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Janus, the End of Fair Share Fees and the Next Round of Attacks on Your Pensions

   Published on:  04 Oct, 2017

Last Thursday, as has been widely reported in the media, the United States Supreme Court agreed to review the decision of the 7th Circuit Court of Appeals in Mark Janus v. American Federation of State, County, and Municipal Employees, Council 31, et al., Case No. 16-3638. It is expected that, with Neil Gorsuch filling the ninth seat on the Court, there is a five-vote majority to prohibit the collection of agency fees (or fair share fees) by public employee unions. We expected agency fees to be outlawed in 2016 after the Friedrichs case was argued to the Supreme Court; however, the death of Justice Scalia deprived the conservative wing of a tie-breaking fifth vote.

Agency fees have been permitted since at least the 1970s, so it will create significant changes in labor relations. Victory for Janus will make the entire public sector workforce — nationwide — “right to work.”

Most of our association clients enjoy very high levels of voluntary membership – usually well into the 90th percentile. But there are at least 4 reasons why even those associations should care about the consequences of the expected ruling in Janus:

1. A dramatic reduction in the finances and political reach of non-safety labor associations. Non-safety associations typically have membership rates significantly below those of safety associations. If agency fees are prohibited, instead of being able to charge non-members 75% or 80% of membership dues (which is the norm), associations will not be able to charge non-members. Unions will have less money generally, will have to spend more of it attracting and retaining members, and will have less to spend on representation and political engagement.

2. Union membership will drop. Non-membership will become more attractive to some employees because instead of saving 20 or 30 cents on the dollar under the current agency fee model, a non-member will save 100 cents on the dollar.

3. Large international and miscellaneous unions may more aggressively seek to represent safety unions and smaller independent associations. As non-safety association coffers deplete and membership levels fall, public safety and small independent associations will become more attractive to larger labor organizations.

4. Public employee unions as a whole will have less political power in elections. Starting in the 2018 election cycle, public sector labor unions will simply be less involved. In California, for example, former San Jose City Mayor Chuck Reed and former San Diego City Councilmember Carl DeMaio have delayed their next retirement initiative until 2018, in part to take advantage of the anticipated adverse ruling in Janus. See this recent article for example.

We will work with the Stanford Law School Supreme Court Clinic to file an amicus brief in Janus highlighting the impact of an adverse ruling on the fabric of public safety labor relations. Our brief in Friedrichs was written on behalf of more than half a million public safety employees nationwide and we hope to better that number this time around.

If you have any questions about this alert, please contact Gregg Adam at 415.266.1801 or gregg@majlabor.com.