A.G. BAKER, JR., ET AL., APPELLANTS V. GENERAL MOTORS CORPORATION AND MICHIGAN EMPLOYMENT SECURITY COMMISSION No. 85-117 In the Supreme Court of the United States Octomber Term, 1985 On Appeal from the Supreme Court of Michigan Brief for the United States as Amicus Curiae in Support of Affirmance TABLE OF CONTENTS Question presented Interest of the United States Statement Summary of argument Argument: The Michigan statute disqualifying from unemployment compensation employees who financed the labor dispute that caused their unemployment by contributing to an emergency fund specifically established for that dispute does not impermissibly burden the right of employees under Section 7 of the National Labor Relations Act to "form, join, or assist labor organizations" A. The State supreme court's decision is consistent with this Court's decision in New York Telephone B. The legislative history demonstrates that Congress intended states to be free to determine the eligibility of persons unemployed due to a labor dispute, notwithstanding the effect of those decisions on interests protected by the NLRA C. Congress intended that states have sufficient latitude to choose to disqualify employees on the basis of their payment of financial support specifically and meaningful connected to the labor dispute causing their unemployment Conclusion QUESTION PRESENTED Whether a state statute that bars the payment of unemployment compensation to employees who, by contributing to an emergency fund specifically established for a labor dispute, financed the labor dispute that caused their unemployment, impermissibly conflicts with the right of employees under Section 7, 29 U.S.C. 157, of the National Labor Relations Act "to form, join, or assist labor organizations." INTEREST OF THE UNITED STATES The question presented in this case is whether the Michigan statute (Mich. Comp. Laws Ann. Section 421.29(8)(a) (ii) (West 1978)) that disqualifies employees from receiving unemployment benefits if they are "participating in or financing or directly interested in" a labor dispute that causes their unemployment impermissibly interferes with the federal labor policy embodied in the National Labor Relations Act (NLRA), ch. 372, 49 Stat. 449, 29 U.S.C. 151 et seq. Since the proper resolution of this question turns on the intent of Congress in enacting two major statutory programs that are administered by federal agencies -- the NLRA and Title IX of the Social Security Act of 1935, ch. 531, 49 Stat. 639 (amended and recodified as the Federal Unemployment Tax Act, ch. 736, 68A Stat. 439, 26 U.S.C. (& Supp. I) 3301 et seq.) -- the United States has a substantial interest in this case. In earlier cases involving challenges under the federal labor laws to state unemployment compensation statutes, the United States has filed amicus curiae briefs in this Court. E.g., New York Telephone Co. v. New York State Dep't of Labor, 440 U.S. 519 (1979); Nash v. Florida Industrial Comm'n, 389 U.S. 235 (1967). STATEMENT 1. This case is an outgrowth of collective bargaining negotiations in the automotive industry almost 20 years ago. In September 1967 the national and local collective bargaining agreements between the United Auto Workers (UAW) and the three major auto makers expired. UAW members employed by General Motors (GM) voted to authorize strikes against GM on national and local issues. J.S. App. 100a-101a. At the time of the strike authorization votes UAW members paid monthly dues of $5.00, of which $3.75 was designated by the union as "administrative" dues and $1.25 was designated as "(s)trike (f)und (i)nsurance" dues (id. at 103a). When the collective bargaining agreements expired, UAW members went on strike against Ford, the company selected as the initial target; there were no immediate strikes at GM plants. While the nationwide strike proceeded against Ford, /1/ a special UAW convention amended the international union's constitution to provide for "(e)mergency (d)ues" (J.S. App. 101a). The new dues were effective immediately and were to continue "'during the current collective bargaining emergency as determined by the International Executive Board and thereafter, if necessary'" (id. at 102a). The new dues structure left the amount of administrative dues unchanged but increased each members' monthly contribution to the strike insurance fund from $1.25 to either $11.25 or $21.25, depending on the average hourly wage at the member's plant. The amendment provided that after the emergency ended monthly dues would consist of two hours "'straight time'" pay, or roughly six dollars, with 40% earmarked for the member's local union and the remainder allocated equally between the international's administrative and strike insurance funds. Id. at 101a-102a. The UAW constitution committee explained at the convention that a "'temporary emergency dues increase'" was needed to support the Ford and Caterpillar workers in their strike and to assure strike benefits to members who may be involved in other strikes in the course of the critical weeks and months ahead" (J.S. App. 104a). In addition, statements at the convention and in contemporaneous UAW publications asserted that the strike fund required augmentation "'(i)n the event we have a strike at General Motors'" (id. at 105a-106a). Each UAW member employed by GM was sent a letter stating that "(t)hese emergency extra dues are being raised to protect GM workers as well as support the Ford strikers" and reminding that national and local strikes against GM three years earlier had cost the strike fund millions of dollars (id. at 106a). A UAW official told the constitutional convention that a GM strike would cost the union more than $50 million each month (id. at 107a). As it happened, the strikes against Ford and Caterpillar ended in October 1967 -- before any emergency dues were collected from UAW members. As negotiations continued with GM, however, emergency dues of $42 million were collected from all UAW members for the months of October and November, thus doubling the strike fund. On November 30, 1967, the UAW determined that there would be no national strike against GM in December and waived collection of the new dues for December 1967 and January 1968. Nevertheless, UAW members were advised that, because "'the collective bargaining emergency is not yet ended,'" the dues program temporarily would revert to the $5.00 per month in effect prior to the constitutional amendment and not to the amendment's permanent dues program of two hours' pay. GM and the UAW reached agreement on all national issues in December 1967 and a new national agreement took effect on January 1, 1968. J.S. App. 8a-9a, 81a, 112a & n.34, 118a. Local bargaining issues at a number of GM plants remained unresolved following ratification of the national agreement, and in January and February 1968 UAW members at three GM foundry plants in Michigan, Ohio and New York went on strike over local issues. In accordance with UAW regulations, the international union paid strike benefits totaling approximately $247,000 to the strikers at these plants from the strike insurance fund into which the emergency dues collected in October and November 1967 had been deposited. By curtailing output at the foundries, these local strikes had a ripple effect on GM's production elsewhere: work shortages developed at 24 other GM plants in Michigan and more than 19,000 employees, including appellants, were laid off. J.S. App. 9a, 81a-82a, 114a. 2. Appellants filed claims for unemployment benefits during their layoffs. The Michigan Employment Security Act (MESA), Mich. Comp. Laws Ann. Sections 421.1 et seq. (West 1978 & Supp. 1985), disqualifies individuals from receiving benefits in certain cases where their unemployment is the result of a labor dispute. Section 29(8)(a) (ii) of MESA provides in pertinent part (J.S. App. 3a-4a): (8) * * * An individual shall be disqualified for benefits for any week with respect to which his total or partial unemployment is due to a labor dispute in active progress * * * in the establishment in which he is or was last employed, or to a labor dispute, other than a lockout, in active progress * * * in any other establishment within the United States which is functionally integrated with the establishment and is operated by the same employing