New York Telephone Co. v. New York State Department of Labor

440 U.S. 519, 99 S. Ct. 1328, 59 L. Ed. 2d 553, 1979 U.S. LEXIS 76, 100 L.R.R.M. (BNA) 2896

• Court: Supreme Court of the United States
• Decided: March 21, 1979
• Docket: 77-961
• Status: Published

Opinions

Mr. Justice Stevens

announced the judgment of the Court and delivered an opinion, in which Mr. Justice White and Mr. Justice Rehnquist joined.

The question presented is whether the National Labor Relations Act, as amended, implicitly prohibits the State of New York from paying unemployment compensation to strikers.

Communication Workers of America, AFL-CIO (CWA), represents about 70% of the nonmanagement employees of companies affiliated with the Bell Telephone Co. In June 1971, when contract negotiations had reached an impasse, CWA recommended a nationwide strike. The strike commenced on July 14, 1971, and, for most workers, lasted only a week. In New York, however, the 38,000 CWA members employed by petitioners remained on strike for seven months.¹

New York’s unemployment insurance law normally authorizes the payment of benefits after approximately one week of unemployment.² If a claimant’s loss of employment is caused by “a strike, lockout, or other industrial controversy in the establishment in which he was employed,” § 592 (1) of the law suspends the payment of benefits for an additional 7-week period.³ In 1971, the maximum weekly benefit of $75 was payable to an employee whose base salary was at least $149 per week.

After the 8-week waiting period, petitioners’ striking employees began to collect unemployment compensation. During the ensuing five months more than $49 million in ben-fits were paid to about 33,000 striking employees at an average rate of somewhat less than $75 per week. Because New York’s unemployment insurance system is financed primarily by employer contributions based on the benefits paid to former employees of each employer in past years, a substantial part of the cost of these benefits was ultimately imposed on petitioners.⁴

Petitioners brought suit in the United States District Court for the Southern District of New York against the state officials responsible for the administration of the unemployment compensation fund. They sought a declaration that the New York statute authorizing the payment of benefits to strikers conflicts with federal law and is therefore invalid, an injunction against the enforcement of § 592 (1), and an award recouping the increased taxes paid in consequence of the disbursement of funds to their striking employees. After an 8-day trial, the District Court granted the requested relief. 434 P. Supp. 810 (1977).

The District Court concluded that the availability of unemployment compensation is a substantial factor in the worker’s decision to remain on strike, and that in this case, as in others, it had a measurable impact on the progress of the strike.⁵ The court held that the payment of such compensation by the State conflicted “with the policy of free collective bargaining established in the federal labor laws and is therefore invalid under the supremacy clause of the United States Constitution.” ⁶ Id., at 819.

The Court of Appeals for the Second Circuit reversed. It did not, however, question the District Court’s finding that the New York statute “alters the balance in the collective bargaining relationship and therefore conflicts with the federal labor policy favoring the free play of economic forces in the collective bargaining process.” 566 P. 2d 388, 390. The Court of Appeals noted that Congress has not expressly forbidden state unemployment compensation for strikers; the court inferred from the legislative history of the National Labor Relations Act,⁷ and Title IX of the Social Security Act,⁸ as well as from later developments, that the omission was deliberate. Accordingly, without questioning the premise that federal law generally requires that “State statutes which touch or concern labor relations should be neutral,” the Court of Appeals concluded that “th[is] conflict is one which Congress has decided to tolerate.” Id., at 395.

The importance of the question led us to grant certiorari. 435 U. S. 941. We now affirm. Our decision is ultimately governed by our understanding of the intent of the Congress that enacted the National Labor Relations Act on July 5, 1935, and the Social Security Act on August 14 of the same year. Before discussing the relevant history of these statutes, however, we briefly summarize (1) the lines of pre-emption analysis that have limited the exercise of state power to regulate private conduct in the labor-management area and (2) the implications of our prior cases, both inside and outside the labor area, involving the distribution of public benefits to persons unemployed by reason of a labor dispute.

I

The doctrine of labor law pre-emption concerns the extent to which Congress has placed implicit limits on “the permissible scope of state regulation of activity touching upon labor-management relations.” Sears, Roebuck & Co. v. Carpenters, 436 U. S. 180, 187. Although this case involves the exploration of those limits in a somewhat novel setting, it soon becomes apparent that much of that doctrine is of limited relevance in the present context.

There is general agreement on the proposition that the “animating force” behind the doctrine is a recognition that the purposes of the federal statute would be defeated if state and federal courts were free, without limitation, to exercise jurisdiction over activities that are subject to regulation by the National Labor Relations Board. Id., at 218 (Brennan, J., dissenting) .⁹ The overriding interest in a uniform, nationwide interpretation of the federal statute by the centralized expert agency created by Congress not only demands that the NLRB’s primary jurisdiction be protected, it also forecloses overlapping state enforcement of the prohibitions in § 8 of the Act,¹⁰ Plankinton Packing Co. v. Wisconsin Employment Relations Board, 338 U. S. 953, as well as state interference with the exercise of rights protected by § 7 of the Act.¹¹ Automobile Workers v. Russell, 356 U. S. 634, 644.¹² Consequently, almost all of the Court’s labor law decisions in which state regulatory schemes have been found to be preempted have involved state efforts to regulate or to prohibit private conduct that was either protected by § 7, prohibited by § 8,¹³ or at least arguably so protected or prohibited.¹⁴

In contrast to those decisions, there is no claim in this case that New York has sought to regulate or prohibit any conduct subject to the regulatory jurisdiction of the Labor Board under § 8.¹⁵ Nor are the petitioning employers pursuing any claim of interference with employee rights protected by § 7. The State simply authorized striking employees to receive unemployment benefits, and assessed a tax against the struck employers to pay for some of those benefits, once the economic warfare between the two groups reached its ninth week. Accordingly, beyond identifying the interest in national uniformity underlying the doctrine, the cases comprising the main body of labor pre-emption law are of little relevance in deciding this case.

