AND NOW FOR THE REAL TRICK-- ENFORCING PAYCHECK PROTECTION IN WASHINGTON STATE

Mr. Jami Lund, Project Manager
Evergreen Freedom Foundation
Olympia, Washington

A landmark campaign finance law was passed by Washington state voters in 1992--the kind of law many states are now eyeing. More than 72 percent of our state's voters said "yes" to Initiative 134 which, among other campaign reform items, provided a requirement that before payroll deductions for politics were taken, annual, written permission had to be obtained from the employee.

But the simple act of protecting employees' paychecks and free speech rights turned the union into a mad bulldog fighting to protect the political power of a handful of elite union officials rather than the employees it represents.

Literature describing Initiative 134 noted that its intent is to "eliminate the power and influence now held closely by a few "megabucks" special interests . . .."⁽¹⁾ To accomplish this, the initiative provided various restrictions targeting different kinds of interest groups. The chief provision was a maximum contribution limit for corporations or other groups. However, the special ability of unions to fund their political activities was also addressed by a provision requiring permission before payroll deductions could be diverted to political activities.

When first faced with Initiative 134, labor organizations turned their disapproval toward producing a counter-initiative which guaranteed protection for the sacred cow of unions' political clout--mandatory political assessments.⁽²⁾ When the union-favored proposal failed to garner enough signatures to make the November 1992 ballot, unions invested money and time to defeat Initiative 134.⁽³⁾ The total amount of union anti-134 spending is unknown, but expenditures of $158,000 were reported to campaign officials. Of the reported $158,000, the Washington Education Association donated $85,250 including a single contribution of $50,000 from the National Education Association.

Despite well-funded opposition, Initiative 134 had tremendous popular support. The public perceived that special interests' advantage in motivating lawmakers would be minimized if the initiative was adopted, and it passed overwhelmingly. With the adoption of this initiative, the nation's first "paycheck protection" legislation was enacted, and payroll deductions could no longer be diverted for politics without annual, written permission from employees.

Revised Code of Washington 42.17.680 Limitations on employers or labor organizations.

. . . (3) No employer or other person or entity responsible for the disbursement of funds in payment of wages or salaries may withhold or divert a portion of an employee's wages or salaries for contributions to political committees or for use as political contributions except upon the written request of the employee. . . .

When the success of Initiative 134 became evident in October of 1992, labor organizations embarked on a new direction to avoid the loss of clout. They began "guiding" our state's election law enforcement agency, the Washington Public Disclosure Commission (PDC) on how the law should be interpreted.

Time line of union efforts to sabotage enforcement of RCW 42.17.680:

The new agency rule, drafted with organized labor's assistance, frustrates Initiative 134's requirement that permission be obtained from employees before diverting payroll deductions for political contributions. It allows unions to take money from employee paychecks that eventually, but indirectly, finds its way to a political campaign or ballot measures.

Additional steps taken to circumvent the law.

Until 1994, when I-134 became law, the Washington Education Association's political action committee (PAC) was funded by a $1.08 per month assessment from each member (unless the member took steps to opt out). Immediately prior to the 1994 implementation of the paycheck protection law, the WEA collected the upcoming year's PAC assessment in advance. They made this unusual decision anticipating what might happen to their political coffers if contributions from employees became voluntary. The table below demonstrates the true reason that unions struggled so hard against permitting members to choose whether or not to contribute to their union's political agenda.

WEA-PAC MEMBERSHIP 1992-98

Other unions also arranged their affairs to continue to extract political resources to preserve union leaders' clout despite low voluntary support from members. For example, the Washington Federation of State Employees simply transfers at least $1.40 from general funds into the political action committee for each of its 19,000 members each month. Others received written permission from the Public Disclosure Commission to create "segregated" accounts within their general operating funds from which to make contributions. The PDC has allowed that these accounts are not going to be considered as "political committees."

Washington Education Association still managed to run afoul the paycheck protection law.