unit * * *. An individual shall not be disqualified under this subsection if he is not directly involved in the dispute. (a) * * * For the purposes of this subsection an individual shall not be deemed to be directly involved in a labor dispute unless it is established that: * * * * * (ii) He is participating in or financing or directly interested in the labor dispute which causes his total or partial unemployment. The payment of regular union dues, in amounts and for purposes established before the inception of the labor dispute, shall not be construed as financing a labor dispute within the meaning of this subparagraph. After several stages of administrative proceedings the Michigan Employment Security Appeal Board held that appellants were disqualified from receiving unemployment benefits because, although they did not "participate" and were not "directly interested" in the local labor disputes that caused their unemployment, they had "financed" the foundry strikes within the meaning of the statute by paying emergency dues into the international strike insurance fund from which benefits had been paid to the strikers. In so finding, the state board concluded that the emergency contributions to the union's strike fund in October and November 1967 were not "regular union dues" within the meaning of the statute because they were not "'in amounts and for purposes established prior to the inception of (the) labor disputes.'" J.S. App. 82a-83a. Following further appeals through the state court system, /2/ the Michigan Supreme Court agreed that "(t)he emergency dues provided by the amendment constituted a marked deviation from the regular pattern of dues collection * * * whose obvious purpose was to replenish the union strike fund(,)" and that they "could not properly be termed 'regular'" within the meaning of the statute. The court concluded that "the Legislature chose the term 'regular' to exclude from possible treatment as financing those dues payments required uniformly of union members and collected on a continuing basis without fluctuations prompted by the exigencies of a particular labor dispute or disputes." /3/ Having determined that the emergency dues payments at issue were not "regular," the court found it unnecessary to determine whether the dues had been established prior to the labor disputes that caused appellants' unemployment. The court concluded, however, that "(w)hile the statute does not require that payments made by individuals * * * be traced into the hands of workers involved in the labor dispute which caused the individuals' unemployment," the payment of such non-regular dues could not be found to be "financing" within the meaning of the statute unless there was a "meaningful connection" between the payments and the labor disputes that resulted in claimants' unemployment. The court remanded the case to enable the state board to make such a determination. J.S. App. 93a-95a. 3. On remand, the Michigan Employment Security Board of Review, /4/ in a plurality decision, concluded that the purpose, amount, and timing of the emergency dues payments revealed a meaningful connection between the payments and the labor disputes that caused claimants' unemployment. Accordingly, the board found that the payments constituted "financing" within the meaning of the statutory disqualification (J.S. App. 99a-142a). Relying on the statements made at the UAW convention and in publications and letters to members, the plurality found (J.S. App. 124a) that "the emergency dues were intended to fund local labor disputes at GM facilities." Because it was foreseeable that local strikes in the functionally integrated auto industry could cause layoffs elsewhere, claimants necessarily "anticipated strikes which might affect themselves" and "were not mere victims of circumstance" (id. at 119a, 124a). In addition, the plurality found that the emergency dues were a substantial source of funding for the local strikers (id. at 111a-115a, 124a-125a). Finally, the board's plurality concluded (id. at 125a) that "the payment of emergency dues, as late as January, 1968 was sufficiently proximate with strike benefits paid in late January or early February, 1968." "The build-up of a strike fund prior to a strike action is a typical strategy" and, therefore, to "require that the period of the strike and the collection of emergency dues overlap is too rigid a reading of the "is . . . financing' language of the statute" (ibid.). /5/ 4. The Michigan Supreme Court upheld the denial of benefits (J.S. App. 6a-74a), holding that a "meaningful connection exists where, for the purpose of supporting labor disputes foreseeably encompassing the labor dispute that caused the claimant's unemployment, the claimant engages in financing labor disputes in significant amounts and at times proximately related to the labor dispute which caused the claimant's unemployment" (id. at 26a, 32a-33a). The court rejected appellants' contention that the State's construction of its "financing" disqualification provision is preempted by the NLRA because it impermissibly conflicts with the Section 7 right of employees to "assist labor organizations." The court found at the outset that Section 7 of the Act "protects the right of employees to financially 'assist' their unions" and that "the MESA disqualification does affect the exercise of the right to 'assist' guaranteed in the NLRA" (J.S. App. 61a-62a)(emphasis in original). In light of this tensio between the state and federal statutes the court, citing New York Telephone Co. v. New York Dep't of Labor, 440 U.S. 519 (1979), concluded (Pet. App. 63a) that "the burden is upon the (state) to show that Congress intended to tolerate the conflict caused by the challenged state law (and) is not upon the plaintiff to show that Congress intended to prohibit the conflict." Its review of the legislative history of the Social Security Act and the NLRA persuaded the court that Congress had in fact "intended to tolerate" the state law provision at issue (id. at 69a). /6/ SUMMARY OF ARGUMENT This case directs the Court's attention once again to the particular federal preemption issues that arise when a state unemployment compensation plan, implemented under the Social Security Act and the Federal Unemployment Tax Act, is alleged to conflict with federal labor law. As in any preemption case, the "ultimate touchstone" is congressional intent. Metropolitan Life Insurance Co. v. Massachusetts, No. 84-325 (June 5, 1984), slip op. 22. But, unlike more routine labor preemption cases, the question is not simply whether the state has acted in a way that is inconsistent with the comprehensive federal scheme for governing the major aspects of labor-management relations within its scope. See, e.g., Garner v. Teamsters Local Union No. 776, 346 U.S. 485 (1953); see generally NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937). Rather, this case arises in the unusual context where Congress has itself provided a gloss on the NLRA. Because of the historic confluence between that statute and the Social Security Act (both were considered and enacted almost simultaneously), the full measure of Congress's intent to tolerate a range of actions by the states cannot be ascertained without taking into account both statutory regimes. See New York Telephone, 440 U.S. at 539 n.32 (plurality opinion). In New York Telephone, 440 U.S. at 544, this Court concluded that "Congress intended that the States be free to authorize, or to prohibit, (the) payments" of unemployment compensation to strikers even though the balance of economic power between labor and management would be affected. This case is not a carbon copy of New York Telephone. Because Michigan has denied unemployment compensation, rather than authorized it (as in New York Telephone), appellants contend that the state is not merely affecting the balance of power but is impermissibly interfering with employee rights protected by Section 7 of the NLRA. Also, because appellants were disqualified from receiving benefits, not because they themselves struck, but because they "financed" the labor dispute that caused their unemployment, this is not a situation where a striker seeks assistance from the state. Despite these distinguishing characteristics, however, New York Telephone provides clear guidance. The