procedures, governing documents and applicable labor laws than to have
those things imposed on them under a law that was designed to regulate the affairs of
corporations that do not have the same interests, objectives and structures as do unions.
Second, the only way that the Union could conform with the NPC statute would be to do
wholesale changes in our Bylaws and other governing documents that would include,
among other things: massively expensive annual full membership meetings; restrictions
on members’ ability to hold officers accountable; allowing voting arrangements that are
contrary to member free choice, and; affording special protections to directors or other
officers who have acted improperly.
In short, choosing to continue to subject ourselves to rules and procedures designed for
corporations that do not reflect our values and history instead of ensuring the application
of rules and procedures developed by members over decades to govern this Union, has no
benefits on the Union or its members and, instead, only imposes unnecessary and
inappropriate burdens and responsibilities on the Union.
Q 5 – Why do we need to keep the NPC (as a Building Corporation) to hold our real property
(the Salem and Portland Buildings)?
A. Under Oregon law, it is preferable to hold real property (buildings and land) through a
corporation than through an unincorporated association.
Q 6 -- Who will have authority to make decisions about our real property (the Salem and Portland
Buildings)
A. The authority and the decision makers will be the same as exist now -- the Board of Directors,
the Statewide Officers and, when it chooses to act on specific matters, the General Council. In
this regard, the restated Articles of Incorporation for the NPC make clear that the Union – and the
procedures set out in its Bylaws and governing documents – will guide and control the actions of
the NPC Building Corporation. This represents no change in authority and decision making. In
fact, when the Union purchased the Portland property it now owns, that transaction was approved
by the Board of Directors.
Q 7: Does this proposed change impact the authority of General Council to change our Union’s
Bylaws, the Administrative Policies and Procedures or other governing documents?
A. No. Except for changing the name and specific function of the NPC and allowing it to operate
under its own governing documents and the laws applicable to unions, the changes being
recommended do nothing to restrict or alter the authority of the General Council – or the Board of
Directors or the Statewide Officers.
CHRONOLOGY OF EVENTS CONCERNING CORPORATE STATUS
1943
--
State Employees Association (OSEA) formed; Constitution and Bylaws
adopted. OSEA acts as a lobbying and advocacy group for State
employees.
1945
--
OSEA incorporated as Oregon tax exempt non-profit corporation.
1973
--
Oregon passes Public Employee Collective Bargaining Act (PECBA)
allowing State employees to secure union representation.
1973
--
OSEA negotiates Central Collective Bargaining Contract – its first
collective bargaining agreement.
1980
--
General Council approves OSEA affiliation with SEIU and changes name
to Oregon Public Employees Union (OPEU).
1981
--
Corporate name change filed with Secretary of State (February 27, 1981).
1981
--
General Council directs changes in corporate Articles of Incorporation that
appear never to have been filed.
1988
--
Union certified as a collective bargaining representative for employees of
first private sector employer (CODA) bringing Union under jurisdiction of
Federal private sector labor laws.
1989 --
The Oregon Nonprofit Corporation statute was drastically changed.
2000
--
General Council directs change in Union’s name to SEIU Local 503
Oregon Public Employees Union to be effective January 1, 2001.
2001
--
Corporate name change filed with Secretary of State (February 26, 2001).
2006
--
Change in corporate agent (to Leslie Frane) filed with Secretary of State
(12/1/06).
2010
--
Amendment of Articles of Incorporation to allow Union to operate under
its Bylaws and governing documents filed 8/31/10.
2010
--
Change in corporate agent (to Heather Conroy) filed 12/7/10.
2012
--
Court decision applying current NPC statute to Local 503. (July 27, 2012).