In a widely anticipated decision – Janus v. AFSCME, the United States Supreme Court ruled today that state laws authorizing public sector unions to charge agency fees are unconstitutional because they violate the First Amendment to the United States Constitution.  As a result of the Court’s decision, States (and their political subdivisions, including cities, towns, and school districts and regional districts) and public sector unions may no longer charge agency fees to non-consenting bargaining unit employees.  Accordingly, only if a non-union, public sector bargaining unit employee affirmatively consents to pay an agency fee or other payment to the union may a public employer deduct such fee from an employee’s wages.

Agency fees are payments charged by unions to public sector bargaining unit members who are not union members and who, therefore, do not pay union dues.  Agency fees are similar to union dues, but are limited to the fair share of the direct costs of negotiating and administering the collective bargaining agreement, settling and adjusting grievances, and the expenses associated with the normal and reasonable activities or undertakings associated with implementing or effectuating the duties of the union.  Unlike union dues, agency fees do not include the cost associated with any political causes the union supports.

The Supreme Court had previously upheld the constitutionality of agency fees in the case of Abood v. Detroit Board of Education, 431 U.S. 209 (1977) and other cases, holding that agency fees could be used to cover union expenditures for activities that were “germane” to a union’s collective bargaining obligations but could not be used for the union’s political or ideological objectives.

Today, the Supreme Court reversed course and overruled Abood.  In its majority opinion, the Court stated that the Abood Court had erred in its conclusion that agency fees did not violate the First Amendment and that stare decisis (i.e., case law precedent) could not support the upholding of the Abood decision.  The Supreme Court went on to explain that “[f]orcing free and independent individuals to endorse ideas they find objectionable raises serious First Amendment concerns[,]” including compelling persons to subsidize the speech of other private speakers.

The Court also reasoned that neither of the two justifications set forth in Abood for the collection of agency fees pass muster under the “exacting” scrutiny standard the Court had previously used to judge the constitutionality of agency fees.  First, the Court noted that agency fees cannot be upheld on the grounds that they promote “labor peace,” which the Abood Court had feared would be disrupted if employees were effectively represented by more than one labor union.  The Court wrote that 41 years after Abood was decided, “it is now undeniable that ‘labor peace’ can readily be achieved ‘through means significantly less restrictive of associational freedoms’ than the assessment of agency fees.”

Second, the Court rejected the second basis set forth in Abood – avoiding “the risk of ‘free riders’” (i.e., employees in bargaining units who are not union members and do not pay union dues).  In doing so, the Court concluded that avoiding the risk of “free riders” is not a compelling state interest and is insufficient to overcome First Amendment objections.  In reaching this conclusion, the Court rejected the contention that unions will refuse to exclusively represent all employees in the bargaining unit, including non-union members who do not pay agency fees, pointing to those unions who represent millions of public employees in the 28 right-to-work states that do not permit agency fees and noting that unions’ duty of fair representation of both union and non-union bargaining unit members is part of their obligations as the exclusive representative of the bargaining unit.

The Court also rejected the respondent AFSCME Council 31’s alternative justifications for agency fees, including that the Abood decision is supported by the First Amendment’s original meaning.  The Court’s majority explained that its past decisions (i.e., stare decisis) does not require a continued adherence to Abood, noting that Abood (1) was “poorly reasoned” and did not take into account the First Amendment question that arises when a State requires employees to pay agency fees; (2) lacks workability in terms of the line that often cannot be drawn between chargeable and non-chargeable expenditures of agency fees (i.e., what agency fees can and cannot be used for); (3) was decided on the assumption that “the principle of exclusive representation in the public sector is dependent on a union or agency shop,” which has proven to be untrue; and (4) does not carry decisive weight given the clarity that decision has provided, the short-term nature of collective bargaining agreements, and the ability of unions to protect themselves if an agency fee was crucial to its bargain.

In light of the Supreme Court’s Janus decision, public sector employers that have been making deductions for agency fees should immediately cease doing so unless and until a non-union bargaining unit employee expressly, affirmatively and voluntarily authorizes the employer in writing to continue to do so. Public sectors employers should also immediately notify each of their respective unions that they will stop making deductions for agency fees.

Please feel free to contact us if you have any questions about this or any other labor and employment matters.