interplay of the NLRA and the Social Security Act and their respective legislative histories demonstrates Congress's commitment to allow the states freedom to act "'without dictation from Washington'" (440 U.S. at 543). Congress chose this course while recognizing that benefits could be denied to striking employees and to others whose unemployment was caused by a labor dispute in which they were involved. This legislative awareness, coupled with the consistent pattern of federal administrative approval of Michigan's benefits plan, provides persuasive evidence that the judgment below does not exceed the latitutde Congress afforded to the states in this complex area of social policy. ARGUMENT THE MICHIGAN STATUTE DISQUALIFYING FROM UNEMPLOYMENT COMPENSATION EMPLOYEES WHO FINANCED THE LABOR DISPUTE THAT CAUSED THEIR UNEMPLOYMENT BY CONTRIBUTING TO AN EMERGENCY FUND SPECIFICALLY ESTABLISHED FOR THAT DISPUTE DOES NOT IMPERMISSIBLY BURDEN THE RIGHT OF EMPLOYEES UNDER SECTION 7 OF THE NATIONAL LABOR RELATIONS ACT TO "FORM, JOIN OR ASSIST LABOR ORGANIZATIONS" A. The State Supreme Court's Decision Is Consistent With This Court's Decision In New York Telephone All states (except New York) disqualify persons from receiving unemployment compensation in specified circumstances where a labor dispute with the employer has caused the loss of employment. Michigan, like a number of other states, disqualifies persons unemployed due to labor disputes not only at their own plant, but also "in any other establishment * * * which is functionally integrated with the(ir) establishment and is operated by the(ir employer)" (Mich. Comp. Laws Ann. Section 421.29(8) (West 1978)). Like the majority of states, Michigan limits its labor dispute disqualification to those employees who are "directly involved" in the dispute that causes their unemployment, that is, persons who are "participating in or financing or directly interested" in the dispute (id. Section 421.29(8)(a)(ii)). In four states, including Michigan, the disqualification does not preclude persons from receiving benefits simply because they are dues-paying members of a union. Thus, the Michigan statute expressly provides that the "(t)he payment of regular union dues, in amounts and for purposes established before the inception of the labor dispute, shall not be construed as financing" (ibid.), /7/ and as the court found, the financial payments must be "meaningful connected" (J.S. App. 95a) to the labor dispute before they may serve as a basis for denying benefits. /8/ Pursuant to these provisions, Michigan disqualified GM employees who contributed substantial sums (roughly 10 to 15 times the amount of their normal strike insurance) to an emergency strike fund. It was, as the state court concluded, foreseeable that the contributions could support strikes against the company and cause appellants' unemployment. The resulting strikes had precisely that effect. In these circumstances the Michigan Supreme Court found (J.S. App. 62a) that the State's financing disqualification affects the exercise of the employees' right, guaranteed by Section 7 of the NLRA, "to form, join, or assist labor organizations." We do not dispute that conclusion. Nor do we dispute appellants' additional contention (Br. 21 & n.12) that the Michigan law affects the union's ability to sustain a strike and thereby affects the balance of power between parties to a labor dispute. But this does not compel the further conclusion that the Michigan statute conflicts with, and is therefore preempted by, the NLRA. "In any preemption analysis, the purpose of Congress is the ultimate touchstone." Metropolitan Life Insurance Co. v. Massachusetts, No. 84-325 (June 5, 1985), slip op. 22. That is true whether the state law at issue affects rights that Congress affirmatively protected in the NLRA or conduct that it intended to leave unregulated. Id. at 24 n.27. In either case, the question is whether Congress contemplated that the scope of the states' prerogative to act was broad enough to embrace the action that allegedly interferes with a federal right or policy. See Brown v. Hotel Employees Union Local 54, No. 83-498 (July 2, 1984), slip op. 11-17 (state regulation of officers of certain labor unions in casino industry did not impermissibly interfere with Section 7 right to select bargaining agent where "Congress has at least indicated both that employees do not have an unqualified right to choose their own officials and that certain state disqualification requirements are compatible with Section 7"). The Court applied these principles in New York Telephone Co. to uphold a New York statute awarding unemployment benefits to strikers. Relying primarily on the legislative history of Title IX of the original Social Security Act, the Court concluded that Congress intended to permit states generally to determine the eligibility for benefits of persons unemployed due to a labor dispute, and specifically either to grant or deny benefits to strikers as they see fit. The plurality stated (440 U.S. at 544): 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. The analysis in New York Telephone goes a long way toward disposing of this case. New York Telephone arose in a state that paid unemployment benefits to strikers (funded largely by the employer) (440 U.S. at 524 & n.4). /9/ Although acknowledging that these payments "altered the economic balance between labor and management (id. at 532 (footnote omitted)), the Court nevertheless concluded that Congress intended to leave the states free to grant or deny such benefits. /10/ New York Telephone, therefore, effectively answers several threshold questions in this case. First, Congress's toleration of a range of responses by the states is surely expansive enough to insulate a state's determination to deny benefits to strikers. After all, a state can be free to pay benefits only if it is free to deny them. And second, Michigan's decision not to pay benefits is not preempted by the NLRA merely because it "affects the relative strength of the antagonists in a bargaining dispute" (440 U.S. at 546). New York Telephone is premised on the assumption that the statute at issue there disrupted the labor-management equilibrium (not only by paying strikers, but also by compelling employers to underwrite those payments). To be sure, New York Telephone does not dispose of the present case in its entirety. However, even as to two key respects in which this case differs from New York Telephone, the Court's disposition of New York Telephone provides illumination. Because the statute involved in New York Telephone benefited strikers, the Court was not faced with a "claim of interference with employee rights protected by Section 7" (440 U.S. at 529). Nevertheless, in rejecting the claim that the New York statute impermissibly interfered with the free process of collective bargaining, the Court necessarily concluded that some interference with that process was tolerable. Moreover, unless states are obliged to pay benefits to strikers, a notion at odds with all the views expressed in New York Telephone, they remain free to leave strikers uncompensated. Since that course would inveitably lead to claims of interference with a Section 7 right, the decision to grant the states freedom of action must embrace the possibility that some employee rights may be abridged. Thus, the fact of interference with a Section 7 right is not itself dispositive; rather, the question is whether the interference exceeds permissible bounds. E.g., Nash v. Florida Industrial Comm'n, 389 U.S. 235 (1967). /11/ A second particular in which this case differs from New York Telephone is that here the affected employees were not themselves on strike. Rather, they were laid off because of production cuts at their plants caused by strikes appellants directly financed at other GM facilities. This case thus presents a variation on the theme of persons unemployed due to their involvement in a labor dispute. But, denial of benefits to those who cause their own unemployment by financing strikes at functionally-integrated facilities is no more intrusive on Section 7 rights than denying such benefits to strikers themselves. Indeed, denial of benefits to strikers almost certainly has a more direct effect on the Section 7 right to strike since the