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Through Janus, the Supreme Court Tilts the Playing Field but Doesn’t Change the Game

   Published on:  27 Jun, 2018

This morning the U.S. Supreme Court released its long-awaited decision in Janus v. AFSCME, in which the conservative majority found “fair share fees” unconstitutional. This decision will require action by many of our clients, and will impact all who care about the labor movement.

The decision overruled a 41-year old precedent (Abood v. Detroit Board of Education) that struck a workable middle ground. That decision permitted unions to charge non-members a “fair share” or “agency fee” for the costs of representing all employees in collective bargaining and contract enforcement. Based on the definition of the duty of fair representation in most state’s labor laws, unions have an obligation to represent all employees in a bargaining unit, not just those who join the union. In recognition of the First Amendment, Abood did not require non-members to contribute funds towards the union’s political activities. Unions basically charged two types of dues: those related to collective bargaining and contract enforcement (which were chargeable to objecting non-members) and those related to political efforts (which were not).

Today, in Janus, the Supreme Court threw aside those distinctions. Going forward, public sector unions will no longer be able to require non-members to contribute any fees to cover their fair share of the costs of collective bargaining. Whereas before, non-members would still have to pay significant cents on the dollar to cover the cost of bargaining, now employees who do not want to join the union will pay nothing towards the benefits the union secures for them. This “free rider” problem was at the heart of Abood (with even the late Justice Antonin Scalia recognizing it was deeply troubling). But with new Justice Neil Gorsuch supplying the fifth vote, the Supreme Court thrust aside free rider concerns and Abood’s careful balancing test.

Even casting aside the frustrations that those of us who represent labor unions naturally feel about this loss, it is hard to read the decision as anything other than political in nature. For two hundred years, the Supreme Court has touted the importance of stare decisis – the legal principle of ruling according to precedent. On constitutional questions, courts generally break with precedent only when strong majorities exist to do so. Yet, here is another example where, on a narrow 5-4 vote, the Court has broken with precedent on a major constitutional question and rearranged the legal landscape as a result.

If there is a silver lining on this dark day, it is that the decision appears to strike down fair share fees going forward only. However, to the extent unions receive transfers of fair share fees in the days or weeks ahead, they should set those funds aside in preparation for reimbursing them.

We are reviewing the relevant laws, and are in discussions with all relevant parties, concerning the process by which public employers in California begin to offer to their employees the option of cutting off union-related salary deductions. We believe that the implementation of such changes will be matters subject to meet and confer requirements. Whether or not such negotiations are appropriate will depend on how the California legislature responds to implement the Janus decision and the exact terms of the relevant MOUs permitting the reopening of negotiations in the event Abood was overruled.

To the extent severability clauses have been incorporated into MOUs, we expect those to help salvage many of the terms upon which our unions, their members, and their employers have placed considerable reliance.

We also believe that the decision leaves room for many “maintenance in membership” terms (which courts have upheld as reasonable) to remain in force going forward. In other words, if a union’s bylaws or MOU only allow members to leave the union during certain periods, those provisions are still lawful.

This ruling will weaken labor nationally. A weakened national labor movement will significantly undermine the ability of public safety unions to stand for public safety workers’ rights when we need to marshal our allies. And while some unions will see no change in their bargaining strength, based on various studies of the relative compensation of employees where agency fees were allowed and those where they were not, employees can, on a macro level, expect to see loss in earnings of between 4% and 8% over future years.

Most of our association clients enjoy very high levels of voluntary membership – usually well into the 90th percentile. But there are at least four reasons why even those associations should care about the consequences of 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. Now that 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.

It’s a new world out there, but the labor movement has suffered set-backs in the past, and with solidarity, creativity, and resolve we can continue the fight for what is right.

Please contact Gary Messing, Gregg Adam, or Yonatan Moskowitz if you have any questions about this or other developments.