A chief shop steward paid by an employer who works full-time on dealing with employee grievances but is subject to employer assignment and discipline may lawfully receive compensation from the employer, according to the Ninth Circuit Court of Appeals in San Francisco.  Section 302 of the Taft-Hartley Act prohibits employers from paying or providing anything of value to any employee representative, except that such payment is not prohibited where made to "an employee or former employee of such employer, as compensation for, or by reason of, his service as an employee of such employer."
 
The Chief Shop steward in the case had been an employee for 20 years prior to his election to the post.  Once elected, he performed steward duties full-time from an office on the shop floor and continued to receive compensation from the employer.  The company sought to invalidate the provision of the parties' collective bargaining agreement calling for the steward to be paid by the company.

The court upheld the provision, noting that the steward's duties were of substantial benefit to the employer, and that while not performing maintenance work on machinery as he did prior to becoming steward, he still had a relationship with the company in which it controlled his schedule and assignments, which was not the case in his relationship with the union.

It must be noted that this decision approves the steward arrangement on the facts before it, but on somewhat narrow fact-laden grounds.

IAMAW Local Lodge 964 v. BF Goodrich Aerospace, 387 F.3d 1046 (9th Cir. 2004)