WASHINGTON (Reuters) - The U.S. Supreme Court struck down on Thursday a California law that prohibits employers from using state money to influence employees' views on unions in their workplace.
By a 7-2 vote, the high court sided with the U.S. Chamber of Commerce business group and with the Bush administration. It ruled federal labor law pre-empted the California law adopted in 2000 and the first of its kind in the nation.
The law prohibits employers who receive state funds and grants from using the money to "assist, promote or deter union organizing." It also requires companies to maintain detailed records on how public money has been spent.
Opponents also argued the California law unconstitutionally restricted employers' speech in violation of their First Amendment rights.
California defended the law and said it simply sought to make sure the state does not subsidize an employer's union activities. The law allows the state to be neutral in labor disputes, California's lawyers said.
The Chamber of Commerce challenged the law in 2002 and won before a federal judge. But the full U.S. appeals court in California upheld the law, prompting the business group to appeal to the Supreme Court.
New York, which has a similar law, and 17 other states supported California. A number of states have been considering adopting similar laws if the California law was upheld.
The court's majority opinion, written by Justice John Paul Stevens, said the law was preempted by the National Labor Relations Act. Congress in adopting the federal law expressly sought to protect free debate, he said.
Justices Stephen Breyer and Ruth Bader Ginsburg dissented.
Reporting by James Vicini, Editing by Deborah Charles and David Wiessler