Public unions can't force nonmembers to pay, U.S. Supreme Court rules

The U.S. Supreme Court has ruled that public sector unions cannot charge "agency fees" to nonmembers, setting the stage for changes in labor relations nationwide and sowing the seeds for friction between public unions and employees who do not want their services.

Agency fees are a reduced charge on nonmember employees that are allowed so long as they are not used for the union's political agenda, such as financially supporting candidates.

In a 5-4 decision, the court ruled in its highly anticipated Janus opinion that unions charging nonmembers they represent is a violation of First Amendment rights. Justice Samuel Alito, writing for the majority, reasoned that agency fees force nonmembers to financially support positions they do not agree with. Janus v. AFSCME Council 31, 2018 DJDAR 6308.

The plaintiff "argues that he is not a free rider on a bus headed for a destination that he wishes to reach but is more like a person shanghaied for an unwanted voyage," Alito wrote.

Justices John Roberts, Neil Gorsuch, Clarence Thomas and Anthony Kennedy concurred. Justices Sonia Sotomayor, Ruth Bader Ginsberg, Elena Kagan, and Stephen Breyer dissented.

Alito wrote that the free speech argument is fortified by the fact Janus is a public sector employee. Since his collectively negotiated pay comes from taxes, there is a public interest at stake.

"When you're talking about an entire workforce, like police, that is an expenditure of public money, and it's a matter of public interest," commented Jack Schaedel of Scali Rasmussen in Los Angeles. "I think the fact it was a public sector heightened the First Amendment impact because everything a public sector union does and everything an agency agrees to is inherently a matter of public interest."

The union argued the agency fees help cover the cost of representing nonmembers like Janus. As the exclusive representative for him and his peers, the union is obligated by duty of fair representation under the National Labor Relations Act to bargain on his behalf.

In order to compel companies to bargain in good faith under the act, an exclusive representative is needed, meaning a lot of union power requires exclusivity, tying it to the compulsion to represent nonmembers no longer obligated to pay fees.

"Under the public sector statutes, the only route to getting an enforceable right to bargain in good faith, the foundation of collective bargaining, goes through using an election system," said Stephen Diamond, associate professor of law at Santa Clara University School of Law.

"Without exclusive bargaining, you could have individual workers cutting side deals, and that hands power right back to the employer," he added. "People like Mr. Janus think they can do a better job on their own, but they're wrong."

"Now, unions are going to be in the bind of having to provide benefits to everyone without being able to collect the fees to pay for it," said Daniel E. Jackson, of counsel for Keker, Van Nest & Peters LLP, who filed an amicus brief in the case. "I think there's going to be a lot of chaos like any time you overturn a precedent states have passed laws based on."

Agency fees were codified by Abood v. Detroit Board of Education in 1977, establishing a labor relations framework used as the basis for state laws all over the country.

Jackson's chaos concern was echoed in Kagan's dissent. She wrote, "Judicial disruption does not get any greater than what the Court does today."

Jackson represented a group of 36 economists in his amicus brief, which argued a ruling against the union would be financially damaging for collective bargaining groups.

"Where the unions will still get hurt in California, is they'll collect less money, and if they'll collect less money, they'll have less to do what they do whether it's politicking or bargaining," said Robert F. Millman of Littler Mendelson PC.

While agency fees are not used directly for political purposes, Schaedel said that issue is not as simple as it appears.

"The union is creating a distinction by saying writing a check for 'x' for candidates is political and everything else is not, but with teachers' unions, some believe a teacher should be paid on how many years they've worked. Others say it should be based on the quality of the instruction. Unions have usually been lockstep for seniority pay. That's a political issue," he said.

Jackson found that argument less compelling.

"The court analogizes the unions to legislatures, but everybody knows that legislatures impose taxes and you can't choose not to pay your taxes," he said. Schaedel also said workers may not always feel unions are acting in their interests. "It's certainly a political question to say everyone should be paid the same at a certain level. Why am I forced to pay for something that's only going to restrict me and say I get paid the same as a lazier worker next to me?" he asked.

Colin P. Calvert of Fisher & Phillips LLP said litigation may be on the horizon.

"I think it's one that's going to be tested. It's reasonable to say we're going to see a wave of litigation trying to apply the Janus decision to the private sector," he said.

"I would say we will see them outside of states that are right-to work-states, maybe in a favorable jurisdiction trying to take case law and graft it onto Janus. In California, you would be looking at a jurisdiction that is both conservative and has a strong union presence."

He also said as public unions clash with employees striking out on solo negotiations, unions may complain of unfair labor practices if nonmembers get better pay or benefits, calling it an attempt by the company to give an incentive to union-busting.

The way forward, attorneys agreed, might be for unions to rethink how they approach politics and negotiation to better mirror their members now that a chunk of revenue is optional. "There's sort of a market theory to it. Say there are 10 to 12 unions, I'm going to choose the one that most closely aligns with my beliefs," Calvert said. "Unions might want to take a good hard look at their memberships and make sure they closely align with their members."

"If it causes significant numbers of people to stop paying dues, unions will have less revenue, they will have to lay off staff including lawyers, and they will have to find other ways to try and make up the revenue to be an effective agency," said Diamond. "That includes persuading people like Mr. Janus to keep paying."