Public Sector Fair Share Fees Held Unconstitutional by U.S. Supreme Court

IN BRIEF

In a 5-4 decision the U.S. Supreme Court held today that requiring public sector employees to pay agency or fair share fees for union representation is unconstitutional. As had been widely anticipated, the Court held that compelling the payment of fair share fees is a violation of public workers’ free speech rights.  

In the majority opinion, Justice Samuel Alito wrote:

“The First Amendment is violated when money is taken from nonconsenting employees for a public-sector union; employees must choose to support the union before anything is taken from them. Accordingly, neither an agency fee nor any other form of payment to a public-sector union may be deducted from an employee, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay.”

– Janus v. AFSCME, U.S. Sup. Ct. No. 16–1466 (June 27, 2018)

The Case

AFSCME, the union sued by plaintiff Mark Janus, and other unions that submitted supporting briefs to the Court argued that fair share fees do not go to support unions’ political activity and are necessary and appropriate to cover the cost of representing all employees in the bargaining unit, as unions are required to do by current labor law. Without service fees, the unions argued, employees who do not pay dues are “free riders”.

Overturning an earlier Supreme Court case that upheld fair share fees on this basis, the Court held in today’s decision that avoiding  “free riders” is not a compelling interest that could justify interfering with public sector employees’ freedom of speech under the First Amendment.

The decision takes effect immediately.

Why This Matters

What are the practical consequences for public sector employers with collective bargaining agreements that contain mandatory fair share or service fee payments from non dues-paying bargaining unit members?

• As soon as possible, employers should stop deducting fair share fees from any and all employees who are subject to them. There is no need to delay a payroll, but all feasible steps should be taken to stop the deduction of fair share fees now.
• While there is no duty to notify employees (unions may do this), to avoid confusion and questions it would be useful to inform affected employees that:

“Complying with the U.S. Supreme Court’s decision issued on June 27, 2018 in the case of Janus v. AFSCME, the [Town, City, County, etc.] will immediately cease deducting the fair share fee that you have been paying under the collective bargaining agreement between the [Town]  and [name of Union]. Fair share fees and any agreement to require them have been held to violate the free speech rights of governmental employees.” 

• If payroll with deductions for fair share is already in process and fair share fees are or will be sent directly to the union, call the union business agent(s) and confirm that the fees will be escrowed or segregated and will be returned to the payer by the union.Our understanding is that, anticipating the result of Janus, unions have set up escrow accounts and will return fees that have been remitted to them.
• If deductions are already in process and are not remitted to the union simultaneously, do not send such fees to the union. Return the fees to employees directly.
• While the decision on its face deals with fair share fees and not dues (which presumably have been paid voluntarily), employers may get questions or even objections from dues payers concerning their right to cancel their authorization for dues deductions. If this happens, it is essential to consult with counsel about the possible scope of the Janus decision in light of the language of the particular bargaining agreement before responding or taking action. 

What’s Next

While the holding of Janus was anticipated and is not surprising, in the short term it will likely generate questions from employees and pay roll administrators. As the full impact of Janus is realized, other issues may  arise, such as (for example) requests by unions  to bargain a fee for service in place of fair share fees. We will be issuing further guidance as these additional issues develop.

If you have questions or concerns about the fair share decision and its impact, please contact Linda McGill, Matt Tarasevich, Ann Freeman or Glenn Israel with questions.