Supreme Court Overturns Precedent in Ruling that Public-Sector Unions are Prohibited from Requiring Nonmembers to Pay Fees

By: Kristen L. Cook

Supreme Court Overturns Precedent in Ruling that Public-Sector Unions are Prohibited from Requiring Nonmembers to Pay Fees

On June 27, 2018, the United States Supreme Court issued an opinion in Janus v. American Federation of State, County, and Municipal Employees, Council 31, No. 16-1466 (2018) which held that requiring public-sector union members to pay agency fees violates the First Amendment.  The decision overruled a 1977 Supreme Court case, Abood v. Detroit Board of Education, 431 U.S. 209 (1977).  In Abood, the court upheld public-sector unions’ imposition of mandatory agency fees to support union activities such as collective bargaining and contract administration.  The fees could not be used for political purposes.

In Janus, Petitioner Mark Janus, an employee of the Illinois Department of Healthcare and Family Services, argued that he should not be required to pay an agency fee of $44.58 per month.  Janus had refused to join AFSCME because he opposed its public policy positions, including with respect to collective bargaining.  He asserted that AFSCME’s bargaining behavior did not appreciate Illinois’ fiscal crises and that the union did not bargain in the best interests of Illinois citizens.  The complaint alleged that all nonmember fee deductions constituted coerced political speech and that “the First Amendment forbids coercing any money from the non-members.”

By way of background, while workers have had the option to opt out of union membership, they were still required to pay what is known as an agency fee (also known as “fair share” or “representation” fees) in non-right-to-work states in order to cover the costs of their collective bargaining representation.  When no agency fee is required (such as in right-to-work states), all bargaining unit employees continue to be covered by the collective bargaining agreement regardless of whether they choose to pay union dues or representation fees.  In other words, non-paying employees still receive the benefits of the applicable collective bargaining agreement, including wages, benefits and representation in grievances and arbitrations.

The Court in Janus reconsidered and rejected a number of the Abood Court’s arguments, including the risk of so-called “free riders” as a justification for imposing agency fees.  Specifically, the unions argued that without agency fees, nonmembers could enjoy the benefits of union representation without having to shoulder any of the costs.  The Court, however, noted that “free rider-arguments…are generally insufficient to overcome First Amendment Objections.”  It found that to hold to the contrary would have “startling consequences.” In reaching its decision, the majority stated:

Compelling a person to subsidize the speech of other private speakers raises similar First Amendment concerns…As Jefferson famously put it, ‘to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhor[s] is sinful and tyrannical.’…We have therefore recognized that a ‘significant impingement on First Amendment rights’ occurs when public employees are required to provide financial support for a union that ‘takes many positions during collective bargaining that have powerful political and civic consequences.’

The majority discussed several areas of “great public concern” that it found that unions have influenced through their speech in collective bargaining, including how public money is spent; climate change; sexual orientation and gender identity; and minority religions.  The Court ultimately held that the balance of the State’s interests—in this case the interest in “bargaining with an adequately funded exclusive bargaining agent”—and employees’ free speech rights tipped in favor of the employees such that mandatory agency fees are not justified.

According to U.S. Department of Labor, 7.2 million public sector employees belonged to a union as of 2017—roughly equal to the number of private sector employees union members. The union membership rate of public-sector workers, however, is more than five times that of private sector workers (34.4 % compared to 6.5 % as of 2017).  Some estimate that as many as 400,000 public-sector union members may stop paying fees following the Court’s decisions.  Among the largest public-sector unions are the Service Employees International Union, AFSCME, National Education Association, and American Federation of Teachers.   

Currently, 28 states, including Michigan, are right-to-work states.  This means that employees in these states, including public-sector employees, were not required to pay agency fees even prior to the Janus decision.  To this extent, public-sector employees in right-to-work states will see minimal change following Janus.  The decision does, however, lend support to right-to-work laws, particularly on the issue of whether it is constitutional for right-to-work legislation to be applied to state employees.  Further, police and fire unions in Michigan were expressly exempted from right-to-work laws.  Pursuant to the Court’s opinion, this exemption is now effectively lost.

As has been the case in Michigan and other states following the passage of right-to-work laws, there is an ongoing political debate regarding the viability of public-sector unions after Janus.  Supporters argue that workers will not pay for services when not required to do so, thereby leaving the unions with insufficient funding.  The majority in Janus disagreed that the decision would mean the end of public-sector unions, noting that unions continue to operate and represent their members in jurisdictions that do not require agency fees (i.e., right-to-work states).  The fate of public-sector unions is yet to be seen.  Private sector employees in non-right-to-work states remain unaffected by Janus and may still be required to pay agency fees as the First Amendment applies only to state actors.

This article was written by Kristen L. Cook, who is a member of the Legal Affairs Committee of Detroit SHRM and an employment attorney with Kitch Drutchas Wagner Valitutti & Sherbrook. She can be reached at kristen.cook@kitch.com or at (313) 965-286.

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