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By: Brad Adler & Matt Weiss
On Wednesday June 27, the United States Supreme Court reached a landmark 5-4 decision in Janus v. American Federation of State, County, and Municipal Employees Council 31 wherein it ruled that the Constitution’s First Amendment prohibits public sector unions from collecting fees from non-union members. While the scope of the impact of this ruling will be unknown for years, there is no doubt that Janus weakens the ability of public sector unions to raise money.
In Janus, an employee with the Illinois Department of Healthcare and Family Services sued the American Federation of State County, and Municipal Employees Council 31 (“AFSCME”) to challenge an “agency fee” that he was required to pay to the union under the Illinois Public Labor Relations Act. The Act provided that, if a majority of employees in a bargaining unit voted to be represented by a union, the union was designated as the exclusive representative of all employees and, even though employees were not obligated to join the union, they were required to pay the agency fee, a percentage of union dues for “chargeable expenditures,” i.e., the portion of union dues attributable to activities germane to the union’s duties as a collective bargaining representative. The agency fee excluded “nonchargeable expenditures,” which funded the union’s political and ideological projects. This distinction between chargeable and nonchargeable expenditures was the framework created by the Supreme Court in its 1977 decision Abood v. Detroit Board of Education, 431 U.S. 209.
The Supreme Court elected to use Janus as a vehicle to overturn Abood and hold that the Illinois law that required nonunion public employees to pay an agency fee to a public union constituted a violation of their First Amendment right to free speech, even if the fees only consisted of chargeable expenditures. The Court assessed the agency fees under an exacting standard, which required a showing that “a compelled subsidy must serve a compelling state interest that cannot be achieved through means significantly less restrictive of associational freedoms.” Applying the standard, the Court declined to identify a “compelling state interest” and found that public-sector unions could no longer extract agency fees from nonconsenting employees.
The Court’s ruling in Janus very likely will have a direct effect on 5 million public employees in 22 states, including California, New Jersey, New York, and Pennsylvania, who are no longer required to pay agency fees for a union in which they are not a member. However, the impact of this decision is less direct in states where agency fees and, in some cases, public sector collective bargaining, are either non-existent or prohibited. Nonetheless, even in these states, the Supreme Court’s basic holding in Janus, that the government cannot compel its employees to make payments for causes with which they disagree, could be applied in a variety of other contexts such as mandatory contributions to government pension funds.
Whether the Supreme Court will expand on this newly identified First Amendment right of government employees and non-union members remains to be seen, especially in light of Justice Kennedy’s retirement announcement. The one certainty is that public unions in cities and counties in nearly half the states in the country will no longer be able to require non-union employees to contribute union fees. And very few doubt that this new legal reality will reduce (in some capacity) the power of public unions by shrinking their financial base of support and by potentially reducing their membership.
But lawmakers in some states already are rallying to pass statutes that will allow unions to limit the services they provide to only those employees that pay union dues. As a result, it is important for employers to keep informed on any new Janus-induced union laws in states in which they operate. In fact, in anticipation of an adverse ruling, on April 12, New York passed legislation that relieved unions from representing the interests of non-members in different areas.
The Janus decision is only the latest chapter in a long and unfinished story written about the constitutionality of certain activities of public sector unions. More to come in the years ahead. . .
If you have any questions or would like more information, please contact Brad Adler at [email protected] or Matt Weiss at [email protected].