denial would bring pressure directly on those contemplating taking strike action. The Michigan law therefore fits comfortably within the range of options that, as this Court recognized in New York Telephone, Congress left open to the states. B. The Legislative History Demonstrates That Congress Intended States To Be Free To Determine The Eligibility Of Persons Unemployed Due To A Labor Dispute, Notwithstanding The Effect Of Those Decisions On Interests Protected By The NLRA The simultaneous consideration and contemporaneous enactment of the NLRA and the Social Security Act, including debate on the issue of labor dispute disqualification, require that both Acts be examined to learn Congress's intent in 1935. In acting against a backdrop of massive unemployment, Congress's primary concern in enacting the unemployment compensation provisions in Title IX of the original Social Security Act was to ameliorate the adverse social and economic effects of this substantial involuntary unemployment. See H.R. Rep. 615, 74th Cong., 1st Sess. 8 (1935); S. Rep. 628, 74th Cong., 1st Sess. 11 (1935). However, Congress also focused sharply on the need to protect the freedom of choice for each state in determining the balance to be struck in the distribution of economic benefits and burdens under the unemployment compensation system. After examining the legislative history of Title IX, this Court found it "abundantly clear" that "'(e)xcept for a few standards which were necessary to render certain that the State unemployment compensation laws (were) genuine unemployment compensation acts and not merely relief measures, the states (were) left free to set up any unemployment compensation system they wish, without dictation from Washington.'" New York Telephone, 440 U.S. at 537 & 543 n.42, quoting S. Rep. 628, supra, at 13. To this same effect, the Senate report also stated that "(s)uch latitude is very essential because the rate of unemployment varies greatly in different states, being twice as great in some states as in others. * * * In accordance with the entire spirit of the Social Security Act, we believe that the Federal Government should not attempt to dictate to the states which type of unemployment compensation law they should adopt." Thus, the states were left free of federal "dictation" and could "decide for themselves which type best suits their peculiar conditions." S. Rep. 628, supra, at 13-14. /12/ In choosing not to impose federal restrictions on the payment of unemployment benefits to strikers, Congress followed the recommendation of the Report of the Committee on Economic Security that, since "considerable controversy has developed over the type of unemployment compensation legislation that should be enacted," including "the type of unemployment to be benefited," it was desirable to permit "considerable variation, so that we may learn through demonstration what is best." /13/ Economic Security Act: Hearings on S. 1130 Before the Senate Comm. on Finance, 74th Cong., 1st Sess. 1323 (1935) (Senate Hearings). The legislation ultimately adopted by Congress was thus intended to permit "variations in State laws but insure(s) uniformity in respects in which uniformity is absolutely essential" (ibid.). Consistent with this intent, Section 903(a) of the original Act, 49 Stat. 640 (now codified at 26 U.S.C. 3304(a)), provided that a state unemployment compensation law must meet only six specific requirements to qualify under the federal scheme. The one requirement that relates to benefit eligibility provides that (26 U.S.C. 3304(a)(5)): (C)ompensation shall not be denied * * * 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. Section 903(a) shows that, when Congress wanted to require states to have certain eligibility standards, it knew how to say so. See New York Telephone, 440 U.S. at 538 n.29; Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471, 488 & n.16 (1977). Of particular significance to the present inquiry, Congress adopted these eligibility conditions for the very purpose of insuring "the compatibility of state unemployment compensation laws with the then brand-new labor statute." Grinnell Corp. v. Hackett, 475 F.2d 449, 454-455 (1st Cir.), cert. denied, 414 U.S. 858 (1973). See Burns, Unemployment Compensation and Socio-Economic Objectives, 55 Yale L.J. 1, 17 n.49 (1945). /14/ After reviewing the legislative history of the Social Security Act and the Act's specific eligibility conditions for benefits, this Court concluded in Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471, 488-489 (1977) -- as it did in New York Telephone, 440 U.S. at 536-538 -- that Congress intended to leave the states free to determine the eligibility of persons unemployed due to labor disputes. In Hodory, the Court approved Ohio's labor dispute provision, which at the time the case arose broadly disqualified an employee if "'(h)is unemployment was due to a labor dispute other than a lockout at any factory, establishment, or other premises located in this or any other state and owned or operated by the employer by which he is or was last employed'" (431 U.S. at 473). /15/ Although that case did not present a claim of presumption under the NLRA, and did not require consideration of the relationship between the NLRA and the state law at issue (id. at 475 n.3), the Court rejected the argument that Congress intended in the Social Security Act and in "draft" unemployment compensation bills prepared by the Social Security Board /16/ following the Act's passage, to require states to pay benefits to workers involuntarily unemployed due to labor disputes. The Court noted (431 U.S. at 485) that the draft bills were "'merely suggestive,'" and that the Social Security Board had made clear that "'it is the final responsibility and the right of each state to determine for itself just what type of legislation it desires and how it shall be drafted.'" Moreover, the Court found that the very draft bills approved by the Social Security Board "could serve to disqualify even a person who actively opposed a strike and could extend to persons laid off because of a dispute at another plant owned by the same employer" (id. at 485-486). In addition, the Court found that states have an interest in broadly disqualifying individuals unemployed due to a strike in order to preserve the "fiscal integrity" of their unemployment compensation funds (id. at 491). Because an employer's unemployment insurance contribution costs rise for every laid-off worker who is qualified to collect unemployment compensation, a state may properly limit the employers' costs by barring benefits to anyone unemployed due to a strike against his employer (id. at 491-492). Finally, the Court noted the absence of any provision pertaining to labor dispute disqualifications in the Social Security Act and concluded (id. at 488-489): (W)hen Congress wished to impose or forbid a condition for compensation, it was able to do so in explicit terms. * * * The fact that Congress has chosen not to legislate on the subject of labor dispute disqualifications confirms our belief that * * * the Social Security Act was (not) intended to restrict the States' freedom to legislate in this area. Thus, the legislative history that formed the basis of the Court's decisions in Hodory and New York Telephone makes clear that, in choosing not to legislate on the subject of labor dispute disqualifications, Congress left the states free, "'without dictation from Washington'" (440 U.S. at 543), to determine a broad range of policy issues concerning the eligibility for benefits of persons unemployed due to a labor dispute, notwithstanding the effect of certain of those decisions on interests protected under the NLRA. As we now show, the legislative materials further demonstrate that Congress intended, as part of the states' broad freedom in this area, to allow states to disqualify employees from unemployment compensation on the basis of their direct financial support of the labor dispute that resulted in their unemployment. C. Congress Intended That States Have Sufficient Latitude To Choose To Disqualify Employees On The Basis Of Their Payment Of Financial Support Specifically And Meaningfully Connected To The Labor Dispute Causing Their Unemployment The remaining question in this case is whether states are free to disqualify not only strikers but also persons who financially supported a strike against their employer that caused their own unemployment. The legislative history clearly shows Congress's intent to permit the states to do so. As we now show, Congress was aware of pre-existing state laws that disqualified persons other than strikers. That understanding was carried forward in early proposals generated by the Social Security Board that authorized financing disqualifications, and by laws in a majority of states adopting some form of financing disqualification. In addition, over the past 50 years the Social Security Board and the Labor Department have never objected to such provisions. This unbroken record of administrative acceptance, which is entitled to considerable deference, further reflects Congress's intent to let the states develop plans with a minimum of federal interference. 