Wednesday, June 27, 2018

A BREAK IN THE DAM: U.S. SUPREME COURT RULES PUBLIC UNIONS MAY NO LONGER COMPEL PAYMENTS FROM NON-MEMBERS


In a highly anticipated 5-4 decision, in which Justice Gorsuch cast the deciding vote, the U.S. Supreme Court overruled its own previous case and held today that a labor union may not require employees in the public sector to pay for its services. The decision, Janus v. AFSCME Council 31, may significantly weaken unions operating in both the public and private sectors and throw labor relations between government workers, their employers, and their unions into turmoil.

Until now, the Court’s 1977 decision in Abood v. Detroit Bd. of Ed. had permitted public sector unions to compel payment of an “agency fee” by employees who choose not to join the union and pay full union dues. Agency fees have typically been upwards of 75% of union dues. In Janus, the Court applied a strict scrutiny standard under the First Amendment for the first time in considering whether the agency fee requirement effectively compels the speech of private individuals based on the way a union might use the fee.  The Court ruled that public sector:

employees must choose to support the union before anything is taken from them. Neither an agency fee nor any other form of payment to a public-sector union may be deducted from an employee, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay.

[Emphasis added.] The Janus holding is based on the Court’s conclusions that “[t]he State’s extraction of agency fees from nonconsenting public sector employees violates the First Amendment” and that the free rider problem resulting from employees receiving union services for which they don’t pay is “not a compelling state interest.” The Court also noted that the requirement to pay fees “cannot be upheld on grounds that it upholds labor peace.” 

The Janus decision marks a legal and cultural sea change for the labor movement. As has been noted, Janus effectively makes every state a right-to-work state in the public sector. The decision will not only damage unions’ revenue streams, but also place on them costly administrative burdens associated with modifying their payment arrangements with employers and employees. Justice Kagan noted in her dissenting opinion, joined by Justices Sotomayor, Breyer, and Ginsburg, that the decision “wreaks havoc on entrenched legislative and contractual arrangements” and “undoes bargains reached [between unions and public employers] all over the country.” The consensus seems to be that its effect will likely be a weakening of unions in both the public and private sectors because many of them represent both public and private employees; and the rate of unionization in the public sector is more than four times greater than for private employees. The Janus majority rejected this view, however, and held there is no real evidence to support it. Further, the majority opinion stated that although:
the loss of payments from nonmembers may cause unions to experience unpleasant transition costs in the short term, and may require unions to make adjustments in order to attract and retain new members . . . we must weigh these disadvantages against the considerable windfall that unions have received under [our previous precedent in] Abood for the past 41 years. 

There can be little doubt that unions will now be challenged more than ever to prove their value to employees if they are to survive. But, unions have expected and been preparing for this outcome for years, striving to develop alternative survival strategies. While some have predicted this ruling will be the end of the labor movement in this country as we’ve known it, the effects of the Janus decision really remain quite unpredictable as to where unions, employees, and employers will stand when the shifting ground beneath them settles.


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