Supreme Court Limits Reach of Public Sector Unions in Janus, Finding Agency Fee Arrangements to Be Unconstitutional

06.27.2018

On June 27, 2018, the U.S. Supreme Court changed the landscape of collective bargaining in the public sector across the nation, when it held that agency fee arrangements violate the First Amendment of the United States Constitution.  As a result of the Court’s decision in Janus v. American Federation of State, County, and Municipal Employees, District Council 31, 585 U.S. _, 2018 WL 3129785, California labor laws permitting the collection of agency fees from non-members are no longer enforceable.

Summary of Janus Decision
Mark Janus was employed by the Illinois Department of Healthcare and Family Services as a social worker.  While AFSCME represented other social workers working for the State of Illinois, Janus chose not to belong to the union.  Under Illinois law, AFSCME deducted agency fees from the paychecks of non-members, including Janus.  He filed suit against the union, arguing that the agency fee arrangement violated his First Amendment free speech rights.  The district court dismissed the challenge, noting that agency fee arrangements were lawful under the Abood v. Detroit Board of Education (1977) 431 U.S. 209 decision.  The Seventh Circuit Court of Appeals agreed.  Consequently, Janus asked the Supreme Court to review the matter.

A closely divided Supreme Court ruled that “public-sector agency-shop arrangements violate the First Amendment,” overruling its Abood decision.  The Court highlighted the critical free speech interests involved in the case, observing that “compelling individuals to mouth support for views they find objectionable violates [the] cardinal constitutional” rights of public employees.

The Court explained that agency fee arrangements were lawful only if they were supported by “compelling state interests.”  The State of Illinois relied on two primary interests in support of agency shop.  First, the state argued that agency fees resulted in labor peace, and that “inter-union rivalries” and unrest would occur without them.  The Court disagreed, noting the levels of union membership among federal employees remained high despite the absence of agency fee arrangements.  Second, the state argued that agency fees minimized the risk of “free-riders,” or employees receiving the benefits of collective bargaining without shouldering the costs.  The Court also rejected this argument, noting “the First Amendment does not permit the government to compel a person to pay for another party’s speech just because the government thinks that the speech furthers the interests of the party who does not want to pay.”  The Court also found that agency fees were not needed to protect all employees’ rights, as unions would still continue to represent the interests of non-members even without agency shop. 

Consequently, the Court concluded that employers cannot deduct agency fees (or an equivalent payment) “unless employees clearly and affirmatively consent before money is taken.”  In short, employees must “opt in” before an employer may deduct fees from their paychecks.

Impact of California Senate Bill 866
California’s Legislature approved Senate Bill 866 on June 18, 2018, in anticipation of the Supreme Court’s ruling in Janus.  The Governor signed it into law on June 27, 2018, to address the Janus decision’s impact.  SB 866 applies to nearly all public employers covered by PERB, including cities, counties, special districts, trial courts and the Judicial Council.  The bill effectuates the following changes:

• Employers must continue allowing payroll deductions for union dues;
• Employees must submit requests to start or stop dues deductions to the union and not the employer;
• The union is responsible for notifying the employer about the amount of dues to be deducted from individual employees’ paychecks;
• The union is responsible for notifying the employer about any change to an employee’s dues deductions, including stopping dues deductions;
• The employer must accept the information provided by the union on employee members’ dues deductions; and
• The union must cover any costs incurred by the employer in defending claims brought by employees concerning their payroll dues deductions.

The bill also changes how employers communicate about dues deductions, including:

• If an employer decides to “disseminate mass communications” to employees or applicants about their representation rights or status, the employer must meet and confer with the union representative of the positions involved in or affected by the communication;
• If the employer and the union cannot reach agreement on the mass communication, and the employer decides to issue its proposed communique, the employer must also distribute a communication of “reasonable” length provided by the union.

In addition, SB 866 impacts union’s access to new employee orientations.  Specifically, employers may not disclose the time, location, or date of new employee orientations to anyone, other than the employees themselves, union representatives, and any “vendor” providing services for the orientation meeting.

Practical Guidance Following Janus
The Janus decision clearly invalidates any state laws (such as those found in the MMBA) that permit agency fee arrangements.  Here are some practical tips for employers:

• California public employers cannot continue to collect agency fees, as they are now unconstitutional under Janus
  • Employers should meet with their payroll department, to obtain or prepare a list of represented employees who are not union members and who currently pay agency fees. Once they prepare this list, payroll should stop deducting agency fees from their paychecks as soon as practicable.
• Employer should review their labor agreements for each bargaining unit, specifically those contractual provisions addressing dues deductions and agency shop.
  • Any agency shop MOU provisions are now invalid. Further, any “maintenance of membership” clauses (which obligate employees to maintain their union membership for the duration of an MOU) may also be invalid.
  • While these contract provisions are now invalid, employers do not need to negotiate with the union before removing them. Most MOUs contain a “severability” clause, which invalidate provisions that are found to be unlawful to ensure the rest of the contract remains enforceable.
• Employers can expect that unions may request to meet and confer over the effects of Janus. As with other effects bargaining requests, the union must identify negotiable effects resulting from the elimination of agency fee arrangements before the employer is required to meet and confer.
  • As noted above, if an employer wishes to distribute a mass communication about Janus or dues deductions, SB 866 requires that the employer to meet and confer with the union. Absent mutual agreement on the content of a joint public statement, the employer must distribute the union’s version alongside its own version.
• Employers should be careful to note the difference between union members, non-members, and religious objectors.
  • The latter two groups of employees currently pay agency or service fees. As noted above, Janus requires that employers stop deducting agency fees from the paychecks of these two types of employees.  However, Janus does not impact the payroll deductions of dues from union members.  As made clear in SB 866, employers must continue to honor payroll deductions for union members’ dues.
• Tension exists between the Janus case and SB 866. Here are a few points:
  • Federal law controls if a state law provides for a contrary result. Thus, regardless of SB 866’s requirements, public employers must stop deducting agency fees from non-union members because such fees are now unconstitutional under Janus.
  • SB 866 provides that the employer must “honor the terms of the employee’s written authorization for payroll deductions,” and that “employee requests to cancel or change authorizations for payroll deductions for employee organizations shall be directed to the employee organization rather than” the employer. However, we believe this reference to “payroll deductions” can apply only to dues deductions for union members as opposed to agency fees. 
• Under another recently passed state law (Senate Bill 285), public employers may not discourage or dissuade employees from union membership. This duty continues in the face of Janus, and is reinforced by SB 866.
  • If an employee notifies an employer of a desire to stop paying union membership dues, or asks the employer about options with respect to dues, the employer should tell the employee to speak with his/her union representative on the matter.
• Employers should remain aware of recent legislation designed to support union membership, including Assembly Bill 119 (allowing union access to new employee orientation) and SB 285 (prohibiting employer communications designed to deter or discourage union membership).

The Janus decision changes over 40 years of labor precedent, and will have many effects in the months and years to come.  If you have further questions on how the decision or SB 866 impacts your agency, please feel free to contact us.

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