Supreme Court Holds Mandated Public Sector Union Agency Fees Unconstitutional

In Labor by Coolidge Wall

On June 27, 2018, the United States Supreme Court declared that fees charged to dissenting employees pursuant to a union agency shop arrangement violates the First Amendment. In a 5-4 vote in Janus v. AFSCME, Council 31, No. 16-1466, the court found in favor of Mark Janus, an Illinois public employee who refused to join the union yet had so-called agency or “fair share” fees taken from his paycheck every month, adding up to more than $500 each year.

In finding for Janus, the Court overturned a 1977 decision, Abood v. Detroit Board of Education. There, a group of Detroit teachers (and non-union members) argued they should not have to subsidize a union they did not belong to. The Court in Abood found the statute allowing an “agency” fee to be constitutional, so long as the fee being collected was limited to expenses incurred in collective bargaining and related to the corresponding benefit to the employee. The Abood Court reasoned that “free riders” may refuse to become members but still benefit from union representation without paying for it.

The Court rejected the claim that only private interests were at stake in public sector contract negotiations, noting that collective bargaining can touch upon issues ranging from climate change, sexual orientation and gender identity, to education policy and healthcare spending. The majority found that “what unions have to say on these matters in the context of collective bargaining is of great public importance.” In addition to addressing these issues, union speech in collective bargaining affects how public money is spent. The speech at issue is therefore of substantial public concern and must be strictly scrutinized to determine its constitutionality.

Writing for the majority, Justice Samuel Alito noted that it “is hard to estimate how many billions of dollars have been taken from nonmembers and transferred to public-sector unions in violation of the First Amendment.” The Court held that compelling employees who do not wish to join a public-sector union to finance the union’s activities as a condition of their employment violates the First Amendment. Neither of the Abood rationales of promoting labor peace or the presence of “free riders” were sufficient justifications for compelling dues payments for subsidizing private speech that employees do not support.

What Public Employers Should Know

As unions seek to maintain or grow membership levels, they will have to continually demonstrate the value of joining. This may lead to more disputes with management, such as unfair labor practice charges or adversarial positions in bargaining. Ohio’s agency fee statute at R.C. 4117.09(C) suffers the same First Amendment problems as the Illinois statute at issue in Janus. Employers will need to consider how to refine their payroll practices so as to preclude any liability for payroll deductions without employee consent while also avoiding unfair labor practice charges. If you have questions about this important decision, please contact any member of the Coolidge Wall Labor and Employment Department.