1. Prior to enactment of the Social Security Act in 1935, only a handful of states had passed unemployment compensation laws, and the labor dispute provisions of those states' laws did not seek to distinguish between groups of employees on the basis of their "direct involvement" in a labor dispute. Rather, the provisions disqualified all employees out of work due to a dispute in progress at their place of employment, without regard to whether they were directly involved or were simply laid off due to a lack of work. /17/ Thus, Congress's preenactment understanding of the permissible scope of labor dispute disqualifications was not limited simply to the question of striker eligibility. Similarly, in draft unemployment compensation bills presented to Congress by the President's Committee on Economic Security and the American Association for Social Security during hearings on the Social Security Act, the labor dispute provisions broadly disqualified any claimant whose "unemployment is due to a labor dispute" or "who has lost his employment or has left his employment by reason of a strike." See Senate Hearings 601, 472. For the purpose of determining the validity of the statute at issue in New York Telephone, the Court properly concluded that those provisions would at a minimum have disqualified actual strikers (440 U.S. at 543 n.41), and that in choosing not to legislate on the subject of labor dispute disqualifications Congress therefore at least left the states free to determine the eligibility of strikers. But the proposals of which Congress was aware also disqualified many claimants in addition to actual strikers; accordingly, as Hodory makes clear, in enacting the Social Security Act Congress necessarily contemplated that states would be free to disqualify some or all of such additional persons. Given this history, there is no principled basis upon which to conclude that in 1935 Congress intended to tolerate the disqualification only of strikers and not of persons who had made financial contributions to a strike that resulted in their loss of employment. Moreover, immediately following passage of the Social Security Act the Social Security Board, established in Title VII, 49 Stat. 635, prepared a set of draft bills disqualifying a worker unless "(he) is not participating in or financing or directly interested in the labor dispute" or "does not belong to a grade or class of workers * * * any of whom are participating in or financing or directly interested in the dispute." /18/ U.S. Social Security Board, Draft Bills For State Unemployment Compensation of Pooled Fund and Employer Reserve Account Types Section 5(d)(1) and (2) (1936) (Draft Bills). The draft bills, modeled on the British Unemployment Insurance Act, were designed to aid the states in developing their own statutes. See M. Hughes, U.S. Social Security Administration, Principles Underlying Labor-Dispute Disqualification 3 (1946); 1936 Soc. Security Bd. Ann. Rep. 41 (1937). The bills thus provided an alternative for states that chose not to adopt a blanket exclusion of the kind approved in Hodory, but that nonetheless wished to disqualify claimants, other than actual strikers, who were directly "implicated" in a labor dispute. See Lesser, Labor Disputes and Unemployment Compensation, 55 Yale L.J. 167, 168 (1945); Fierst & Spector, Unemployment Compensation in Labor Disputes, 49 Yale L.J. 461, 462-463 (1940). /19/ In a preface to the bills the Social Security Board stated that its provisions met "the minimum standards * * * in the Social Security Act for State unemployment compensation laws," but, as the Court noted in Hodory, the Board also stated that the draft bills were "merely suggestive" and were not intended to displace the authority of each state to draft labor dispute disqualifications as it saw fit. Draft Bills 1 preamble. State laws containing the draft labor dispute provision, including the financing disqualification, were immediately adopted by the vast majority of states. /20/ Despite the draft bills' objective of limiting the broad labor dispute disqualification in existence prior to the Social Security Act, early interpretations of the financing provision drew on decisions under the British statute to hold broadly that all members were deemed to be financing a union's strike simply by paying regular union dues. See M. Hughes, supra, at 67-69 (discussing cases); Federal Security Agency, Social Security Board Yearbook 1940, at 71 (1941). In response to strong criticism of this interpretation the states began to narrow their disqualifications. See Shadur, Unemployment Benefits and the "Labor Dispute" Disqualification, 17 U. Chi. L. Rev. 294, 328 (1950). Accordingly, in 1937, Michigan amended its financing-disqualification to exclude "regular union dues" from the type of payments that would preclude unemployment compensation. /21/ Other states similarly qualified the financing provisions in their statutes, either by interpretation or, as in Michigan's case, by statutory amendment. See Shadur, supra, 17 U. Chi. L. Rev. at 328. And in a 1940 memorandum prepared by the Social Security Board for use by its staff in consulting with states, the Board reflected the emerging narrow view of financing disqualifications by stating that "(t)he provision found in some laws extending the disqualification to individuals who are financing a labor dispute is not recommended since it might operate to disqualify an individual not concerned with the dispute solely on the basis of his payment of dues to the union that is conducting a strike." Bureau of Employment Security, U.S. Social Security Board, Proposed State Legislation Providing for Unemployment Compensation and Public Employment Offices 56 note (Nov. 1940). By the mid-1950's it was generally accepted by commentators and the states "that the payment of union dues alone is not enough to establish a financing in a labor dispute." Williams, The Labor Dispute Disqualification -- A Primer and Some Problems, 8 Vand. L. Rev. 338, 349-350 (1955). It remained equally clear, however, that "(s)pecific payment of contributions or strike benefits to the striking union would establish a financing." Id. at 349. /22/ Thus, history shows that financing disqualifications were first proposed by the Social Security Board itself and adopted by a majority of states immediately following passage of the Social Security Act. Through experience states have chosen to narrow the scope of disqualification based on financing, and Michigan's provision relfects that development by expressly excluding regular union dues and confining its application to claimants who in the state's view manifest their direct involvement in a dispute by contributing extraordinary payments that are meaningfully connected to the dispute. As was the case with the statute approved in New York Telephone, Michigan's financing provision, as well as the financing provitions in every other state, have never met with any objection from the Social Security Board or the Department of Labor. Comparison of State Unemployment Insurance Laws, supra note 7, Table 405, at 4-45 to 4-47. And, as in New York Telephone, Congress has never expressed its disapproval of labor dispute disqualifications based on financing, but in considering subsequent amendments to the Social Security Act has indicated that states remain free broadly to specify "the conditions for disqualification * * * for unemployment due to a labor dispute" (statements in both the House and Senate Report on the Employment Security Amendments of 1969 and 1970). H.R. Rep. 91-612, 91st Cong., 1st Sess. 18-19 (1969); S. Rep. 91-752, 91st Cong., 2d Sess. 23-24 (1970). 