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Supreme Court Deems Public-Sector Union Agency Fees Unconstitutional

On June 27, 2018, the United States Supreme Court ruled that mandated payment of so-called “agency fees” by non-union members in the public sector violated First Amendment principles protecting freedom of speech and association. In Janus v. American Federation of State, County and Municipal Employees Council 31, No. 16-1466, 2018 WL 3129785 (June 27, 2018) a 5-4 majority of the Court rejected the holding of the 1977 case Abood v. Detroit Board of Education, 431 U.S. 209 (1977), which permitted such fees, as a wrongly-decided imposition on individual constitutional rights. This landmark decision presents major implications for public-sector union funding in the future, and is notable for all employers with unionized workforces.

Before Janus, public-sector unions in states without “right-to-work” legislation were permitted to charge employees who were members of the bargaining unit, but not members of the union, a percentage of standard union dues labeled “agency fees.”[1] However, a public-sector union collecting agency fees was only permitted to use such fees for purposes “germane” to the union’s collective bargaining activities, and not for political purposes such as lobbying for certain legislation or supporting a preferred political candidate. This division was supported by the Court’s decision in Abood, which ruled that the collection of agency fees in this manner was permissible and necessary both to promote labor peace and to avoid “free riders” – that is, bargaining unit members who benefitted from the union’s collective bargaining activities, but made no financial contribution to support it. In 2014, the Court rejected Abood and compelled agency fees with respect to private-sector unions in Harris v. Quinn, 134 S. Ct. 2618 (2014); however, the issue of agency fees for public-sector unions had, until now, remained outstanding.

Mark Janus, the plaintiff in Janus, worked as a child support specialist for the Illinois Department of Healthcare Services, a position that was part of a bargaining unit represented by the American Federation of State, County and Municipal Employees, Council 31 (the “Union”). In accordance with Illinois law (the “Illinois Law”), the Union collected approximately $535 per year from Janus in the form of agency fees, which constituted 78.06% of full union dues. Janus challenged the constitutionality of the Illinois Law, arguing that his legally-required agency fees actually subsidized political speech. Specifically, Janus argued that even though his agency fees were nominally intended to fund activities that were “germane” to the Union’s collective bargaining actives, the Union inevitably engaged in political speech during the collective bargaining process, including taking politically motivated stances on employment and health care law. Thus, Janus contended, he was improperly compelled to fund the Union’s political speech through his agency fee contribution. Lower reviewing courts rejected Janus’ First Amendment arguments, ruling that Abood controlled the outcome of the case.

In an opinion authored by Justice Samuel Alito, the Supreme Court agreed with Janus’ position, overruled Abood, and ruled that public-sector agency fees are unconstitutional for several reasons. Perhaps most notably, the Court concluded that agency fees subsidize speech, even when they are only designated for collective bargaining activities. Speech made and union positions taken as part of the collective bargaining process, the Court remarked, address a variety of politically important matters “of profound value and concern to the public,” including “education, child welfare, healthcare, and minority rights.” Because political speech and the collective bargaining process are inextricably linked, the Court held, compelled agency fees are the equivalent of “compelling a person to subsidize the speech of other private speakers.”

The Court also rejected the Union’s reliance on the “free rider” arguments underpinning the Abood decision. As an initial matter, the Court noted that unions receive many benefits from a designation of “exclusive representative” that outweigh any burden imposed by representing non-members, including “a privileged place in negotiations over wages, benefits and working conditions” and “special privileges,” including information about employees and automatic deduction of dues and fees from members. Moreover, the Court reasoned that activities that might be deemed burdensome, such as representing non-members during grievance proceedings, could be resolved through less restrictive means than compelled agency fees, including requiring non-members to individually pay for representation in the event of a grievance.

As a result of the Court’s decision in Janus, public-sector employees – including teachers, police officers and transit workers – are no longer required to pay agency fees if they wish to avoid doing so. The impact on public-sector union organization and effectiveness in light of the ruling remains to be seen. We will continue to monitor the impact of Janus and provide additional information as it becomes available.


[1] “Right-to-work” states prohibit unions from collecting agency fees in the manner at issue in Janus.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume VIII, Number 179

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About this Author

Associate

Lindsay Colvin Stone is an associate in the Labor and Employment Practice Group in the firm's New York office.

Areas of Practice

Ms. Stone is experienced in representing employers in a wide array of labor and employment matters in judicial, arbitral and agency forums, including disputes related to restrictive covenant and non-competition agreements, misappropriation of trade secrets, wage and hour issues, wrongful termination, and discrimination and harassment. Ms. Stone also regularly counsels clients on matters relating to internal...

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