There is, however, a pair of decisions in which the Court has held that Congress intended to forbid state regulation of economic warfare between labor and management, even though it was clear that none of the regulated conduct on either side was covered by the federal statute.¹⁶ In Teamsters v. Morton, 377 U. S. 252, the Court held that an Ohio court could not award damages against a union for peaceful secondary picketing even though the union's conduct was neither protected by § 7 nor prohibited by § 8. Because Congress had focused upon this type of conduct and elected not to proscribe it when § 303 of the Labor Management Relations Act¹⁷ was enacted, the Court inferred a deliberate legislative intent to preserve this means of economic warfare for use during the bargaining process.¹⁸

More recently, in Machinists v. Wisconsin Employment Relations Comm’n, 427 U. S. 132, the Court held that the state Commission could not prohibit a union’s concerted refusal to work overtime. Although this type of partial strike activity had not been the subject of special congressional consideration, as had the secondary picketing involved in Morton, the Court nevertheless concluded that it was a form of economic self-help that was “ 'part and parcel of the process of collective bargaining,’ ” 427 U. S., at 149 (quoting NLRB v. Insurance Agents, 361 U. S. 477, 495), that Congress implicitly intended to be governed only by the free play of economic forces. The Court identified the crucial inquiry in its pre-emption analysis in Machinists as whether the exercise of state authority to curtail or entirely prohibit self-help would frustrate effective implementation of the policies of the National Labor Relations Act.¹⁹

The economic weapons employed by labor and management in Morton, Machinists, and the present case are similar, and petitioners rely heavily on the statutory policy,. emphasized in the former two cases, of allowing the free play of economic forces to operate during the bargaining process. Moreover, because of the twofold impact of § 592 (1), which not only provides financial support to striking employees but also adds to the burdens of the struck employers, see n. 5, supra, we must accept the District Court’s finding that New York’s law, like the state action involved in Morton and Machinists, has altered the economic balance between labor and management.²⁰

But there is not a complete unity of state regulation in the three cases.²¹ Unlike Morton and Machinists, as well as the main body of labor pre-emption cases, the case before us today does not involve any attempt by the State to regulate or prohibit private conduct in the labor-management field. It involves a state program for the distribution of benefits to certain members of the public. Although the class benefited is primarily made up of employees in the State and the class providing the benefits is primarily made up of employers in the State, and although some of the members of each class are occasionally engaged in labor disputes, the general purport of the program is not to regulate the bargaining relationships between the two classes but instead to provide an efficient means of insuring employment security in the State.²² It is therefore clear that even though the statutory policy underlying Morton and Machinists lends support to petitioners’ claim, the holdings in those cases are not controlling. The Court is being asked to extend the doctrine of labor law pre-emption into a new area.

II

The differences between state laws regulating private conduct and the unemployment-benefits program at issue here are important from a pre-emption perspective. For a variety of reasons, they suggest an affinity between this case and others in which the Court has shown a reluctance to infer a pre-emptive congressional intent.

Section 591 (1) is not a “state la[w] regulating the relations between employees, their union, and their employer,” as to which the reasons underlying the pre-emption doctrine have their “greatest force.” Sears, 436 U. S., at 193. Instead, as discussed below, the statute is a law of general applicability. Although that is not a sufficient reason to exempt it from preemption, Farmer v. Carpenters, 430 U. S. 290, 300, our cases have consistently recognized that a congressional intent to deprive the States of their power to enforce such general laws is more difficult to infer than an intent to pre-empt laws directed specifically at concerted activity. See id., at 302; Sears, supra, at 194-195; Cox, supra n. 16, at 1356-1357.

Because New York’s program, like those in other States, is financed in part by taxes assessed against employers, it is not strictly speaking a public welfare program.²³ It nevertheless remains true that the payments to the strikers implement a broad state policy that does not primarily concern labor-management relations, but is implicated whenever members of the labor force become unemployed. Unlike most States,²⁴ New York has concluded that the community interest in the security of persons directly affected by a strike outweighs the interest in avoiding any impact on a particular labor dispute.

As this Court has held in a related context, such unemployment benefits are not a form of direct compensation paid to strikers by their employer; they are disbursed from public funds to effectuate a public purpose. NLRB v. Gullett Gin Co., 340 U. S. 361, 364-365. This conclusion is no less true because New York has found it most efficient to base employer contributions to the insurance program on “experience ratings.” Id., at 365. Although this method makes the struck, rather than all, employers primarily responsible for financing striker benefits, the employer-provided moneys are nonetheless funneled through a public agency, mingled with other — and clearly public — funds, and imbued with a public purpose.²⁵ There are obvious reasons, in addition, why the pre-emption doctrine should not “hinge on the myriad provisions of state unemployment compensation laws.” Ibid.26

■New York’s program differs from state statutes expressly regulating labor-management relations for another reason. The program is structured to comply with a federal statute, and as a consequence is financed, in part, with federal funds. The federal subsidy mitigates the impact on the employer of any distribution of benefits. See n. 4, supra. More importantly, as the Court has pointed out in the past, the federal statute authorizing the subsidy provides additional evidence of Congress’ reluctance to limit the States’ authority in this area.

Title IX of the Social Security Act of 1935 established the participatory federal unemployment compensation scheme. The statute authorizes the provision of federal funds to States having programs approved by the Secretary of Labor.²⁷ In Ohio Bureau of Employment Services v. Hodory, 431 U. S. 471, an employee who was involuntarily deprived of his job because of a strike claimed a federal right under Title IX to collect benefits from the Ohio Bureau. Specifically, he contended that Ohio’s statutory disqualification of claims based on certain labor disputes was inconsistent with a federal requirement that all persons involuntarily unemployed must be eligible for benefits.

