Supreme Court Overturns 42-Year Precedent and Strikes Down State Fair Share Laws

This week the Supreme Court issued its long-awaited decision in Janus v. American Federation of State, County, and Municipal Employees, Council 31 et al., striking down “fair share” union fees for government workers.  As a result, state and public sector-unions may no longer extract “fair share” fees that cover the cost of collective bargaining from nonconsenting employees.  The decision stands to invalidate 22 state and territory agency shop laws, and is a rare deviation from the Court’s long-standing principle that it will not overturn its own decisions.  

As a result of Janus, public sector employers should immediately consult with labor counsel to determine if any fair share fees are currently being deducted and whether such practices should be ceased.

The Road to Janus

For the past 42 years, “fair share” fees (also called “agency shop” fees) were governed by Abood v. Detroit Bd. of Education, 431 U.S. 209 (1977).  Abood held that states could compel agency shop fees for the purpose of collective bargaining, contract administration and grievance adjustment, but could not compel individuals to contribute to the support of an ideological cause s/he may oppose.  Any expenditure on political views, on behalf of political candidates, or toward the advancement of ideological causes not germane to collective bargaining were required to be financed only from dues of employees who did not object to advancing those ideas.  Although Abood acknowledged the difficulty of drawing a line between collective bargaining activities and ideological activities unrelated to collective bargaining, the Court at that time did not draw a hard and fast line.

In recent years, the Court began questioning Abood’s continued validity, first in 2012 in Knox v. SEIU, Local 1000, 132 S. Ct. 2277 (2012) and then again in 2014 in Harris v. Quinn, 134 S. Ct. 2618 (2014).   Last year, the Court appeared ready to overturn Abood in Friedrichs v. California Teacher’s Association, 136 S. Ct. 1083 (2016).  Justice Scalia’s untimely death shortly after oral argument, however, left the Court split 4-4, thereby affirming the circuit court decision upholding agency shop fees. After Friedrichs, it was only a matter of time before the Supreme Court heard the matter before a full bench.

The Janus Decision

Mark Janus was an Illinois state employee who refused to join his union because he opposed many of its positions, including those taken in collective bargaining.  Illinois law required employees who did not join the union to pay a percentage of the full union dues, known as an agency fee, for activities that were germane to the union’s duties as collective bargaining representative.  For Janus, this percentage was 78.06% of the full union dues, or $535 per year. Janus challenged the Illinois law allowing agency fees as unconstitutional.

In its decision, the Supreme Court sided with Janus.  The Court overturned Abood and held agency shop fees are unconstitutional. Justice Alito, who delivered the majority opinion, explained that Abood was inconsistent with First Amendment principles because it forced a person to subsidize speech they may disagree with.  Additionally, the Court found the two justifications for Abood – promoting labor peace and avoiding free riders – were no longer compelling interests, especially given the evolution of public sector labor over the past 40 years. The Court held that public-sector agency shop arrangements violate the First Amendment, and stare decisis does not counsel against overturning Abood.

Janus and ‘Right-to-Work’ States

The Janus decision will have less direct impact in so-called “right-to-work” states, where state laws already prohibit compulsory membership in unions and payment of union dues and fees (though, some states exempt certain public sector unions from this prohibition).  It is important, however, to keep in mind that public sector unions in states that have experienced the effects of right-to-work legislation over several years have become sensitized to the necessity of proving their value to members and prospective members.

For example, in Michigan, which has been a right-to-work state (with the exception of police and fire unions, which will be impacted by Janus) since March of 2013, the public sector labor unions have become more aggressive at the bargaining table in seeking to add nonunion positions into the bargaining unit, filing grievances, and increasing advocacy for probationary employees.  In the case of the Michigan Education Association, such advocacy resulted in a recent federal court opinion holding that teachers have a protected property interest in their evaluation scores.  See Southfield Education Association, et al. v. Southfield Public Schools et al., No. 17-11259 (March 27, 2018).

Practitioners in right to work states should expect that, while Janus may provide relief to those state employers whose public sector unions are not impacted by right to work, it may have the effect of encouraging those same public sector unions to take more aggressive positions as a way to demonstrate their value to members and prospective members.  Additionally, as the paid-up members in the union bargaining units tend to be the most zealous when it comes to union matters, practitioners should anticipate more, rather than less, difficulty in obtaining ratification.

The Future of Unions          

With the nullification of Abood, states and public sector-unions may no longer extract agency fees from nonconsenting employees. The Janus majority cited to Federal law and the continued existence of labor unions in Right-to-Work states as evidence that unions will not suffer under Janus. Alternatively, Justice Kagan’s dissent predicts large-scale consequences, with unions losing a secure source of financial support, state and local governments needing to find new ways to manage their workforce, and public employees and employers altering their long-standing and historical relationships.   In either case, the future of labor will certainly look different under Janus.

Public sector employers should immediately consult with labor counsel to determine if any fair share fees are currently being deducted and whether such practices should be ceased.  If you have any questions about the implication of Janus, contact Stacey Schor at sschor@clarkhill.com, Daniel A. Krawiec at dkrawiec@clarkhill.com, Joseph B. Urban at jurban@clarkhill.com or another Clark Hill Labor and Employment attorney.