Supreme Court Prohibits Mandatory Union Fees for Public Sector Non-Union Members

By Erica E. Flores - Skoler, Abbott & Presser, P.C.

June 28, 2018

The U.S. Supreme Court recently issued its highly-anticipated ruling in Janus v. American Federation of State, County, and Municipal Employees, a case that challenged the constitutionality of an Illinois law that allowed unions who represent public employees to collect mandatory contributions from employees who chose not to join the union.  In a 5-4 decision, the Court ruled that the Illinois law violated non-union members’ First Amendment rights, reversing a decision that had been in place for more than 40 years.

What does the First Amendment have to do with union dues?

There are many legal and practical differences between public-sector employees and private-sector employees.  One of those differences is the fact that public-sector employees have First Amendment rights in the workplace.  As a general rule, this means that government employees have the right to speak and associate freely and the right to refrain from speaking or associating when they choose not to, and they cannot be punished by their employers for exercising those rights.  It also means that they cannot be compelled to subsidize the speech of others by being forced to contribute financially to a speaker or a cause with which they do not agree.

Unions take many positions, and not just in the collective bargaining process.  They have a great deal of political power and regularly lobby for and against proposed legislation.  They also devote substantial resources to supporting or opposing political candidates whom they view as having pro- or anti-union views.  For these reasons, the U.S. Supreme Court has long recognized that requiring public employees to provide financial support to a union whose positions they oppose infringes on their First Amendment rights.

Wasn’t this issue decided a long time ago?

Few civil rights are absolute, including public employees’ First Amendment rights. In prior cases, the Supreme Court has held that First Amendment rights may lawfully be restricted by public employers in some circumstances.  For example, public employers can control or restrict employee speech that is part of the employee’s job duties, involves a matter of purely private concern, or would impede the employer’s ability to accomplish its public mandate.  The Court also has ruled on the very same issue it resolved yesterday, in a 1977 case called Abood v. Detroit Board of Education.

In the Abood case, the Court concluded that a Michigan law allowing public-sector unions to charge non-members an “agency fee” did not violate their First Amendment rights because the law’s interference with those rights was outweighed by the government’s reasons for passing it.  First, the Court reasoned that unions are obligated to fairly represent all employees in the bargaining unit, whether they were union members or not, and that the state law was meant to promote “labor peace”; without agency fees, there could be “confusion and conflict” due to inter-union rivalries and conflicting demands from different unions.  Second, the Court found that the law was necessary to prevent employee “free-riders” who would otherwise benefit from the union’s collective bargaining without having shared in its cost.  Thus, the Court held that as long as the agency fee was used exclusively for collective bargaining activities, and not for the union’s “ideological” activities, they did not violate non-union members’ constitutional rights.

Why did the Court change its mind?

This week, after 41 years, the Supreme Court overturned the Abood case.  It did so for the following reasons:

• The Court concluded that a public union’s ability to serve effectively as a unit’s exclusive bargaining representative has little to with whether it is able to charge non-members agency fees. Both the federal government and many states prohibit agency fees, and many of their public-sector unions are the exclusive bargaining representatives for their bargaining units, which include both members and non-members.

• The Court also concluded that government does not have a compelling interest in preventing non-union members from free-riding. Many organizations lobby and speak out on behalf of groups whose interests they claim to represent, like veterans and seniors, but they have no right to collect mandatory fees from all people who may benefit in some way from the group’s efforts.  Unions should not be treated differently, even if they are the employees’ elected, exclusive bargaining representatives.  Again, lots of public sector unions effectively represent entire bargaining units without having the right to collect agency fees, and the benefits of being designated as exclusive bargaining agent outweigh the perceived burden of fairly representing non-members.

• According to the Court, union speech in the collective bargaining context is not exclusively related to matters of purely private concern to employees. Bargaining often involves highly important public matters, such as state budgets, taxes, education, child welfare, healthcare, and the rights of minorities.  In short, public sector bargaining is inherently political.  As a result, the First Amendment applies to all union speech, including speech in the collective-bargaining context.

• And finally, the Court observed that there are practical difficulties associated with the Abood ruling, including the fact that agency fees are difficult to calculate because unions cannot draw a precise line between collective bargaining activities and “ideological” activities and that non-members have faced great expense and difficulty when seeking to challenge those calculations.

What does this mean for public-sector employers?

The significance of the Supreme Court’s decision cannot be overstated in the 21 states where public sector unions are legally authorized to collect agency fees from non-members.  In no uncertain terms, the Court held that “[n]either an agency fee nor any other payment to the union may be deducted from a nonmember’s wages, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay.”

Whether the ruling will prompt a mass exodus from union membership by public employees remains to be seen, but their membership rolls are certain to take a hit, and that very well could threaten their financial viability, especially over time.  As a result, labor leaders are already planning so-called “re-commitment” campaigns, seeking to persuade public employees to remain members.  Public unions are also likely to try to take advantage of a single sentence in the Supreme Court’s 46-page majority decision, where the Court suggested that unions could charge a fee to non-members for certain services, such as grievance and arbitration procedures, which would be a “more tailored alternative” to the problem of free-riders with a lesser burden on First Amendment rights.  Public employers should expect these issues to come up in bargaining.

We will continue to follow the fallout from this week's ruling and will report any important additional developments for employers on our blog.  No matter how things play out down the road, however, public sector employers must take immediate steps to implement the Janus ruling.  Most importantly, they should immediately eliminate agency fee deductions from employees who are not union members, unless such employees have consented, in writing, to the deduction.  Public employers are also likely to be inundated with questions from members and non-members alike about how the decision will affect them.  Indeed, the choice between full dues and an agency fee is very different from the choice between full dues and nothing at all, and some members may want to get out of the union to avoid the cost.  Accordingly, public employers should consider proactively consulting with both union leaders and their labor counsel to develop a plan to address these issues.  Such a plan may include developing a process for current members to re-affirm their union membership going forward, and even putting union fee deductions on hold in the interim.