Our review of both the statute and its legislative history convinced us that Congress had not intended to prescribe the nationwide rule that Hodory urged us to adopt. The voluminous history of the Social Security Act made it abundantly clear that Congress intended the several States to have broad freedom in setting up the types of unemployment compensation that they wish.²⁸ We further noted that when Congress wished to impose or forbid a condition for compensation, it did so explicitly; the absence of such an explicit condition was therefore accepted as a strong indication that Congress did not intend to restrict the States’ freedom to legislate in this area.²⁹

The analysis in Ho dory confirmed this Court’s earlier interpretation of Title IX of the Social Security Act in Steward Machine Co. v. Davis, 301 U. S. 548,³⁰ and was itself confirmed by the Court’s subsequent interpretation of Title IV of the Act in Batterton v. Francis, 432 U. S. 416.³¹ These cases demonstrate that Congress has been sensitive to the importance of the States’ interest in fashioning their own unemployment compensation programs and especially their own eligibility criteria.³² It is therefore appropriate to treat New York’s statute with the same deference that we have afforded analogous state laws of general applicability that protect interests “deeply rooted in local feeling and responsibility.” With respect to such laws, we have stated “that, in the absence of compelling congressional direction, we could not infer that Congress had deprived the States of the power to act.” San Diego Building Trades Council v. Garmon, 359 U. S. 236, 244.³³

III

Pre-emption of state law is sometimes required by the terms of a federal statute. See, e. g., Ray v. Atlantic Richfield Co., 435 U. S. 151, 173-179. This, of course, is not such a case. Even when there is no express pre-emption, any proper application of the doctrine must give effect to the intent of Congress. Malone v. White Motor Corp., 435 U. S. 497, 504. In this case there is no evidence that the Congress that enacted the National Labor Relations Act in 1935 intended to deny the States the power to provide unemployment benefits for strikers.³⁴ Cf. Hodory, 431 U. S., at 482. Far from the compelling congressional direction on which preemption in this case would have to be predicated, the silence of Congress in 1935 actually supports the contrary inference that Congress intended to allow the States to make this policy determination for themselves.

New York was one of five States that had an unemployment insurance law before Congress passed the Social Security and the Wagner .Acts in the summer of 1935.³⁵ Although the New York law did not then assess taxes against employers on the basis of their individual experience, it did authorize the payment of benefits to strikers out of a general fund financed by assessments against all employers in the State. The junior Senator from New York, Robert Wagner, was a principal sponsor of both the National Labor Relations Act and the Social Security Act;³⁶ the two statutes were considered in Congress simultaneously and enacted into law within five weeks of one another; and the Senate Report on the Social Security bill, in the midst of discussing the States’ freedom of choice with regard to their unemployment compensation laws, expressly referred to the New York statute as a qualifying example.³⁷ Even though that reference did not mention the subject of benefits for strikers, it is difficult to believe that Senator Wagner³⁸ and his colleagues were unaware of such a controversial provision, particularly at a time when both unemployment and labor unrest were matters of vital national concern.

Difficulty becomes virtual impossibility when it is considered that the issue of public benefits for strikers became a matter of express congressional concern in 1935 during the hearings and debates on the Social Security Act.³⁹ As already noted, the scheme of the Social Security Act has always allowed the States great latitude in fashioning their own programs. From the beginning, however, the Act has contained a few specific requirements for federal approval. One of these provides that a State may not deny compensation to an otherwise qualified applicant because he had refused to accept work as a strikebreaker, or had refused to resign from a union as a condition of employment.⁴⁰ By contrast, Congress rejected the suggestions of certain advisory members of the Roosevelt administration as well as some representatives of citizens and business groups that the States be prohibited from providing benefits to strikers.⁴¹ The drafters of the Act apparently concluded that such proposals should be addressed to the individual state legislatures “without dictation from Washington.” ⁴²

Undeniably, Congress was aware of the possible impact of unemployment compensation on the bargaining process. The omission of any direction concerning payment to strikers in either the National Labor Relations Act or the Social Security Act implies that Congress intended that the States be free to authorize, or to prohibit, such payments.⁴³

Subsequent events confirm our conclusion that the congressional silence in 1935 was not evidence of an intent to pre-empt the States’ power to make this policy choice. On several occasions since the 1930’s Congress has expressly addressed the question of paying benefits to strikers, and especially the effect of such payments on federal labor policy.⁴⁴ On none of these occasions has it suggested that such payments were already prohibited by an implicit federal rule of law. Nor, on any of these occasions has it been willing to supply the prohibition. The fact that the problem has been discussed so often supports the inference that Congress was well aware of the issue when the Wagner Act was passed in 1935, and that it chose, as it has done since, to leave this aspect of unemployment compensation eligibility to the States.

In all events, a State’s power to fashion its own policy concerning the payment of unemployment compensation is not to be denied on the basis of speculation about the unexpressed intent of Congress. New York has not sought to regulate private conduct that is subject to the regulatory jurisdiction of the National Labor Relations Board. Nor, indeed, has it sought to regulate any private conduct of the parties to a labor dispute. Instead, it has sought to administer its unemployment compensation program in a manner that it believes best effectuates the purposes of that scheme. In an area in which Congress has decided to tolerate a substantial measure of diversity, the fact that the implementation of this general state policy affects the relative strength of the antagonists in a bargaining dispute is not a sufficient reason for concluding that Congress intended to pre-empt that exercise of state power.

The judgment of the Court of Appeals is

Affirmed.

1 Petitioners — New York Telephone Co., American Telephone & Telegraph Co. Long Lines Department, Western Electric Co., and Empire City Subway Co. — are the four Bell Telephone Co. affiliates with facilities and employees in the State of New York.