2. Appellants principal contention (Br. 25-26) is that, notwithstanding the evidence concerning the development of financing disqualifications subsequent to enactment of the Social Security Act, there is no affirmative evidence that Congress was aware of such a ground for disqualification prior to the Act's passage. Appellants assert that by contrast, Congress was specifically made aware of proposals to disqualify strikers prior to passing the Social Security Act, and that in choosing not to legislate on labor dispute disqualifications Congress therefore intended to permit only that limited disqualification, approved in New York Telephone, and no other. Contrary to appellants' contention, the legislative record plainly demonstrates Congress's awareness that states could choose to disqualify persons other than actual strikers (see pp. 21-24, supra). Indeed, some states had already done so (ibid.). Nor is there merit to appellants' contention (Br. 29-30) that the omission of a financing provision from the District of Columbia unemployment law is evidence that such a provision is inconsistent with congressional intent. In enacting the District of Columbia law in 1935, Congress was acting in a capacity similar to that of a state legislature. It does not follow from the choice made by Congress, as local lawmaker, that the same policy judgment was mandated nationwide. Indeed, Congress's decision to deny benefits to strikers in the District of Columbia did not preclude New York from taking exactly the opposite view. Congress was committed to "free local choice," and "it neither assumed nor intended that its passage of the NLRA" would preempt either the payment or denial of benefits to strikers or to persons who specifically and directly financed the strikes that resulted in their unemployment (440 U.S. at 543 n.41). Appellants assert (Br. 20) that, because under the Union's constitution employees can be required to pay dues as a condition of maintaining membership, Michigan's disqualification, notwithstanding that it is limited to the payment of extraordinary assessments specifically in support of a strike, puts claimants to the choice of forgoing eligibility for benefits or jeopardizing their union membership. Accordingly, they contend, it runs afoul of Section 903(a) of the original Social Security Act (recodified at 26 U.S.C. 3304(a)(5)(C)), which prohibits states from requiring as a condition of eligibility that an unemployed claimant accept substitute employment "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." /23/ Appellants' argument is not persuasive. As this Court made clear in Hodory and New York Telephone, Section 903(a) does not preclude a state from denying benefits to a claimant whose unemployment is due to his involvement in a labor dispute, even where that "involvement" consisted of going out on strike. A financing disqualification presents a claimant with no different choice than does a disqualification based on strike participation. An employee may thus be compelled either to strike or to contribute to a strike as a condition of maintaining union membership, but that fact alone does not preclude a state from disqualifying employees from benefits on either ground. Finally, appellants assert (Br. 33) that they have discovered no cases other than the decision below "holding that claimants were disqualified solely * * * on grounds of 'financing.'" They accordingly suggest that, because the result that Michigan reached in this case assertedly represents an isolated view that other states would not share, Michigan's financing disqualification cannot be said to have been within the contemplation of Congress at the time it enacted the NLRA and Social Security Act. Appellants, however, point to no case, nor have we discovered any, that disapproves a financing disqualification of the kind here involved. Indeed, the cases cited by appellants all suggest that financial contributions that are specifically and meaningfully connected to a labor dispute would alone constitute adequate grounds for disqualification. /24/ Even if appellants were correct and other states would not interpret their financing disqualifications as Michigan did here, there would still be no basis for concluding that Congress intended to prevent Michigan from reaching that result. The New York statute approved in New York Telephone, for example, was one of only two in the nation that granted benefits to strikers, and New York is currently alone in its view on that issue. See Comparison of State Unemployment Insurance Laws, supra, at 4-13. In choosing not to legislate on the subject of labor dispute disqualifications and in leaving the matter to the states, Congress contemplated that the states would constitute "separate laboratories" (New York Telephone, 440 U.S. at 541 n.36), that there would be "considerable variation" and that "no two State laws (would be) alike" (Senate Hearings 1323; Comparison of State Unemployment Insurance Laws, supra, at iii), and that preemption would not "'hinge upon the myriad provisions of state unemployment compensation laws.'" New York Telephone, 440 U.S. at 535 (quoting NLRB v. Gullet Gin Co., 340 U.S. 361, 365 (1951)). Michigan, as the home state to a large industrial employer with operations nationwide, has sought to protect its unemployment compensation funds from excessive drain and to avoid subjecting the employer to the increased contribution costs that would result from paying benefits to individuals who contribute direct financial support to strikers at their employer's other plants in circumstances where, due to the employer's vertical integration, those strikes would foreseeably lead to their own unemployment. See n.15, supra. In this complex area of social policy, that is a judgment Congress left states free to make on the basis of their own experience. See Hodory, 431 U.S. at 492-493. CONCLUSION The judgment of the Michigan Supreme Court should be affirmed. Respectfully submitted. CHARLES FRIED Solicitor General CAROLYN B. KUHL Deputy Solicitor General JERROLD J. GANZFRIED Assistant to the Solicitor General ROSEMARY M. COLLYER General Counsel JOHN E. HIGGINS, JR. Deputy General Counsel ROBERT E. ALLEN Associate General Counsel NORTON J. COME Deputy Associate General Counsel LINDA SHER Assistant General Counsel ROBERT C. BELL, JR. Attorney National Labor Relations Board JANUARY 1986 /1/ Some three weeks after the Ford strike commenced, the UAW also went on strike against the Caterpillar Company. J.S. App. 101a. /2/ The decision of the Michigan Court of Appeals upholding the state board's determination is reproduced at J.A. 201a-210a. /3/ In so finding, the court rejected appellants' contention that the term "regular union dues" in the Michigan statute should be construed as the equivalent of "'periodic dues * * * uniformly required as a condition of (union) * * * membership'" under the union security proviso to Section 8(a)(3) of the NLRA, 29 U.S.C. 158(a)(3). Appellants asserted that this would include all "dues * * * so long as they are part of the union's constitutionally adopted dues structure rather than separately imposed special assessments." In support of that argument appellants relied on a decision by the General Counsel of the National Labor Relations Board. In refusing to issue an unfair labor practice complaint against the UAW based on the emergency dues increase at issue here, the General Counsel concluded that the dues were "a permissible change in 'periodic dues'" under the proviso to Section 8(a)(3), payment of which the union could lawfully compel as a condition of membership under a union security clause. J.S. App. 144a-146a, 91a & n.25. The court found "no evidence of a legislative intention to equate 'regular union dues' with 'period dues' enforceable through a union security agreement under Section 8(a)(3) of the NLRA" (id. at 93a). /4/ The board of review is the successor to the appeal board (J.S. App. 11a n.7). /5/ A concurring board member found that a meaningful connection existed between the emergency dues and strike benefit