Supreme Court Holds Fees Imposed by Public Unions on Non-Members are UnconstitutionalPublications - Client Alert | June 28, 2018
This morning, the Supreme Court issued its opinion in Janus v. American Federation of State, County and Municipal Employees, Council 31, et. al. which strikes down an Illinois law authorizing public-sector labor unions to collect an “agency fee” (i.e., a percentage of full union dues) from non-union member employees. In its 5-4 decision, the Court’s majority determined that the payment of agency fees from nonconsenting public-sector employees violates the First Amendment because it forces these individuals to endorse ideas they find objectionable.
The Janus Decision
Mark Janus, a state employee, brought suit challenging the constitutionality of an Illinois law authorizing agency fees. In this case, the agency fee was 78.06% of full union dues. Janus opposes many of the union’s public policy positions and the positions it takes in collective bargaining. He argued that all “nonmember fee deductions are coerced political speech” and that “the First Amendment forbids coercing any money from the non-members.”
The Court agreed and overruled its 1977 decision in Abood v. Detroit Bd. Of Ed. In Abood, the Court authorized agency fees to cover union expenditures attributable to those activities “germane” to the union’s collective-bargaining activities. Agency fees, however, were not permitted to cover the union’s political and ideological projects. The Abood Court approved of agency fees on the grounds that they promoted “labor peace” and alleviated “the risk of ‘free riders.’”
In Janus, the Court’s majority determined that these reasons were not sufficient to compel a non-member’s support of the union. It found that Abood had become an “anomaly” amongst the Court’s free speech cases and its supporting arguments no longer justified the First Amendment issues created by requiring non-union members to pay agency fees.
The immediate impact of the Janus decision is not likely to extend beyond the public sector because the First Amendment concerns relied on in the Court’s opinion are limited to actions taken by the government, not private conduct. However, private-sector employers and unions have been debating similar arguments in the context of “right-to-work” laws that can be found in twenty-eight (28) states.
The right-to-work laws generally prohibit agreements between employers and unions that employees must be a member of the union, pay dues or other “fair share” fees as a condition of employment. Labor organization efforts in states with right-to-work laws appear to be trending downward or, at a minimum, unions are being more selective with these campaigns because of their limited resources and expectations about a workforce’s willingness to pay dues and fees if they vote to unionize.
For Taft-Hartley benefit plans, employees’ participation rights and employers’ contribution obligations are not predicated upon whether an employee is a union member or pays a “fair share” fee. These rights and obligations are dictated by the collective bargaining agreement that covers the work being performed by the employee. Although right-to-work laws do not directly affect benefit plans, boards of trustees for such plans must be proactive in assessing whether a plan’s population of potential participants is in decline and how fewer employer contributions may impact a plan’s ability to sustain current benefit levels.
If you have any questions regarding the Supreme Court’s Janus decision or how your state’s right-to-work law may impact your workforce or Taft-Hartley benefit plans, please contact a member of our Employee Benefits Practice Group listed in the right-hand column of this page.