The goal of the New York strike was to disassociate the New York units of the CWA from the nationally settled-upon contract and to dislodge petitioners from the “pattern” bargaining format long used by Bell affiliates. Under that format, management and International CWA officials would select two Bell affiliates with early contract expiration dates and would attempt to reach a settlement at both, which would then be used as the basis for the contracts at all Bell units around the country. In order to “break the pattern,” the New York CWA units refused to ratify the pattern contract agreed upon by the International CWA and the pattern-setting affiliates during the week-long national strike in July 1971, and most members of the New York units remained on strike. Although the International originally opposed the continuation of the strike, it eventually lent its support. The strike was settled when petitioners agreed to a modest, but precedentially significant, increase in wage benefits over the national pattern. 434 F. Supp. 810, 812-814, and n. 3 (SDNY 1977).

2 N. Y. Lab. Law § 590 (7) (McKinney Supp. 1978-1979). Eligibility for benefits turns on the recipient’s total unemployment and his capability and readiness, but inability, to gain work in his “usual employment or in any other for which he is reasonably fitted by training and experience.” §§ 591 (1), 591 (2).

3 Section 592 (McKinney 1977) is entitled “Suspension of accumulation of benefit rights.” Subsection (1) of that section, entitled “Industrial controversy,” provides:

“The accumulation of benefit rights by a claimant shall be suspended during a period of seven consecutive weeks beginning with the day after he lost his employment because of a strike, lockout, or other industrial controversy in the establishment in which he was employed, except that benefit rights may be accumulated before the expiration of such seven weeks beginning with the day after such strike, lockout, or other industrial controversy was terminated.”

4 In order to explain why the entire cost was not borne by the companies, it is necessary to describe in some detail the rather complicated method used by New York to compute employer contributions. The State maintains an “unemployment insurance fund” made up of all moneys available for distribution to unemployed persons. § 550 (McKinney 1977). A separate “unemployment administration fund” is maintained to finance the administration of the unemployment law. § 551.

The unemployment fund is divided into various “accounts.” The “general account” is primarily made up of moneys derived from federal contributions under 42 U. S. C. § 1103 (a part of Title IX of the Social Security Act), the earnings on all moneys in the fund, and, occasionally, employer contributions. N. Y. Lab. Law §§577 (l)(a), 577 (2) (McKinney 1977 and Supp. 1978-1979). The money in the general account may be transferred to the administrative fund (the federally contributed money being specially set aside for this purpose, § 550 (3)) or used to finance refunds, the payment of benefits to certain employees who move into New York from out of state, and claims against “employer accounts” that show negative balances. §§577 (l)(b), 581 (l)(e) (McKinney 1977 and Supp. 1978-1979).

Employer accounts, which make up the rest of the unemployment fund, contain all of the contributions from individual employers. The rate of contributions — above a minimum level charged to all employers — is generally based on the employer’s “experience rating,” i. e., the amount of unemployment benefits attributable to employees previously in his employ. §§570 (1), 581 (McKinney 1977 and Supp. 1978-1979).

Employees are generally eligible for 156 “effective days” of benefits, which usually amount to about eight calendar months. §§ 523, 590 (4), 601 (McKinney 1977 and Supp. 1978-1979). But not all of those benefits are attributed to the account, and thus reflected in the experience rating, of the employer who last employed the claimant. First, the account is only charged with four days of benefits for every five days during which the claimant was employed by that employer. If this computation exhausts the claimant’s tenure with a given employer, the benefits are then charged to the account of the recipient’s next most recent employer, or to the general account when the class of former employers of the recipient is exhausted. §581(l)(e) (McKinney Supp. 1978-1979). Second, special provisions limit the liability of employers for claimants who previously held down two jobs or were only employed part time. Ibid. Third, any benefits reimbursed by the Federal Government are not debited to employer accounts. Ibid. Finally, and most importantly, only one-half of the last 52 effective days of benefits available to a claimant are charged to the employer's account; the other half is debited to the general account, and that account is credited with amounts received from the Federal Government pursuant to the Federal-State Extended Unemployment'Compensation Act, 26 U. S. C. § 3304. N. Y. Lab. Law § 601 (4) (McKinney Supp. 1978-1979). Hence, it is not by any means accurate to state that the struck employer is charged with all of the unemployment benefits paid to striking employees. The Federal Government, and the class of New York employers as a whole, may also pay significant amounts of the benefits, as well as of the costs of administering the program.

In this case, for example, the payments to strikers commenced at a time when the unemployment account of petitioner New York Telephone Co. (TELCO) had credits of about $40 million. During the strike, about $43 million in benefits were paid to TELCO employees. Yet, TELCO’s account was not completely depleted during the period, apparently because other accounts were debited with approximately $3 million in benefits paid to its workers.

Based on its unemployment benefits “experience” during the strike, TELCO’s contributions to its unemployment account during the next two years were increased by about $16 million over what they would have been had no strike occurred. (The like figure for petitioners as a whole was just under $18 million.) See 434 F. Supp., at 813-814, and n. 4.

5 “Notwithstanding the State’s adamant position to the contrary, I regard it as a fundamental truism that the availability to, or expectation or receipt of a substantial weekly tax-free payment of money by, a striker is a substantial factor affecting his willingness to go on strike or, once on strike, to remain on strike, in the pursuit of desired goals. This being a truism, one therefore would expect to find confirmation of it everywhere. One does.” Id., at 813-814.

In the District Court’s opinion, as well as in petitioners’ briefs in this Court, the primary emphasis is on the impact of the availability of unemployment benefits on the striking employee. The District Court’s economic-impact analysis finds further support, however, in the separate impact that the New York scheme has on the struck employer, whose unemployment insurance contribution rate will increase in rough proportion to the length of the 8-weeks-plus strike. But, as the District Court apparently recognized, under an economic-impact test it makes little difference— assuming the same amount of money is involved — whether the result of the unemployment scheme is simply to provide payments to striking workers, or simply to exact payments from struck employers, or some of both.

6 The District Court regarded the State’s interest in making the payments as not of sufficient consequence to be a factor in its determination. Id., at 819.

7 49 Stat. 449, as amended, 29 U. S. C. § 151 et seq.

8 49 Stat. 639, as amended and recodified as the Federal Unemployment Tax Act, 26 U. S. C. § 3301 et seq., 42 U. S. C. § 501 et seq., § 1101 et seq.

