Supreme Court: Public Sector Agency Fees are Unconstitutional and Must Cease Immediately
"Fundamental free speech rights are at stake," began the Supreme Court's 5-4 majority opinion in Janus v. American Federation of State, County, and Municipal Employees, Council 31, --- U.S. ----, No. 16-1466 (June 27, 2018). And so they were. Citing—among other reasons—a long line of free speech case law, developing realities of the workplace since 1977, and Thomas Jefferson's famous adage that "to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhor[s] is sinful and tyrannical," the Supreme Court held in no uncertain terms that "[s]tates and public-sector unions may no longer extract agency fees from nonconsenting employees." Any such agency fee arrangement in the public sector violates the First Amendment, is unlawful, and must cease immediately.
Janus is a major, sea change decision, overruling Abood v. Detroit Board of Education, a 41-year old Supreme Court decision that authorized agency fees in the public sector. Twenty-two states, including Minnesota, have labor laws on the books allowing agency fee arrangements in the public sector. While each state's (now invalid) law differs slightly, they all contain common features:
- If a union is the exclusive representative of a bargaining unit, it represents every employee in the bargaining unit for purposes of collective bargaining.
- Public employers and unions can enter into a collective bargaining agreement (CBA) containing a provision requiring either union dues or agency fees as a condition of employment; meaning that a union could require a public employer to terminate the employment of an employee who failed to pay (this type of provision is commonly referred to as a "union security clause").
- While employees can choose whether to become union members, they must pay at least something to the union. Union members can be required to pay full union dues; nonmembers cannot be required to pay full union dues, but can be required to pay an agency fee. An agency fee—usually running between 75%-95% of full union dues— covers collective bargaining activities but not political or ideological projects.
Thousands of CBAs between government employers and unions contain union security clauses. Janus outlaws all of them, and the state laws authorizing them, as unconstitutional under the First Amendment.
Why? The First Amendment "includes both the right to speak freely and the right to refrain from speaking at all," the court stressed. Therefore, compelling someone to speak in support of a view he or she finds objectionable usually violates the First Amendment. And "[c]ompelling a person to subsidize the speech of other private speakers [with which he or she does not agree] raises similar First Amendment concerns." Because nonmembers may not (and, in Janus, did not) agree with the positions a union takes in collective bargaining, if a state law (or state actor via a CBA) requires them to pay an agency fee for collective bargaining, then it is compelling that nonmember to subsidize unsupported speech. In doing so, agency fees violate the First Amendment.
Private Employers: the Janus decision has no direct effect. In the 22 states where union security clauses are allowed (non right-to-work states):
- Union security clauses in current CBAs remain valid.
- Private employers and unions may lawfully enter into union security clauses.
- If a union security clause is in place, unions can still require private employers to terminate the employment of employees who fail to pay.
In addition, the Supreme Court suggested that there is a significant First Amendment difference between allowing private employers and unions to enter into union security clauses in private contracts on the one hand, and public employers requiring employees to pay agency fees on the other. In short, Janus's reasoning does not suggest that the Supreme Court will invalidate private-sector union security clauses (lawful under the National Labor Relations Act and Railway Labor Act in non right-to-work states) anytime soon.
Public Employers: As the dissenters in Janus noted, this decision will have an immediate and potentially harsh financial effect on public-sector unions. Nonmember agency fees were a significant source of income for them.
For public-sector employers, Janus creates some immediate certainty:
- Public-sector employers may still deduct dues from the wages of union members, if authorized by the CBA or other agreement, just as before;
- Public-Sector employers cannot deduct agency fees from the wages of nonmembers who have not voluntarily consented to such deductions.
But it creates much uncertainty as well. If a nonmember signed a dues/fees authorization card prior to June 27, 2018, was it truly voluntary? Can employees immediately revoke their dues/fees authorization cards due to a change in the law? Does the CBA contain a severability clause? If so, what must be done when part of the CBA is held unlawful; if not, what effect does that have on the validity of the CBA itself? Do changes need to be made to payroll/wage practices and, if so, what are an employer's effects bargaining obligations?
Janus does not clearly answer these day-to-day, practical, nuanced, questions—but they are among the many important issues that public-sector employers will need to consider in the coming days and weeks.
For more information about this landmark Supreme Court decision regarding public-sector unions and the impact on employers, please contact Joel Abrahamson, Dominic Cecere, Rick Pins, Matt Tews, or the Stinson Leonard Street contact with whom you regularly work.