Sunday, July 8, 2012

California Paycheck Deception Initiative


Workers in California must turn their attention to defeating the “Special Interest Money Now Act” (“Paycheck Deception Act”) that is on this November balloting. This initiative is an attempt by wealthy and political dominant billionaires to take control of California politics by eliminating the ability of labor organizations to support and elect candidates who believe in workers’ safety and fair wages and instead buy politicians who will act solely in the interest of the wealthy.

Major Provisions

In a few words the major provisions of this initiative limit the rights of labor unions to contribute money to a candidate's campaign for political office or to any committee controlled by a candidate. Specifically, it prohibits:

  • Labor unions from contributing money for these purposes
  • Government contractors from contributing money for these purposes in cases when the candidate, if elected, could play a role in awarding a government contract to the contractor
  • Corporations, government contractors, government employers, and labor unions cannot deduct wages from employees and union members to be used for political purposes
  • Corporation and labor unions can receive voluntary contributions, but not through payroll deductions. Instead, voluntary contributions must be made through other means such as a check, transfer from a bank account, or credit card. These voluntary contributions would have to be authorized in writing by the employee, every year.


The sponsors of the initiative are no surprise. They include billionaires A Jerrold Perenchio and an array of Orange County political groups. Top contributors include William E. Bloomfield Jr., Larry Smith, Paycheck Protection 2010, Charles Munger, Jr., Timothy Draper, William Edwards, Wayne Hughes, Frank E. Baxter, Citizen Power Campaign, Lion Club OC, and the Howard Jarvis Taxpayers Assoc.

Prior Attempts to Limit Unions’ Ability to Contribute to Candidates

In 2010, a similar proposal attempted but failed to reach the ballot.

Earlier in 2005, Governor Schwarzenegger’s special election included Proposition 75, “Public Employee Union Dues Restrictions on Political Contributions. Unlike the current Paycheck Deception Act, Prop 75 targeted public sector unions, not all unions. Prop 75 would have required public sector unions to obtain annual written permission from each member that specified: the amount of fees that could be used by the unions for general political purposes and or an amount that could be used by the unions for a political contribution to a specific political committee, which the employee had to identify. Prop 75 was defeated. The final vote count was 53.5% to 46.5%.

In 1998, there was Proposition 226, “Political Contributions by Employees, Union Members, and Foreign Entities Initiative Statute” that also tried to stop payroll deductions. Prop 226 required all employers and labor organizations to obtain employee or member's permission before withholding wages or using union dues or fees for political contributions. Employee or member's permission had to be obtained annually using a prescribed form. The final vote count was 54.33% to 45.77%.

Utah, Idaho, Ohio, Wyoming, Michigan, and Washington State all have similar “Paycheck Protection” laws. An example of the possible impact comes from Utah. The Utah Education Association reported that since a paycheck protection measure became law they experienced a drop in voluntary contributions for political purposed from 68% to 7%.

Proposed Statute

The Stop Special Interest Money Now Act would amend California Government Codes as follows.

§85150 (a) Notwithstanding any other provision of law and this Title, no corporation, labor union, or public employee labor union shall make a contribution to any candidate, candidate controlled committee; or to any other committee, including a political party committee, if such funds will be used to make contributions to any candidate or candidate controlled committee.

(b) Notwithstanding any other provision of law and this Title, no government contractor, or committee sponsored by a government contractor, shall make a contribution to any elected officer or committee controlled by any elected officer if such elected officer makes, participates in making or in any way attempts to use his or her official position to influence the granting, letting, or awarding of a public contract to the government contractor, during the period in which the decision to grant, let, or award the contract is to be made and during the term of the contract.

§85151 (a) Notwithstanding any other provision of law and this Title, no corporation, labor union, public employee labor union, government contractor, or government employer shall deduct from an employee's wages, earnings, or compensation any amount of money to be used for political purposes.

