United States: U.S. Supreme Court Strikes A Massive Blow Against The National Labor Movement

There has been a lot of big news out of Washington D.C. the past few days, but by far the biggest event for employers was the U.S. Supreme Court's ruling on Wednesday, June 27, that the First Amendment prohibits public-sector employers from collecting, and thereafter transmitting to a union, "fair share" fees from its non-union employees.

"Fair share" fees — sometimes known as "agency" fees — are paid by those public sector employees who choose not to belong to a union, but are part of a bargaining unit, and covered by a collective bargaining agreement, for which the union is the exclusive representative. In 1977, the Supreme Court found that state laws requiring or authorizing such payments to public sector unions were constitutional in the Abood v. Detroit Board of Education case. Ohio has just such a law: R.C. 4117.09(C) states that a collective bargaining agreement in the public sector "may contain a provision that requires as a condition of employment... that the employees in the unit who are not members of the employee organization pay to the employee organization a fair share fee."

Over the last five years, three significant cases have come to the Supreme Court involving the constitutionality of "fair share" fees," each asking whether Abood should be overruled on First Amendment grounds. The first, 2014's Harris v. Quinn, involved home health aides in the state of Illinois. Although the court issued a 5-4 decision striking down mandatory fair share fees, the ruling only extended to the particular class of employees at issue. The court's opinion, however, signaled a willingness to reconsider Abood on a much broader scale should a test case arise.

Two years later, in Friedrichs v. California Teachers Association, a group of California public school teachers brought just such a case. During the January 2016 oral arguments, indications pointed towards the Court striking down these arrangements, as the Court's questioning focused on the constitutional justification—or lack thereof—of compelled payments to a labor organization. However, in March 2016, following Justice Antonin Scalia's death the month before, the Court issued a one-sentence decision upholding agency fee statutes by a 4-4 vote.

The third is Janus v. AFSCME, the case decided on Wednesday.

The plaintiff, Mark Janus, is a child support specialist for the Illinois Department of Healthcare and Family Services. Although not a union member, he is required to pay a monthly fee to the union through automatic payroll deductions by his public employer pursuant to a collective bargaining agreement that covered his position of employment. This arrangement was authorized pursuant to an Illinois statute very similar to Ohio's R.C. 4117.09(C). Janus argued that requiring him to pay fair share fees violated his First Amendment rights.

The 7th Circuit Court of Appeals rejected his argument, explaining that it lacked the power to overrule Abood. However, the one court with such power — the U.S. Supreme Court — granted review of the case and agreed to resolve the debate once and for all.

In the 5-4 decision authored by Justice Samuel Alito, the court ruled that requiring bargaining unit employees to pay agency fees to a union violated the First Amendment. In so doing, the court concluded that Abood must be overruled, as it had "erred in concluding otherwise." The court found that legal and factual developments since its issuance in 1977 "have 'eroded' the decision's 'underpinnings' and left it an outlier among the court's First Amendment cases."

The court expressed serious concerns regarding the compulsory nature of agency fees, noting "compelling individuals to mouth support for views they find objectionable violates that cardinal constitutional command." Compelling employees to "subsidize the speech of other private speakers raises similar First Amendment concerns."

In the end, the court ruled the First Amendment prohibited both states and public sector unions from extracting agency fees from "nonconsenting" employees. As of today, such fees must not be deducted unless the employee "affirmatively consents to pay." The court ruled that such agreements to pay act as clear waivers to their First Amendment rights, and therefore must be freely given as shown by "clear and compelling" evidence.

In Ohio, no such affirmative consent has occurred with public employees, as fees have been automatically deducted from employees' paychecks if a public sector collective bargaining agreement contained a fair share fee provision and the union certified the amount of the fee. But all of that changes starting today.


  • We recommend that each public employer in Ohio immediately cease processing any fair share deductions. As an aside, reliance on indemnity provisions in the collective bargaining agreements that require the union to indemnify the employer for wrongfully deducted fees will not shield the public employer against liability if fair share deductions continue after today's Janus decision. Such indemnity provisions will likely not protect public employers from a knowing violation of law, which such actions might be now that Janus has clearly decided the issue. Moreover, some unions, including the OEA, have already begun sending cease and desist letters advising public employer to stop withholding fair share fees in an attempt to limit their own liability under such indemnity provisions.
  • Each public employer should meet with business representatives for the unions with which it holds collective bargaining agreements to confirm implementation of the Janus decision. In some cases, it would be appropriate to consider entering into memorandum of understanding to affirm both the union and the public employer recognize any fair share provisions of the labor contract are null and void as a matter of law and will be considered inoperative for the remainder of the agreement. How to handle memorializing the impact of Janus will depend upon whether the labor contract contains a severability clause and other factors. If the agreement has a "severability" clause, then the rest of the collective bargaining agreement continues in force as if the provision was not there. If not, however, the entire agreement may found to be null and void.
  • Each public employer should review the current union members for whom regular dues deductions are being made and request written confirmation from the union of the each employee's affirmative consent to membership. While the Janus decision does not address union dues for members, its dicta could have implications on such deductions. Indeed, a provision in Ohio law specifically requires public sector collective bargaining agreements to have a provision that "authorizes the public employer to deduct the periodic dues, initiation fees, and assessments of members of the exclusive representative upon presentation of a written deduction authorization by the employee." Should no written deduction authorization exist, the public employer should require the union to produce said documents before continuing regular union dues deductions for the member at issue. This is more important given the court in Janus statement that "neither an agency fee nor any other payment to the union may be deducted from a nonmember's wages, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay."
  • Should a union demand bargaining based on the Janus decision, we suggest that you review the demand with your counsel. With their assistance, you can determine the appropriate steps to take in light of the demand and the particular provisions of the labor contract at issue.

Originally published by Crain's Cleveland Business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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