payments based on the "commonalities of interest and shared objectives between those workers on strike and the workers who bec(a)me unemployed due to a labor dispute" (J.S. App. 127a). In the concurring member's view, the local disputes that followed the national GM agreement were, practically speaking and as a matter of bargaining history in the auto industry, simply part and parcel of a single collective bargaining emergency that was precipitated by the termination of the earlier contracts and that affected all UAW and GM employees equally. Two board members dissented because in their view the payments of emergency dues occurred before the local labor disputes arose and were intended only to finance national strikes, and because the actual strike benefit payments that "might conceivably be attributable to the claimants in this case are indirect and de minimus" (J.S. App. 133a-139a, 139a-142a). /6/ By the same reasoning, the court rejected appellants' contention that the Michigan statute impermissibly interferes with the internal affairs of labor unions by affecting the nature and timing of dues increases (J.S. App. 69a). The court also rejected a claim that the statute violated appellants' First Amendment right of freedom of association (J.S. App. 69a-72a). /7/ Statutes in 30 states contain a financing disqualification, and Florida, Massachusetts and Virginia also specify in their statutes that the payment of regular union dues does not constitute financing. See Manpower Administration, U.S. Dep't of Labor, Comparison of State Unemployment Insurance Laws 4-12 to 4-14 (Sept. 1985); id. Table 405, at 4-45 to 4-47; Fla. Stat. Ann. Section 443.101 (West 1981 & Supp. 1985); Mass. Ann. Laws ch. 151A, Section 25 (Law. Co-op. 1976 & Supp. 1985); Va. Code Section 60.1-52 (Supp. 1982). /8/ Thus, contrary to appellants' suggestion (Br. 19 & n.10), this case does not involve a financing disqualification based simply on the payment of regular union dues. The Michigan law would not disqualify claimants merely because they supported their union financially, even if, as was the case here prior to the dues amendment, a part of their regular dues payment went into a strike fund. Only payments specially raised to support the particular strike that caused the unemployment at issue are covered by the Michigan law. See Burrell v. Ford Motor Co., 386 Mich. 486, 494-495, 192 N.W.2d 207, 211 (1971). /9/ New York did not provide compensation in the same manner to strikers and to those not involved in a labor dispute. While benefits were ordinarily authorized after approximately one week of unemployment, an eight week wait was required for a person whose loss of employment was caused by "'a strike, lockout, or other industrial controversy in the establishment in which he was employed.'" 440 U.S. at 523 (quoting New York statute). /10/ No opinion in New York Telephone mustered a majority of the Court. By reading the opinions together, it is clear that a majority of the Court had no doubt about Congress's intent with respect to unemployment compensation as expressed in the legislative histories of the NLRA and the Social Security Act, which were passed within a short time of one another. See 440 U.S. at 540-546 (plurality opinion); id. at 546-547 (Brennan, J., concurring in the result); id. at 547-551 (Blackmun, J., concurring in the judgment). What divided the Court was the doctrinal approach to preemption. Three Justices concluded that, in view of Congress's sensitivity "to the importance of the States' interest in fashioning their own unemployment compensation programs and especially their own eligibility criteria," it was appropriate "to treat New York's statute with the same deference * * * 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.'" 440 U.S. at 539-540 (plurality opinion), quoting from San Diego Building Trades Council v. Garmon, 359 U.S. 236, 244 (1959). Justice Brennan, while finding "substance in (the plurality's) conclusion that the legislative history of the Social Security Act supports the argument that New York's law should be accorded a deference not unlike that accorded state laws touching interests deeply rooted in local feeling and responsibility," did not specifically adopt that view. 440 U.S. at 546-547 n.* (opinion concurring in the result). Moreover, a majority of the Court rejected the plurality's view, concluding that the "local interests" exception to the preemption doctrine was intended to cover only a limited number of state interests that are at the core of the States' duties and traditional concerns -- such as violence, libel and the intentional infliction of mental distress; that a state unemployment compensation law did not fit in that category; and that, therefore, if such law interferes with the regulatory scheme of the NLRA, it is preempted unless there is evidence of congressional intent to tolerate the state action. See 440 U.S. at 548-551 (concurring opinion of Blackmun, J., in which Marshall, J., joined); id. at 559-560 (dissenting opinion of Powell, J., in which Burger, C.J., and Stewart, J., joined). Accordingly once the Michigan Supreme Court found that the State's action affected rights protected by Section 7 of the NLRA, it placed on the State the burden of showing that Congress intended to tolerate that effect. /11/ We do not suggest that Congress intended that states could enact any unemployment compensation provision they desire, irrespective of the provisions of the NLRA. In Nash the Court held that a state's disqualification for benefits of an individual for filing unfair labor practice charges with the NLRB -- on the ground that the mere filing of charges constituted a disqualifying "labor dispute" within the meaning of the state's labor dispute disqualification provisions -- conflicted with the federal labor policy prohibiting retaliation or coercion of individuals who file charges with the NLRB. The Court found it "obvious * * * that this financial burden which Florida imposes will impede resort to the Act and thwart congressional reliance on individual action." 389 U.S. at 239. Accordingly, the Court concluded that the regulation "stood '"as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."'" Id. at 240 (quoting Hill v. Florida, 325 U.S. 538, 542 (1945)). The regulation involved in Nash could not be said to have been within Congress's contemplation as appropriate state action when it enacted the Social Security Act of 1935. /12/ Of five state statutes referred to and approved in the Senate report, four of them denied unemployment benefits to striking employees. S. Rep. 628, supra, at 13-14. /13/ In California Department of Human Resources Development v. Java, 402 U.S. 121, 130 (1971), this Court recognized that the "Social Security Act received its impetus from the Report of the Committee on Economic Security." /14/ As further evidence of legislative intent, the Court in New York Telephone noted (440 U.S. at 544) that the Social Security Board and later the Department of Labor had never raised a question about the state's unemployment compensation law. The Michigan law at issue here has a similar record of administrative acceptance. /15/ While most states require that the labor dispute resulting in a claimant's unemployment occur at the plant in which the claimant worked, Ohio and Michigan are among seven states that define the location of a disqualifying dispute more broadly to include other plants owned by the employer. See Comparison of State Unemployment Insurance Laws, supra, at 4-13. These provisions generally were designed to protect against requiring employers to finance, and states to pay, benefits where a strike called by a union at one plant results in a foreseeable lack of production and layoffs at the employer's other plants. See W. Lewis, Unemployment Compensation Law in Labor Disputes: Michigan Compared with Seven Selected States 1936-1964, at 41 (1964). As the Court noted in Hodory, the Ohio law was subsequently amended so that it now resembles in relevant respects the Michigan statute at issue here. The disqualification continues to extend to disputes either at the claimant's own plant or any other plant owned by his employer, but disqualification is limited to persons who are "'financing, participating in, or directly interested in (the) labor dispute.'" 