Despite all the extraordinary steps granted by state officials to help WEA circumvent the intent of I-134, the election opportunities of 1996 provided a temptation too great for the WEA to resist. On the ballot were two initiatives which WEA officials could not permit to become law despite initial public support--school vouchers and charter schools. The WEA devised a $1.5 million dollar political plan of attack despite its less than $12,000 per month in political income.

Teachers who detected the WEA's massive 1996 political ramp-up began to investigate. Their efforts led them to our door--the Evergreen Freedom Foundation. We are a public policy research organization located in the state's capitol of Olympia. Evergreen's president, Bob Williams, is a former state legislator and government auditor, and was able to unearth a host of campaign finance violations including a clandestine political action committee.

Williams' investigation revealed that the WEA, which collects $43 million annually from its members, is the most powerful political machine in our state. It boasts a dozen political action team members, 22 full-time regional directors, and more than 300 local representatives who are released from their teaching responsibilities (full time or half time) in order to carry out union activities--including politics.

Internal WEA documents reviewed by EFF also indicate that the National Education Association (NEA) plays a strong role in planning the political activities and direction of the WEA's political involvement. For example, internal documents examined by EFF disclose that, for the past eight years, the NEA, not the WEA, has paid the salary of the state affiliate's executive director. Likewise, the leading strategist for the WEA's political activities is also an employee of the National Education Association.

Furthermore, as EFF's investigation into the WEA intensified, concealed transfers of money between the NEA and the WEA for campaigns were discovered. On October 1, 1997, EFF filed a legal action against the NEA for moving at least $410,000 through the WEA to use in Washington state elections.

Williams presented his evidence to the Public Disclosure Commission. After pursuing its own investigations, the executive director of the PDC described WEA's 1996 campaign activities as "the most serious campaign finance violations in state history." Concerned that the maximum PDC fine allowed under the law ($2,500 per violation) would be regarded by the $43 million-per-year organization as "simply the cost of doing business," the PDC referred the case to the Washington State Attorney General, who filed a precedent-setting lawsuit against the WEA on February 12, 1997.

Special law allows "citizen action" lawsuit to supplement the state's legal action.

The state's suit addressed only the most glaring violations committed by the WEA. Specifically, the state charged that the WEA's "Community Outreach Program," funded through a mandatory dues assessment, failed to file and report as a political committee. Other elements included failure to report contributions, concealing the source of NEA contributions and improperly reporting contributions from WEA to WEA-PAC as "loans."

Missed by these charges are the more fundamental concerns about WEA's use of required dues without employees' permission and whether the scope of WEA's political activities qualify the WEA itself as a political action committee.

Fortunately, Washington state laws related to campaign finance permit citizens to file civil actions for alleged violations that the state or county prosecutors refuse to address.

Revised Code of Washington 42.17.400

Any person who has notified the attorney general . . . that there is reason to believe that some provision . . . has been violated may himself bring in the name of the state any of the actions (hereinafter referred to as a citizen's action) authorized under this chapter. This citizen action may be brought only if the attorney general and the prosecuting attorney have failed to commence an action hereunder within forty-five days after such notice . . . If the person who brings the citizen's action prevails, the judgment awarded shall escheat to the state, . . .

Under this law, the Evergreen Freedom Foundation and a group of teachers calling themselves "Teachers for a Responsible Union" also filed suit to hold the WEA and NEA accountable for diverting deducted employee wages to political causes without the legally mandated consent.

State settles rather than investigates.

The state's suit against the WEA was promising, for it afforded the opportunity for true enforcement of the nations' first law codifying the free speech rights enumerated by the 1988 U.S. Supreme Court decision in Communications Workers v. Beck. But, sadly for everyone interested in open, free elections and in a workers' basic civil rights, our state courts never heard the case as prepared by our attorney general. The investigation was suddenly shut down.

Subpoenas critical to the case--for example, one requiring copies of all checks passed between the parties involved in the money laundering scheme--were never enforced. Instead, the attorney general's office was secretly negotiating a settlement with the WEA.