9 "The animating force behind the doctrine of labor law pre-emption has been the recognition that nothing could more fully serve to defeat the purposes of the Act than to permit state and federal courts, without any limitation, to exercise jurisdiction over activities that are subject to regula^ tion by the National Labor Relations Board. See Motor Coach Employees v. Lockridge, [403 U. S. 274, 286]. Congress created the centralized expert agency to administer the Act because of its conviction — generated by the historic abuses of the labor injunction, . . . that the judicial attitudes, court procedures, and traditional judicial remedies, state and federal, were as likely to produce adjudications incompatible with national labor policy as were different rules of substantive law. See Garner v. Teamsters, 346 U. S. 485, 490-491 (1953).” Sears, 436 U. S., at 218 (Brennan, J., dissenting).

10 29 U. S. C. § 158.

11 29 U. S. C. §157.

12 “Cases that have held state authority to be pre-empted by federal law tend to fall into one of two categories: (1) those that reflect the concern that ‘one forum would enjoin, as illegal, conduct which the other forum would find legal’ and (2) those that reflect the concern ‘that the [application of state law by] state courts would restrict the exercise of rights guaranteed by the Federal Acts.’ Automobile Workers v. Russell, 356 TJ. S. 634, 644 (1958). ‘[I]n referring to decisions holding state laws pre-empted by the NLRA, care must be taken to distinguish pre-emption based on federal protection of the conduct in question . . . from that based predominantly on the primary jurisdiction of the National Labor Relations Board . . . , although the two are often not easily separable.’ Railroad Trainmen v. Jacksonville Terminal Co., 394 U. S. 369, 383 n. 19 (1969).” Machinists v. Wisconsin Employment Relations Comm’n, 427 U. S. 132, 138.

13 E. g., Weber v. Anheuser-Busch, Inc., 348 U. S. 468; Garner v. Teamsters, 346 U. S. 485; Hill v. Florida ex rel. Watson, 325 U. S. 538.

14 E. g., Iron Workers v. Perko, 373 U. S. 701; Plumbers v. Borden, 373 U. S. 690; Marine Engineers v. Interlake S. S. Co., 370 U. S. 173.

15 Cf. Nash v. Florida Industrial Comm’n, 389 U. S. 235, in which the Court held that the NLRA pre-empted a state policy of denying unemployment benefits to persons who filed unfair labor practice charges against their former employer. Relying upon § 8 (a) (4) of the Act, which makes it an unfair labor practice for an employer to restrain or discriminate against an employee who files charges, the Court concluded that the state statute trenched on the employees’ federally protected rights contrary to the Supremacy Clause. 389 U. S., at 238-239.

For similar reasons, we reject petitioners’ contention that the NLRA at the least forbids the States from awarding benefits to participants in illegal strikes. See Communication Workers of America (New York Telephone Co.), 208 N. L. R. B. 267 (1974) (declaring part of the strike involved in this case illegal). Because such a rule would inevitably involve the States in ruling on the legality of strikes under § 8, it would invite precisely the harms that the pre-emption doctrine is designed to avoid.

16 Although a leading commentator in this area contends that “[t]here are numerous situations in which the conduct is not arguably protected or prohibited but state law is precluded,” Cok, Labor Law Preemption Revisited, 85 Harv. L. Rev. 1337, 1364 (1972), the Court has been faced with such situations on only the two occasions discussed in text. Dicta in other cases, however, have occasionally been cited in this context. See Hanna Mining Co. v. Marine Engineers, 382 U. S. 181, 187; Retail Clerks v. Schermerhorn, 375 U. S. 96 (negative implication of the holding); Garner v. Teamsters, supra, at 500.

17 29 U. S. C. § 187.

18 “This weapon of self-help, permitted by federal law, formed an integral part of the petitioner’s effort to achieve its bargaining goals during negotiations with the respondent. Allowing its use is a part of the balance struck by Congress between the conflicting interests of the union, the employees, the employer and the community. Electrical Workers Local 761 v. Labor Board, 366 U. S. 667, 672. If the Ohio law of secondary boycott can be applied to proscribe the same type of conduct which Congress focused upon but did not proscribe when it enacted § 303, the inevitable result would be to frustrate the congressional determination to leave this weapon of self-help available, and to upset the balance of power between labor and management expressed in our national labor policy. ‘For a state to impinge on the area of labor combat designed to be free is quite as much an obstruction of federal policy as if the state were to declare picketing free for purposes or by methods which the federal Act prohibits.’ Garner v. Teamsters Union, 346 U. S. 485, 500.” Teamsters v. Morton, 377 U. S., at 259-260.

19 “Whether self-help economic activities are employed by employer or union, the crucial inquiry regarding pre-emption is the same: whether ‘the exercise of plenary state authority to curtail or entirely prohibit self-help would frustrate effective implementation of the Act’s processes.’ Railroad Trainmen v. Jacksonville Terminal Co., 394 U. S., at 380.” 427 U. S., at 147-148. See also id., at 147 n. 8

20 What was said in Super Tire Engineering Co. v. McCorkle, 416 U. S. 115, 123-124, about a state benefits plan for strikers that did not impose a contributory burden on struck employers applies with special force in the present case with its twofold impact:

“Rather, New Jersey has declared positively that able-bodied striking workers who are engaged, individually and collectively, in an economic dispute with their employer are eligible for economic benefits. This policy is fixed and definite. It is not contingent upon executive discretion. Employees know that if they go out on strike, public funds are available. The petitioners’ claim is that this eligibility affects the collective-bargaining relationship, both in the context of a five labor dispute when a collective-bargaining agreement is in process of formulation, and in the ongoing collective relationship, so that the economic balance between labor and management, carefully formulated and preserved by Congress in the federal labor statutes, is altered by the State’s beneficent policy toward strikers. It cannot be doubted that the availability of state welfare assistance for striking workers in New Jersey pervades every work stoppage, affects every existing collective-bargaining agreement, and is a factor lurking in the background of every incipient labor contract. The question, of course, is whether Congress, explicitly or implicitly, has ruled out such assistance in its calculus of laws regulating labor-management disputes.” See also Ohio Bureau of Employment Services v. Hodory, 431 U. S. 471, 492.

