Legislation prohibiting employers from using state dollars to influence union organization is undergoing its first test under a lawsuit filed by the Service Employees International Union Local 399 and one of its members against two Santa Monica convalescent homes.

Thousands of employers could be affected by the outcome of the case, which may decide the future of the new law that seeks to keep state contractors and businesses that receive state funding from using taxpayer dollars to keep workers from organizing.

The suit contends that Santa Monica-based AB Crispino & Company Inc., owner of Santa Monica Convalescent Centers, used Medi-Cal funds to organize an anti-union campaign and failed to keep proper records of how state money was used.

The centers are among many nursing homes SEIU has tried to organize over the past year. The union, which represents about 2,500 nursing-home workers in Southern California, was successful at eight such facilities in the area but failed to organize workers at the Santa Monica centers.

“Health care facilities, least of all nursing homes already in a state of crisis, should not unlawfully divert our precious public health dollars to interfere with workers’ freedom to form a union,” said Eliseo Medina, SEIU executive vice president, in a prepared release.

SEIU officials claim 60 percent of the estimated 50 workers at the facilities signed cards pledging their support for representation. A union vote that had been scheduled for March 21 was canceled after the employer allegedly questioned and threatened employees, according to the union.

AB Crispino officials did not return calls for comment.

“The state law is crystal-clear and it was quite clear that the defendant was in violation of the state law,” said Michael Wall, an attorney with Altshuler Berzon Nussbaum Rubin & Demain in San Francisco who is representing the union.

The legislation, introduced by Assemblyman Gil Cedillo (D-Los Angeles), in addition to keeping taxpayer dollars from being used to promote or deter union organization, requires any employer benefiting from state funds to keep strict records of how that money is used.

For example, if those employers hold mandatory meetings during work hours to dissuade workers from organizing, they must pay their employees for that time from an account free of state funds. Violators may face civil penalties including a fine of $1,000 per employee.

Some say the law cannot stand up to legal review.

“There are some pretty good arguments that it will not withstand court scrutiny,” said Lawrence Ginsberg, a labor attorney with Mitchell, Silberberg & Knupp LLP in Los Angeles. The firm often represents employers in labor cases.

The statute is preempted by the National Labor Relations Act, which establishes guidelines for union organization, and violates employers’ First Amendment rights, Ginsberg said. “In essence, they’re saying, ‘In return for these (state) funds, you cannot express your opinion on issues that are important to your workforce,'” he said.

A coalition of California employers in December sought a preliminary injunction to keep the law from taking effect but the request was denied.

SEIU Local 399 represents more than 16,000 health care workers in Southern California, including 2,500 nursing home workers.