Fair Share Union Fees Are Not Fair: SCOTUS Rules Public Sector Non-Members Don’t Need to Pay

On June 27, 2018, the Supreme Court of the United States announced its decision in a case that tested the constitutionality of requiring mandatory payment of “fair share” union dues to be paid by non-member public sector workers. The Court, with Justice Alito writing for a 5-4 majority, overruled the decades-old Abood v. Detroit Education Association case finding that it “was not well reasoned.” The Court ruled that a state law requiring public-sector union non-members to pay a fair share fee violates the First Amendment of the U.S. Constitution. According to Justice Alito, “public-sector agency-shop arrangements violate the First Amendment, and Abood erred in concluding otherwise.” Janus v. American Federation of State, County, and Municipal Employees, Council 31, No. 16-1466, Supreme Court of the United States (June 27, 2018).

A Brief History of “Fair Share” Fees

Under an agency shop arrangement, all workers in a unit covered by a union contract must pay union fees, regardless of whether they are union members. According to Supreme Court precedent, unions may require non-members to pay these “fair share” or “agency” fees to support union activities related to collective bargaining—but not for union political activity.

In 1977, the Supreme Court extended this rule to public-sector workers in Abood v. Detroit Education Association. The Court ruled that unions may impose these fees on nonunion government workers for nonpolitical expenses including collective bargaining, administration of union contracts, and internal grievance procedures.

In 1988, in Communications Workers of America v. Beck, the Court extended the Abood ruling from the Railway Labor Act to the National Labor Relations Act (NLRA). In that case, the Court ruled that Section 8(a)(3) of the NLRA “does not permit a union, over the objections of dues-paying nonmember employees, to expend funds collected from them on activities unrelated to collective bargaining activities.”

In 2014, in Harris v. Quinn, the Supreme Court held that the First Amendment of the U.S. Constitution prohibits a public-employee union from collecting an agency fee from home-care workers who do not want to join or support the union. According to the majority opinion, which Justice Alito wrote in a 5-to-4 decision, the Court’s holding reaffirmed “the bedrock principle that, except perhaps in the rarest of circumstances, no person in this country may be compelled to subsidize speech by a third party that he or she does not wish to support.”

In 2016, the Supreme Court issued a per curiam opinion in another case on the validity of public-sector “agency shop” arrangements. During oral argument, the Court had seemed likely to invalidate the fee and overrule the Court’s primary precedent, the death of Justice Scalia, shifted the Court’s conservative-liberal balance, and likely changed the outcome of this case. As a result, in Friedrichs v. California Teachers Association, an equally divided Court affirmed a court of appeals decision upholding the agency fee on the basis of Abood.

The Background in Janus 

Under the Illinois Public Relations Act, a union that represents public employees may collect dues from its members, but may only collect fair share fees from non-members on whose behalf the union negotiates. In 2015, the governor of Illinois filed suit to challenge the collection of fair share fees, arguing that the statute violates the First Amendment by compelling employees who disapprove of the union to contribute money to it.

On September 28, 2017, the Supreme Court announced that it will grant certiorari in the case to decide whether Abood should be overruled and public-sector “agency shop” arrangements invalidated under the First Amendment.

The Supreme Court’s Decision

After quickly dismissing a threshold jurisdictional issue, the Court turned to an analysis of the free speech implications of imposing fair share fees on non-members of public-sector unions. Relying largely on his majority opinion in Harris, Justice Alito started by saying, “[i]n Abood, the Court upheld the constitutionality of an agency-shop arrangement . . . but in more recent cases we have recognized that this holding is ‘something of an anomaly.’” The Court reasoned that “the compelled subsidization of private speech seriously impinges on First Amendment rights” and systematically rejected unions’ justifications for agency fees, such as the promotion of “labor peace” and the risk of “free riders.”

After concluding that the imposition of fair share fees violate the First Amendment, and that Abood erred in concluding otherwise, the Court turned to its final issue of “whether stare decisis counsels against overruling Abood.” In this regard, the Court (once again, relying heavily on Harris) noted that “Abood failed to appreciate the conceptual difficulty of distinguishing in public-sector cases between union expenditures that are made for collective-bargaining purposes and those that are made to achieve political ends” and that “Abood does not seem to have anticipated the magnitude of the practical administrative problems that would result in attempting to classify public-sector union expenditures as either ‘chargeable’ . . . or nonchargeable.”

The Court thus concluded that “[s]tates and public-sector unions may no longer extract agency fees from nonconsenting employees.”

Key Takeaways

The outcome of Janus v. AFSCME could go a long way to determining the future financial viability of public sector unions to engage in lobbying and politics outside the confines of collective bargaining and contract administration, including grievance handling.

Recent actions by state legislatures in adopting state right-to-work laws, limiting collective bargaining rights, and reducing public sector pensions has, to an extent, begun eroding the power of public sector unions. The Supreme Court’s ban on the mandatory collection of public sector union dues among non-members could have a further significant effect on the financial stability of public sector unions.