21 “[T]he conduct being regulated, not the formal description of governing legal standards, ... is the proper focus of concern” in pre-emption cases. Motor Coach Employees v. Lockridge, 403 U. S. 274, 292. Nevertheless, in assessing whether there is “conflicting [state and federal] regulation” of the conduct, ibid., the scope, purport, and impact of the state program may not be ignored.

22 For these same reasons, § 591 (1) may be distinguished from a hypothetical state law, unattached to any benefits scheme, that imposes a fine on struck employers who failed to come to terms with striking employees within an allotted time period.

23 When confronted with welfare programs, the Courts of Appeals have been unwilling to imply a pre-emptive congressional intent. Super Tire Engineering Co. v. McCorkle, 550 F. 2d 903 (CA3 1977), cert. denied, 434 U. S. 827; Francis v. Chamber of Commerce, 529 F. 2d 515 (CA4 1975) (mem.) (unreported opinion), rev’d on other grounds sub nom. Batterton v. Francis, 432 U. S. 416; see ITT Lamp Division v. Minter, 435 F. 2d 989, 994 (CA1 1970), cert. denied, 402 U. S. 933. It is interesting to note that under the economic-impact test applied by the District Court in this case, there is no meaningful way, for pre-emption purposes, to distinguish between unemployment and welfare programs. See n. 5, supra.

24 This may be an overstatement. It is true that only Rhode Island has a statutory provision like New York’s that allows strikers to receive benefits after a waiting period of several weeks. See Grinnell Corp. v. Hackett, 475 F. 2d 449, 457-459 (CA1 1973). But most States provide benefits to striking employees who have been replaced by nonstriking employees, and many States, pursuant to the so-called “American rule,” allow strikers to collect benefits so long as their activities have not substantially curtailed the productive operations of their employer. See Hawaiian Telephone Co. v. Hawaii Dept. of Labor & Industrial Relations, 405 F. Supp. 275, 287-288 (Haw. 1976), cert. denied, 435 U. S. 943. For example, in Kimbell, Inc. v. Employment Security Comm’n, 429 U. S. 804, this Court dismissed for want of a substantial federal question an appeal from the Supreme Court of New Mexico which had held that a retroactive post-strike award of unemployment benefits to strikers under the “American rule” was not pre-empted by federal labor law.

25 Despite the experience-rating system, it is almost inevitable that some of the unemployment payments will be charged to the individual accounts of nonstruck employers as well as to a general account funded by the entire class of employers and by the Federal Government. See n. 4, supra.

26 “But respondent argues that the benefits paid from the Louisiana Unemployment Compensation Fund were not collateral but direct benefits. With this theory we are unable to agree. Payments of unemployment compensation were not made to the employees by respondent but by the state out of state funds derived from taxation. True, these taxes were paid by employers, and thus to some extent respondent helped to create the fund. However, the payments to the employees were not made to discharge any liability or obligation of respondent, but to carry out a policy of social betterment for the benefit of the entire state. See Dart’s La. Gen. Stat., 1939, §4434.1; In re Cassaretakis, 289 N. Y. 119, 126, 44 N. E. 2d 391, 394-395, aff’d sub nom. Standard Dredging Co. v. Murphy, 319 U. S. 306; Unemployment Compensation Commission v. Collins, 182 Va. 426, 438, 29 S. E. 2d 388, 393. We think these facts plainly show the benefits to be collateral. It is thus apparent from what we have already said that failure to take them into account in ordering back pay does not make the employees more than 'whole’ as that phrase has been understood and applied.

“Finally, respondent urges that the Board’s order imposes upon it a penalty which is beyond the remedial powers of the Board because, to the extent that unemployment compensation benefits were paid to its discharged employees, operation of the experience-rating record formula under the Louisiana Act, Dart’s La, Gen. Stat., 1939 (Cum. Supp. 1949) §§ 4434.1 et seq., will prevent respondent from qualifying for a lower tax rate. We doubt that the validity of a back-pay order ought to hinge on the myriad provisions of state unemployment compensation laws. Cf. Labor Board v. Hearst Publications, 322 U. S. 111, 122-124. However, even if the Louisiana law has the consequence stated by respondent, which we assume arguendo, this consequence does not take the order without the discretion of the Board to enter. We deem the described injury to be merely an incidental effect of an order which in other respects effectuates the policies of the federal Act. It should be emphasized that any failure of respondent to qualify for a lower tax rate would not be primarily the result of federal but of state law, designed to effectuate a public policy with which it is not the Board’s function to. concern itself.” NLRB v. Gullett Gin Co., 340 U. S., at 364-365 (footnotes omitted). See also Carmichael v. Southern Coal Co., 301 U. S. 495, 508.

27 In broad outline, the federal scheme imposes a tax on employers which the States may mitigate (as all have done) by establishing their own unemployment programs. 26 U. S. C. § 3301. , State programs qualified by the Secretary of Labor are then eligible for federal funds. 42 U. S. C. §§ 504-503.

28 “Appellee cites only a single page of the voluminous legislative history of the Social Security Act in support of his assertion that the Act forbids disqualification of persons laid off due to a labor dispute at a related plant. That page contains the sentence: ‘To serve its purposes, unemployment compensation must be paid only to workers involuntarily unemployed.’ Report of the Committee on Economic Security, as reprinted in Hearings on S. 1130 before the Senate Committee on Finance, 74th Cong., 1st Sess., 1311, 1328 (1935).