On February 27, 1998 the Washington State Attorney General announced a settlement with the WEA that dismissed "all lawsuits, administrative charges and pending complaints" between the teachers' union and the state. In return for the dismissal, the WEA agreed to pay the state a $100,000 penalty (paid from union dues), refrain from collecting $5 from each member the following year and abide by "guidelines" drafted by the attorney general's office. Using the earlier, ill-begotten definitions of our 1992 campaign finance law as drafted by the Public Disclosure Commission (with, you may remember, "recommendations" from labor attorneys), the effect of these new "guidelines" was to offer all unions a state-sanctioned "tolerance policy" waiving paycheck protection law merely on the authority of a state agency.

An excerpt from the attorney general's "guidelines" reveal the heart and intent of her decision.

The PDC is aware that membership organizations, such as the WEA, collect dues from their members which go to their general treasury. . . . Such general treasury funds may be expended as contributions to candidates and political committees, including affiliated political committees such as WEA-PAC without creating a political committee. The PDC interpretation of RCW 42.17.680(3) is that it does not apply to the dues deductions that generate WEA's general treasury funds because as presently constituted the WEA is not a political committee. WAC 390-17-100.

The WEA dominated the settlement negotiation.

Immediately after the behind-closed-doors settlement was announced and the guidelines were issued, we realized WEA attorneys would use the guidelines as their chief argument for dismissal of all charges against them in our pending lawsuit. To gain an understanding of how the guidelines should be treated, we sought public documents related to the crafting of the settlement.

When the state refused to disclose documents related to the secret negotiation, we were once again forced to file suit, this time against the state attorney general for refusing to produce public records. The court ordered the state to hand over the documents and the Attorney General was penalized $33,000 for the attempt to conceal them.

While the documents do not reveal who first suggested seeking a settlement, the very first draft was prepared by Judith Lonnquist, attorney for the Washington Education Association.⁽¹³⁾ This draft was transmitted to the state on February 3, 1998. In it, the WEA establishes the tone, format, facts, legal interpretations, admissions and remedies. A comparison of the initial WEA draft and the final settlement from the attorney general demonstrates that the state permitted WEA officials to write their own settlement.

The preparation of the "guidelines" also appears to have been controlled by the WEA. In the February 3 draft of the settlement, WEA attorney, Lonnquist, adds a notation, "WEA would like to have these guidelines finished before final settlement and made an attachment to the agreement." Of course, this is exactly how events transpired.

The Evergreen Freedom Foundation suit against the WEA.

Fortunately, the Attorney General settlement will not be the last word on whether Washington will have paycheck protection as adopted by the voters. The lawsuit filed by the Evergreen Freedom Foundation and concerned teachers is not settled by the state's agreement with the WEA.

The EFF citizen action lawsuit, which has been underway for over a year, provides the best avenue for bringing the WEA in compliance with the law. This legal action will also give a court the opportunity to correct the settlement's misrepresentation of the state's paycheck protection law.

In this lawsuit, the court took up the issue of whether or not the paycheck protection provisions of Initiative 134 apply to unions. The WEA went on record arguing that section 42.17.680 of Washington state's code, titled "Limitations on employers and labor organizations," does not actually apply to labor organizations.

In a disappointing ruling, the Court decided in July that the requirement to seek permission for political withholdings was not violated by the WEA (since they are not the employer) or by the School districts (since they did not know that the WEA general fund was using the money for politics.) This ruling reaches the conclusion that although the payroll deduction was diverted to political contributions, no one is guilty of committing the act.

The judge is permitting Evergreen and the teachers to proceed with an immediate appeal, and the Washington State Supreme Court may agree to hear the appeal this fall.

However, this ruling does not alter the spring 1999 trial of WEA officials for the use of general dues money for campaign activities.

Thurston County Superior Court Judge Richard McPhee, set aside the entire month of May for this precedent-setting trial. In preparation, EFF attorneys and research analysts have spent the better part of a year pouring over tens of thousands of pages of documents and have deposed more than sixty WEA and NEA officials. What we have uncovered is startling: it exposes the NEA and its state affiliates as the biggest campaign influence in American politics. To prevent election authorities, political opponents and WEA members from learning what EFF uncovered, the WEA secured a protective order from the court preventing dissemination of the evidence gathered until the start of the trial.

