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Abide by Abood no more: Public sector unions take a direct hit on agency fees

June 28, 2018

FeesOn June 27, 2018, the Supreme Court of the United States, in a 5-4 ruling in Janus v. AFSCME, overruled 41-year-old precedent when it ruled that an Illinois law requiring non-union members to pay “agency fees,” i.e., a percentage of the full union dues, was unconstitutional.

Under Abood v. Detroit Board of Education, agency fees could cover union expenditures attributable to those activities “germane” to the union’s collective bargaining activities (chargeable expenditures) but not the union’s political and ideological projects (non-chargeable expenditures). Unions set agency fees annually and send non-members a notice explaining the basis for the fees and the breakdown of expenditures. In this case, the fee equaled 78% of full union dues.

Mark Janus is a state employee in a collective bargaining unit represented by the American Federation of State County and Municipal Employees (AFSCME), a public-sector union. Janus refused to join AFSCME because he opposed many of its positions, including those taken in collective bargaining. But the Illinois law required Janus to pay the agency fee. Janus sued, claiming the law violated his constitutional rights.

In deciding to abandon the Abood ruling, the Supreme Court stated that the doctrine of stare decisis is “at its weakest when we interpret the Constitution” and applies with “perhaps least force of all to decisions that wrongly denied First Amendment rights.” The Court noted that it has “not hesitated to overrule decisions offensive to the First Amendment (a fixed star in our constitutional constella­tion, if there is one).”

Applying this rationale to the Illinois agency fee law, the Court ruled that requiring non-consenting public-sector employees to pay such fees violates the First Amendment. The Court further held that Abood, a decision the Court described as “poorly reasoned,” erred in concluding otherwise.

According to the Court, forcing free and independent individuals to endorse ideas they find objectionable raises serious First Amendment concerns. The Court found neither of Abood’s two justifications for agency fees acceptable. Agency fees cannot be upheld on the ground that they promote an interest in “labor peace.” The Court noted that times have changed, and whatever may have been the case 41 years ago when Abood was decided, it is now undeniable that “labor peace” can readily be achieved through less restrictive means than the assessment of agency fees.

The Court similarly dismissed the other justification recognized under Abood—the risk of “free riders.” The Court found that the free rider argument was not a compelling state interest and was insufficient to overcome First Amendment objections. The Court found that the statutory requirement that unions represent members and non-members alike does not justify different treatment. The Court looked at experience in non-agency-fee jurisdictions and found that unions in those jurisdictions remained willing to represent non-members. Moreover, the union’s duty of fair representation “is a necessary concomitant of the authority that a union seeks when it chooses to be the exclusive representative[.]” In any event, the Court held that States can avoid free riders through less restrictive means than the imposition of agency fees.

Following Janus, states and public-sector unions may no longer extract agency fees from non-consenting employees. Instead, employees must choose to support the union. Accordingly, neither an agency fee nor any other form of payment to a public-sector union may be deducted from monies due an employee, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay the fee.

This decision will have a significant impact in the public sector. Public employers should review their union contracts to ensure that they take steps to comply with the Janus ruling. Labor contracts containing agency fee provisions are no longer permitted, and public employers should seek legal counsel regarding these issues.

Unions will undoubtedly suffer loss of revenue and will likely redouble their efforts to address lost income by raising dues and by shifting their focus to marketing efforts to get employees to sign on and join their ranks. Some unions may become more aggressive in pursuing members and ostracizing those who refuse to join. This could create stress and tension in a workforce. Employers need to ensure that they have enforceable anti-solicitation policies to maintain appropriate workplace decorum. In addition, employers should have a process that allows employees to report inappropriate conduct.

Time will tell whether this decision will accelerate the de-unionization of the public sector, but there is no question that this reversal will have wide-ranging impact in public workplaces.

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