“The cited Report was one to the President of the United States and became the cornerstone of the Social Security Act. On its face, the quoted sentence may be said to give some support to appellee’s claim that 'involuntariness’ was intended to be the key to eligibility. A reading of the entire Report and consideration of the sentence in context, however, show that Congress did not intend to require that the States give coverage to every person involuntarily unemployed.

“The Report recognized that federal definition of the scope of coverage would probably prove easier to administer than individualized state plans, id., at 1323, but it nonetheless recommended the form of unemployment compensation scheme that exists today, namely, federal involvement primarily through tax incentives to encourage state-run programs. The Report’s section entitled ‘Outline of Federal Act’ concludes with the statement:

“ ‘The plan for unemployment compensation that we suggest contemplates that the States shall have broad freedom to set up the type of unemployment compensation they wish. We believe that all matters in which uniformity is not absolutely essential should be left to the States. The Federal Government, however, should assist the States in setting up their administrations and in the solution of the problems they will encounter.’ Id., at 1326.” 431 U. S., at 482-483.

In addition to undercutting petitioners’ general argument that federal law restricts New York’s freedom to provide unemployment benefits to strikers, this legislative history also belies their more specific claim that involuntary unemployment must be “the key to eligibility” under Title IX-qualified programs.

29 “Indeed, study of the various provisions cited shows that when Congress wished to impose or forbid a condition for compensation, it was able to do so in explicit terms.¹⁶ There are numerous examples, in addition to the one set forth in n. 16, less related to labor disputes but showing congressional ability to deal with specific aspects of state plans.¹⁷ The fact that Congress has chosen not to legislate on the subject of labor dispute disqualifications confirms our belief that neither the Social Security Act nor the Federal Unemployment Tax Act was intended to restrict the States’ freedom to legislate in this area.

16 “16See, for example, 26 U. S. C. §3304 (a) (5), which from the start has provided:

“‘(5) compensation shall not be denied in such State to any otherwise eligible individual for refusing to accept new work under any of the following conditions:

“ '(A) if the position offered is vacant due directly to a strike, lockout, or other labor dispute;

“'(B) if the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality;

“‘(C) if as a condition of being employed the individual would be required to join a company union or to resign from or refrain from joining any bona fide labor organization.’

17 “17 See Employment Security Amendments of 1970, 84 Stat. 695; Emergency Unemployment Compensation Act of 1971, 85 Stat. 811; Emergency Unemployment Compensation Act of 1974, 88 Stat. 1869; Unemployment Compensation Amendments of 1976, 90 Stat. 2667.” Id., at 488-489, and nn. 16, 17.

30 “A wide range of judgment is given to the several states as to the particular type of statute to be spread upon their books. For anything to the contrary in the provisions of this act they may use the pooled unemployment form, which is in effect with variations in Alabama, California, Michigan, New York, and elsewhere. They may establish a system of merit ratings applicable at once or to go into effect later on the basis of subsequent experience. . . . They may provide for .employee contributions as in Alabama and California, or put the entire burden upon the employer as in New York. They may choose a system of unemployment reserve accounts by which an employer is permitted after his reserve has accumulated to contribute at a reduced rate or even not at all. This is the system which had its origin in Wisconsin. What they may not do, if they would earn the credit, is to depart from those standards which in the judgment of Congress are to be ranked as fundamental.” 301 U. S., at 593-594.

31 In Batterton, the Court was faced with the question of whether the eligibility criteria for certain unemployment benefits under Title IV of the Act (AFDC-UF) were to be set nationally by the Secretary of Health, Education, and Welfare or locally by each State. The Court found the presumption in favor of “cooperative federalism” and the free play of “legitimate local policies in determining eligibility” strong enough to overcome considerable “varian[t]” legislative history concerning a recent amendment to the statute. Thus, despite references in the congressional Reports accompanying the amendment to “a uniform” and “a Federal definition of unemployment,” the Court concluded that Congress had not intended to replace the various state definitions of unemployment with a federal one, and it specifically left the States free to provide benefits to strikers. This result is the more persuasive in the present context because the Batterton Court, citing Hodory, commented that the federal restraints imposed on state unemployment programs by Title IX are “not so great” — and thus not as likely pre-emptive — as those imposed by Title IV. 432 U. S., at 419.

32 The force of the legislative history discussed in Hodory, Steward, and Batterton, comes close to removing this case from the pre-emption setting altogether. In light of those decisions, the case may be viewed as presenting a potential conflict between two federal statutes — Title IX of the Social Security Act and the NLRA — rather than between federal and state regulatory statutes. But however the conflict is viewed, its ultimate resolution depends on an analysis of congressional intent.

33 See also Construction Workers v. Laburnum Construction Corp., 347 U. S. 656 (threats of violence); Youngdahl v. Rainfair, Inc., 355 U. S. 131 (violence); Automobile Workers v. Russell, 356 U. S. 634 (violence); Linn v. Plant Guard Workers, 383 U. S. 53 (libel); Farmer v. Carpenters, 430 U. S. 290 (intentional infliction of mental distress).

34 See Grinnell Corp., 475 F. 2d, at 454-457; Hawaiian Telephone Co., 405 F. Supp., at 285-286; Dow Chemical Co. v. Taylor, 57 F. R. D. 105, 108 (ED Mich. 1972).

35 See generally Steward, 301 U. S., at 593-594.

36 Wagner was also a prominent advocate of local freedom of choice with respect to unemployment benefits programs. In introducing the bill that became the Social Security Act to the Senate Committee on Finance, he stated:

“With growing recognition of the need for unemployment insurance, there has come considerable sentiment for the enactment of a single and uniform national system. Its proponents advance the argument, among others, that only in this way can a worker who migrates from New York to New Mexico be kept under the same law at all times. This, of course, is true. But there are an infinitely greater number of workers, and industries, that remain permanently within the boundaries of these two States, respectively, and that are permanently subjected to entirely different industrial conditions. European experience with unemployment insurance has demonstrated that every major attempt, except in Russia, has been successful and has been continued. But it has also shown that widely varying systems have been applied to divergent economic settings. Our own extent of territory is so great, and our enterprises so dissimilar in far-flung sections, that we should, at least for a time, experiment in 48 separate laboratories.” Hearings on S. 1130 before the Senate Committee on Finance, 74th Cong., 1st Sess., 3 (1935).