431 U.S. at 473-474 n.1. /16/ Under the original Act, the Social Security Board was empowered to review state unemployment compensation plans and to determine whether they were consistent with the conditions set forth in Title IX (Section 903(a), 49 Stat. 640). That function is now performed by the Secretary of Labor. 26 U.S.C. 3304. /17/ See 1932 Wis. Laws 63 (as amended, 1935 Wis. Laws 292); 1935 Cal. Stat. 1238; 1935 Mass. Acts 644; 1939 N.H. Laws 164-165; 1935 Utah Laws 44; 1935 Wash. Laws 451. New York's law granting benefits to persons unemployed due to a labor dispute did so only after an extended waiting period, but the waiting period was not limited to persons directly involved in the dispute. 1935 N.Y. Laws 1032-1033. /18/ Appellants suggest (Br. 27) that because the financing disqualification "in the Board's 1936 draft bill did not surface until after the passage of the SSA" it is of little probative value in assessing congressional intent. However, the Court in New York Telephone found relevant to assessing congressional intent the fact that "the administrative agency originally charged by Title IX of the Act with qualifying state statutes for federal funds * * * (had) approved the New York statute." 440 U.S. at 544 n.43. The same unbroken line of administrative acceptance exists here. /19/ The draft bill provisions concerning participation and financing were designed to disqualify claimants who had manifested their direct involvement by some identifiable conduct. The "grade or class" and "direct interest" provisions were intended to disqualify individuals who had an interest in the outcome of the strike, even if they were not participating in or they actively opposed the strike. See Hodory, 431 U.S. at 485-486. The purpose of the latter provisions was to prevent a "keyman" strike by a small number of pivotal workers who could halt production "in the knowledge that a majority of the workers will get benefits and thus augment the workers' fighting fund," and also to prevent the unemployment compensation system from being "used to induce defections from a union which calls a strike by the promise of benefits to workers who take no part in the dispute." Lesser, supra, 55 Yale L.J. at 169. /20/ By 1937, at least 40 states had adopted financing disqualifications. The remaining states adopted a blanket disqualification, without regard to a claimant's involvement in the dispute causing his unemployment. See Bureau of Unemployment Compensation, U.S. Social Security Board, A Comparison of State Unemployment Compensation Laws 46-47 (1937); Fierst & Spector, supra, 49 Yale L.J. at 463. /21/ In a 1963 amendment, Michigan added the parenthetical language specifying that payments would escape disqualification if they are "in amounts and for purposes established prior to the inception of the labor dispute." Baker v. General Motors Corp., 74 Mich. App. 237, 246, 254 N.W.2d 45, 50 (1977). /22/ Appellants contend (Br. 28) that the Social Security Board's 1940 memorandum to the effect that a financing provision "is not recommended since it might operate to disqualify an individual not concerned with a dispute solely on the basis of his payment of dues to the union" is specific evidence that the Board would regard Michigan's disqualification as inconsistent with congressional intent. Appellants are incorrect. Read in the context of the historical development of state financing provisions, the Board's statement was critical only of the then-current view in some states that the payment of regular union dues, unconnected to a particular labor dispute, could constitute financing. But the Board continued to recognize the states' interests in disqualifying claimants "directly involved" in the dispute causing their unemployment, and it was never questioned that the "(s)pecific payment of contributions or strike benefits to the striking union would establish a financing." Williams, supra, 8 Vand. L. Rev. at 349. In any event, as noted above (p. 20), this Court made clear in Hodory that the statements of the Social Security Board were merely precatory and were never intended to supplant "'the final responsibility and the right of each state to determine for itself just what type of legislation it desires and how it shall be drafted'" (431 U.S. at 485 (quoting the Draft Bills 1)). Indeed, in a preface to a 1942 revised version of its 1940 memorandum, the Board stated that it "(was) not intended to restrict the scope or direction of State legislation nor to standardize the methods for developing a better social insurance program." Bureau of Employment Security, U.S. Social Security Board, Manual of State Employment Security Legislation at iii (Nov. 1942). /23/ Appellants no longer make the claim, contained in their jurisdictional statement (at 11-12) that Michigan disqualified claimants based on their payment of "'the periodic due * * * uniformly required'" as a condition of employment under a valid union security agreement. See Section 8(b)(2) and (a)(3) of the NLRA, 29 U.S.C. 158(b)(2) and (a)(3). As the record shows (J.S. App. 20a, 107a), there was no collective bargaining agreement in effect, and no operative union security clause, at the time the special strike contributions was assessed. Appellants therefore could not have been discharged for refusing to pay the dues, and the Michigan Employment Security Board of Review expressly relied on that fact in finding that the payments could serve as grounds for disqualification (J.S. App. 107a). This case thus presents no issue of a conflict between the state's disqualification provision and the NLRA provision that employees governed by a union security clause can be required to pay regular dues as a condition of keeping their jobs. Although the General Counsel administratively determined (n.3, supra) that the union's strike assessment constituted a permissible change in "periodic dues" that could be required of other UAW members working under a union security agreement, the Board did not have an opportunity to pass on that question. The Board's settled interpretation is that special strike assessments do not constitute periodic dues which could lawfully be required under a union security clause. See Carpenters Local 455, 271 N.L.R.B. 1099, 1100 (1984); Food Fair Stores v. NLRB, 307 F.2d 3, 11 (3d Cir. 1962); Peerless Tool & Engineering Co., 111 N.L.R.B. 853, 871 (1955). /24/ See General Motors Corp. v. Bowling, 85 Ill. 2d 539, 545, 426 N.E.2d 1210, 1213 (1981) ("A payment of money is not 'financing' a labor dispute unless there is a meaningful connection between the payment and the dispute.") (citing with approval Baker v. General Motors Corp., 409 Mich. 639, 297 N.W.2d 387 (1980)); Outboard, Marine & Mfg. Co. v. Gordon, 403 Ill. 523, 538, 87 N.E.2d 610, 618 (1949) (suggesting that payment of support would constitute financing if it was specifically related to a strike and was "used in any part for strike benefits or to assist in any particular in prolonging the strike"); Burrell v. Ford Motor Co., 386 Mich. 486, 494-495, 192 N.W.2d 207, 211 (1971) (payment of non-regular dues in amounts and for purposes connected to a labor dispute could constitute financing); Burgoon v. Board of Review, 100 N.J. Super. 569, 579, 242 A.2d 847, 853 (App. Div. 1968) (claimants disqualified in part on financing grounds where their dues to their international union "were used, at least in part, to finance the strike"); Soricelli v. Board of Review, 46 N.J. Super. 299, 311, 134 A.2d 723, 729 (App. Div. 1957) (payment of $1.00 to a fund in support of striking employees "alone would disqualify claimant from benefits"). But cf. United Steel Workers v. Meierhenry, 608 F.Supp. 201, 202-203, 205-209 (D.S.D. 1985), appeal docketed sub nom. Johnson v. United Steelworkers, No. 85-5105 (8th Cir.) (unlawful for state to deny benefits to union dues-paying members while awarding them to nonmembers working in the same bargaining unit, even though all unit employees were subject to disqualification as "directly interested" in the outcome of the dispute within the meaning of the state statute; in so holding, however, the court did not disapprove the use of a financing disqualification keyed to payments specifically in support of particular strikes that manifest a claimants direct involvement in a labor dispute).