A February ruling in the case, however, points out how far the WEA will go to avoid disclosure. After a year of seeking, the Evergreen Freedom Foundation was granted access to a detailed "political plan," of the WEA. For the WEA's stonewalling, the court sanctioned the union $15,000. Regrettably, dues-paying teachers who are not allowed to see the plans and political schemes of the union officials will ultimately pay the fine for the concealment.

Our primary charge is that the WEA operates as a political action committee. Using the 1996 elections as our test, if the court finds that affecting elections is one of the union's "primary purposes," then the union would stand in violation of the state's public disclosure laws and the paycheck protection law. Since our state is only one of many with similar NEA and affiliate operations, decisions made in our courts will set legal precedent across the entire country.

Addressing the state's unwillingness to enforce the law.

If the intent of Initiative 134 is ever going to be enforced properly, the state must actually enforce the statute with appropriate agency rules and practices. Evergreen Freedom Foundation and members of five different unions have challenged the state's rule and the Attorney General settlement guidelines in court. In this "declaratory action" the court will rule on whether or not the state's interpretation of the statute, as manifested in the agency rule (crafted at with assistance from unions) and the settlement guidelines (also crafted by a unions). Our suit against the PDC seeks to make clear the state's failure to protect the rights of workers as intended by the voters who adopted I-134. This case will also be tried in the spring of 1999.

What is at stake in the contest for paycheck protection?

The AFL-CIO dominated Washington State Labor Council described the legal actions against the Washington Education Association as "test case about how labor organizations fund political activity" and stated in their argument for amicus curiae status in the case,

If this Court were to issue a decision substantially adverse to [The Washington Education Association and affiliates], that decision would gravely restrict the political activities of unions . . . . [T]he balance of power in this state could be shifted dramatically as a result of the inability of labor organizations to support sympathetic candidates." (WSLC's Reply to Plaintiffs Memorandum Opposing Motion to Be Granted Amicus Curiae Status, Evergreen Freedom Foundation, et al v. Washington Education Association et al, Thurston County Superior Court (Wash.) (No. 97-2-01419-8), p. 1,5.)

As the Evergreen Freedom Foundation continues to strive to preserve the integrity of the nation's first paycheck protection law, three issues are at stake:

First, the integrity of future elections.

Currently, unions throughout the nation are the primary source of funds for liberal candidates and causes. If the experience in Washington is an indicator, 85 percent of union workers would not consent to pay for union politics. While unions have every right to be involved in politics, union officials should not be able to amplify their voices with money taken from unwilling sources.

Second, individuals' liberty regarding contributions.

Imagine if fast-food restaurants began withholding money from all employees' paychecks to fund opposition to an increase in the minimum wage. Would there be any end to the outcry about the injustice? Consider that the teachers' union collects roughly $650 per year from teachers and that the union elites feel free to use these resources to fund their political agenda. All workers, union or not should not be required to fund the campaign preferences of their bosses through mandatory payroll deductions.

Third, the public's right to know of exceptional influences in the democratic process.

Imagine if a national company that offers a government-funded service laundered nearly a half million dollars into a campaign against a law that would permit competition. Again, the injustice of such a scenario would cause a great outcry about the integrity of our election process.

The National Education Association (NEA) did, in fact, launder more than $400,000 into our 1996 election. Nearly the entire $1.4 million campaign against school choice and charter school initiatives were illegally funded by the NEA and WEA. Likewise, officials of the teachers' union are often actively involved in multiple campaigns, yet their involvement is often conspicuously concealed.

The outcome of this legal battle will affect the entire nation. Several states have followed Washington's lead in codifying protection for workers' constitutional rights related to political contributions. Congress and many other states are also considering adopting similar laws. In Washington state, we are fighting through the paycheck protection barriers erected by an unwilling union and complicit state agencies. The legal precedent advanced by our victory benefits every state pursuing paycheck protection policies for its citizens.

Since April 6, 2000