Opinion
No. 77-746-T
December 5, 1978
Estates — Debts Which Have Priority — Wages — Assignment — Union Dues CheckOff
Amounts owed to a union under a "dues check-off" system are not entitled to priority as wages since the dues check-off is a requirement of union representation pursuant to a collective bargaining agreement with the employer rather than a true wage assignment. Under the collective bargaining agreement, the bankrupt agreed to deduct three percent of each participating employee's wages and remit that amount to the union. An employee, in order to participate, submitted a signed card requesting the transfer. Section 64a(2) of the Bankruptcy Act provides that wages earned within three months of bankruptcy are accorded a priority second only to expenses of administration. The purpose of the priority is to alleviate the hardship caused by unemployment and the tendency has been to denominate as "wages" those monies which would benefit the employee immediately. However, an employee with a right to receive payment of wages may assign that right to a third party and that third party is entitled to the priority. If, as with true assignments, each employee voluntarily chose this arrangment rather than paying the union dues in some other manner, then the intent of the parties should govern and these monies are wages entitled to priority. If, however, the dues check-off is a requirement of employment or in any way coerced by the union pursuant to the collective bargaining agreement, then the policy consideration of immediate benefit should control and these monies would not be entitled to priority. In this case, the dues check-off is a requirement of union representation pursuant to the collective bargaining agreement with the employer rather than a true wage assignment. Consequently, the claim is disallowed as a priority claim and allowed as a general unsecured claim. See Sec. 64a(2) [§ 507(a)(3)] at ¶ 9029.