(b) This section shall not prohibit an employee from making voluntary contributions to a sponsored committee of his or her employer, labor union, or public employee labor union in any manner, other than that which is prohibited by subdivision (a), so long as all such contributions are given with that employee's written consent, and that consent shall be effective for no more than one (1) year.

(c) This section shall not apply to deductions for retirement benefit, health, life, death or disability insurance, or other similar benefit, nor shall it apply to an employee's voluntary deduction for the benefit of a charitable organization organized under Title 26 United States Code section 501(c)(3).

§85152 For purposes of this Article, the following definitions shall apply:

(a) "Corporation" means every corporation organized under the laws of this state, any other state of the United States, or the District of Columbia, or under an act of the Congress of the United States.

(b) "Government contractor" means any person, other than an employee of a government employer, who is a party to a contract between the person and a government employer to provide goods, real property, or services to a government employer. Government contractor includes a public employee labor union which is a party to a contract with a government employer.

(c) "Government employer" means the State of California, or any of its political subdivisions, including, but not limited to, counties, cities, charter counties, charter cities, charter city and counties, school districts, University of California, special districts, boards, commissions, and agencies, but not including the United States Government.

(d) "Labor union" means any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work.

(e) "Political purposes" means a payment made to influence or attempt to influence the action of voters for or against the nomination or election of a candidate or candidates, or the qualification or passage of any measure or any payment received by or made at the behest of a candidate, a controlled committee, a committee of a political party; including a state central committee, and county central committee, or an organization formed or existing primarily for political purposes, including, but not limited to, a political action committee established by any membership organization, labor union, public employee labor union, or corporation.

(f) "Public employee labor union" means a labor union in which the employees participating in the labor union are employees of a government employer.

(g) All other terms used this Article that are defined by the Political Reform Act of 1974, as amended (commencing with section 81000 et seq.), or by regulation enacted by the Fair Political Practices Commission, shall have the same meaning as provided therein, as they existed on January 1,2011.

SECTION 3. Implementation

(a) If any provision of this measure, or part of it, or the application of any such provision or part to any person, organization, or circumstance, is for any reason held to be invalid or unconstitutional, then the remaining provisions, parts, and applications shall remain in effect without the invalid provision, part, or application.

(b) This measure is not intended to interfere with any existing contract or collective bargaining agreement. Except as governed by the National Labor Relations Act, no new or amended contract or collective bargaining agreement shall be valid if it violates this measure.

(c) This measure shall be liberally construed to further its purposes. In any legal action brought by an employee or union member to enforce the provisions of this Act, the burden shall be on the employer or labor union to prove compliance with the provisions herein.

(d) Notwithstanding Government Code section 81012, the provisions of this measure may not be amended by the Legislature. This measure may only be amended or repealed by a subsequent initiative measure or pursuant to Article II, Section 10(e).


The passage of this initiative would devastate unions’ election rights as follows:

§ Although under the proposed law both unions and corporations may still contribute to political activities, but since union contributions come primarily from members, as opposed to companies who have budgets for political activities, this initiative would primarily have a devastating impact on unions.

§ Corporations and wealthy individuals tend to fund ballot measures, Super PACS, and political parties, not individual candidates. Therefore, again the impact on unions is highly disproportionate.

§ Proposed provision §85151(a) prohibits any deduction from employee’s wages, earnings, or compensation for any amount of money to be used for political purposes. That means that voluntary contributions under proposed §85151(b) would have to come through writing checks or making transfers from bank accounts, or credit card transactions. This would be an onerous process for unions.

§ As Common Cause, a non-profit citizen lobbying organization, points out in a memorandum, workers, especially lower-wage workers, are less likely to have bank accounts to make these transactions possible, even if they wanted to make voluntary contributions.

§ In addition, for voluntary contributions, unions would have to secure written consent from employees giving voluntary contributions that must be renewed yearly. This would pose a huge obstacle to the collection of even voluntary contributions. Every year unions would have to secure new consent forms from employees willing to give voluntary contributions.


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