Lindabury, McCormick, Estabrook & Cooper, P.C. Firm News & Events
In its June 27, 2018 opinion in Janus v. AFSCME, Council 31 authored by Justice Alito, a divided U.S. Supreme Court resolved a long-standing battle over the ability of public sector unions to charge non-members “fair share” or “agency fees” to cover the cost of collective bargaining and other representational activities. In a major defeat for unions, the Court struck down these mandatory union fees as impermissible violations of nonmembers’ First Amendment speech rights. While the decision is limited to union fee practices in the public sector, it portends to have significant consequences for the private sector labor movement as well.
Agency Fees Pre-Janus: Since the Court’s 1997 ruling in Abood v. Detroit Board of Education, the status of agency fees assessed against employees who opt not to join their representative labor union has been the subject of ongoing debate. The Abood case was the first time the Court squarely addressed the tension between nonmembers’ First Amendment Rights and compulsory union dues in the public sector. Consistent with its prior rulings concerning private sector union fees, the Court concluded that any portion of compulsory fees attributable to contract negotiations and administrative expenses was permissible because employees who elected not to join the union nevertheless benefited from the union’s representation activities, and agency fees were justified as a way to eliminate these “free riders.” However, the Abood Court reasoned that forcing nonmembers to fund any portion of fees attributable to the union’s support of ideological or political causes that they may not agree with would be an impermissible impingement of First Amendment speech rights.
In recent years, the Court has been called upon to consider the continued constitutional viability of the agency fees assessment sanctioned by Abood. In Harris v. Quinn, the Court struck down on First Amendment grounds mandatory agency fees assessed to home health aides, but that ruling was limited to that particular class of employees at issue in that case. Two years later, the Court appeared to be poised to overrule Abood in Friedrichs v. California Teachers Ass’n, an action by teachers challenging agency fees, but the unexpected death of Justice Scalia derailed that effort. Instead, the court issued a per curiam opinion upholding mandatory agency fees.
The Janus Ruling: The Petitioner, Mark Janus, refused to join the American Federation of State, County, and Municipal Employees because he opposed many of the public policy positions that the union advocated the positions it took in collective bargaining. Janus challenged the $44.58 per monthly fees, alleging that “nonmember fee deductions are coerced political speech” and that “the First Amendment forbids coercing any money from the non-members.”
At the outset, the Court recognized the First Amendment implications of agency fees, noting that “[c]ompelling individuals to mouth support for views they find objectionable violates that cardinal constitutional command, and in most contexts, any such effort would be universally condemned.” Because the compelled subsidization of speech impinges free speech, the Court ruled that the “exacting scrutiny” standard must be applied when assessing the constitutionality of agency fees. Under that standard, the compelled subsidy must “serve a compelling state interest that cannot be achieved through a means significantly less restrictive of associational freedoms.”
However, the two justifications for agency fees cited by the Court in Abood – “labor peace” and the risk of “free riders” – did not satisfy the “exacting scrutiny” standard. First, the Court observed 28 states as well as the federal government prohibit agency fees, yet millions of public sector employees adequately represented by their bargaining representatives regardless of their membership status. As for the “free riders” justification, the Court observed that “free-rider arguments . . . are generally insufficient to overcome First Amendment objections.” The Court concluded that developments since Abood “have shed new light on the issue of agency fees, and no reliance interests on the part of public-sector unions are sufficient to justify the perpetuation of the free speech violations that Abood has countenanced for the past 41 years. Abood is therefore overruled.”
Thus, states and public sector unions may no longer extract agency fees against nonmembers unless the employee affirmatively consents to pay, which acts as a waiver of First Amendment rights. The Court cautioned that such consent cannot be “presumed” and “must be freely given and shown by ‘clear and compelling’ evidence.” Current state laws permitting public sector unions to require nonmembers to finance union activities are now struck down as unconstitutional.
The Far-Reaching Effects of the Janus Ruling: The implications of the Janus ruling for the public sector labor movement cannot be overstated. While private sector union membership has significantly declined, public sector union membership has remained stable, currently at nearly 35 percent of all public employees. As a result of Janus, public sector unions will immediately lose a significant revenue stream, hampering both their representational activities as well as their advocacy for pro-worker initiatives in the political arena. In addition, public sector unions have long been financial backers for progressive candidates at the state and local levels, a practice that will likely be untenable to maintain. Amidst such declining revenues and influence, public sector unions face significant headwinds in maintaining and growing their membership.
On the private sector side, the Janus decision does not have any direct impact as it was limited to the government’s right to limit First Amendment rights. However, the “right to work” movement has been gaining significant steam, with 27 states enacting legislation prohibiting the collection of agency fees in the private sector. Whether the decision will further fuel such initiatives in other states as well as on the national level remains to be seen. At a minimum, the drastically-reduced funding stream available to public sector unions to support labor friendly legislation and candidates will negatively impact the private sector that was a beneficiary of these initiatives.
To counter lost revenues and declining relevance, there may be new state initiatives aimed and increasing union membership, such as the Public Service Freedom to Negotiate Act introduced by Congressional democrats which would allow for the deduction of agency fees from consenting employees. In addition, as suggested by Justice Alito in Janus, unions may attempt to soften the blow of Janus by charging nonmembers for direct services provided by the union, such as for aid during disciplinary proceedings or representation at arbitrations. Stay tuned for further developments in these areas.