37 See S. Rep. No. 628, 74th Cong., 1st Sess., 13 (1935).

38 Senator Wagner, in particular, had long taken an active interest and role in the design of social welfare and labor legislation in his home State of New York. Before leaving that State’s legislature for the national one, for example, he had been the moving force behind such landmark statutes as New York’s workmen’s compensation law. See Webster’s American Biographies 1081 (C. Van Doren & R. McHenry eds. 1974).

39 This controversy, in fact, had troubled the National Government for at least two years preceding the passage of the Social Security and Wagner Acts. In July 1933, the Federal Emergency Relief Administration ruled that unemployed strikers would be eligible for relief benefits, a policy that was carried out amid considerable outcry from the press and the business community during the textile strike of September 1934. I. Bernstein, Turbulent Years: A History of the American Worker, 1933-1941, p. 307 (1970). During the same weeks as the newspapers carried stories about the strike, in fact, Senator Wagner was revising previously offered labor-relations proposals into a new bill that became the NLRA. Id., at 323.

40 This provision, 26 U. S. C. §3304 (a)(5), is quoted in n. 29, supra.

41 During the hearings on the Social Security Act, written submissions offered by both Edwin Witte, Director of the President’s Committee on Economic Security, on behalf of that Committee’s Advisory Council, and Abraham Epstein, representing the American Association for Social Security, a citizen’s group devoted to promoting social security legislation, recommended withholding benefits from strikers during a strike. Hearings on S. 1130, supra n. 36, at 228, 472. An even stronger suggestion, which would have disqualified strikers even after the strike was over, was made by a spokesman for the National Association of Manufacturers.

It is also probative that just two weeks after the Social Security Act became law Congress, in its capacity as the legislature for the District of Columbia, passed an unemployment program for that locality which expressly precluded strikers from receiving benefits so long as a labor dispute was in “active progress.” Act of Aug. 28, 1935, ch. 794, § 10 (a), 49 Stat. 950. That it included the restriction in the local Social Security Act, but not in the national one, suggests the strength of its commitment to free local choice. That it did so is also important evidence that it neither assumed nor intended that its passage of the NLRA seven weeks earlier would pre-empt the payment of benefits to strikers in any case.

Of these four antistriker proposals considered by Congress during 1935, it is interesting to note that three allowed former strikers to receive benefits once the strike was ended. In light of these provisions, it seems clear that Congress perceived the opposition to such benefits not simply as a reflection of the view that voluntary unemployment should never be compensated but also as a concern with the nonneutral impact of such benefits on labor disputes. Its refusal explicitly to go along with that opposition on the national level with respect to the Social Security Act is thus all the more relevant to its intent in passing the NLRA several weeks earlier.

42 “Except for a few standards which are necessary to render certain that the State unemployment compensation laws are genuine unemployment compensation acts and not merely relief measures, the States are left free to set up any unemployment compensation system they wish, without dictation from Washington. The States may or may not add employee contributions to those required from the employers. Of the 5 States which have thus far enacted unemployment compensation laws, 2 require employee contributions, and 3 do not. Likewise, the States may determine their own compensation rates, waiting periods, and maximum duration of benefits. Such latitude is very essential because the rate of unemployment varies greatly in different States, being twice as great in some States as in others.” S. Rep. No. 628, supra n. 37, at 13.

43 The contemporaneous interpretation of Title IX by the Social Security Board, the administrative agency originally charged by Title IX of the Act with qualifying state statutes for federal funds, bears out this concluáon. Within a short time after the Act was passed, the Board approved the New York statute which provided benefits to strikers. The Labor Department has periodically followed suit since it took over authority in the area. 566 F. 2d 388, 393-394.

44 Congress twice has considered and rejected amendments to existing laws that would have excluded strikers from receiving unemployment benefits. The House version of the Labor Management Relations Act of 1947 included a provision denying § 7 rights under the NLRA to any striking employee who accepted unemployment benefits from the State. H. R. 3020, § 2 (3), 80th Cong., 1st Sess. (1947). This provision, which responded to public criticism of Pennsylvania’s payment of benefits to striking miners in 1946, was rejected by the Senate and deleted by the Conference Committee. H. R. Conf. Rep. No. 510, 80th Cong., 1st Sess., 32-33 (1947). Although the deletion was not explained, the House Minority Report suggests a reason: “Under the Social Security Act, however, the determination [of eligibility] was advisedly left to the States.” H. R. Rep. No. 245, 80th Cong., 1st Sess., 68 (1947).

In 1969, the Nixon Administration proposed an amendment to the Social Security Act that would have excluded strikers from unemployment compensation eligibility. Speaking in opposition to the proposal, Congressman Mills made the following comment:

“We have tried to keep from prohibiting the States from doing the things the States believe are in the best interest of their people. There are a lot of decisions in this whole program which are left to the States.

“For example, there are two States, I recall, which will pay unemployment benefits when employees are on strike, but only two out of 50 make that decision. That is their privilege to do so. . . . I would not vote for it ... , but if the State wants to do it we believe they ought to be given latitude to enable them to write the program they want.” 115 Cong. Rec. 34106 (1969).

Congress rejected the proposal.

On two other occasions, Congress has confronted the problem of providing purely federal unemployment and welfare benefits to persons involved in labor disputes. In both instances, it has drawn the eligibility criteria broadly enough to encompass strikers. 45 U. S. C. § 3.54 (a-2) (iii) (Railroad Unemployment Insurance Act); 7 U. S. C. § 2014 (c) (Food Stamp Act). It thereby rejected the argument that such elibility forces the Federal Government “to take sides in labor disputes.” H. R. Rep. No. 91-1402, p. 11 (1970).