Supreme Court Strikes Down "Fair Share" Fees Paid by State and Local Non-Union Government Employees

In Janus v. AFSCME, Council 31, 2018 U.S. LEXIS 4028 (June 27, 2018), the U.S. Supreme Court held that state and public-sector unions may no longer require non-consenting employees to pay “fair share” or “agency” fees to cover the cost of the union’s collective bargaining efforts.

The U.S. Supreme Court’s decision overturned 41 years of precedent set by Abood v. Detroit Bd. Of Ed., 431 U.S. 209 (1977), where the Court previously held that public-sector unions could collect an agency fee from employees in union-represented bargaining units who opted not to become members of the union. Because all employees in such units are represented by the union and covered by the collective bargaining agreement regardless of union membership, Abood permitted unions to collect a fee to help cover the costs of collective bargaining and other services, as long as the fee did not support the union’s political and ideological activities. This agency fee amounted to a percentage of the union’s total membership dues, with fees for political and ideological activities excluded. The purpose of the agency fee was to discourage union members from opting out of membership and becoming “free riders,” benefiting from collective bargaining but not paying for it.

Mark Janus, a child-support specialist with the State of Illinois Department of Healthcare and Family Services, challenged the constitutionality of the public-sector agency fee arrangement created by Abood. Mr. Janus argued that the “agency fees” deducted from his paychecks by the American Federation of State, County and Municipal Employees (AFSCME) constituted compelled political speech in violation of his First Amendment Rights.

In a 5-4 decision, the U.S. Supreme Court agreed with Mr. Janus that Abood was wrongly decided and held that “States and public-sector unions may no longer exact agency fees from nonconsenting employees... [as this] procedure violates the First Amendment.” The majority understood that dollars are fungible, and that therefore all fees required by public-sector unions are a matter of speech. The majority rejected the argument that the “free rider” problem discussed in Abood justified burdening the First Amendment rights of employees who object to supporting the union financially. Writing for the majority, Justice Alito stressed the importance of rectifying the unconstitutional burden placed on public-sector employees. “It is hard to estimate how many billions of dollars have been taken from nonmembers and transferred to public-sector unions in violation of the First Amendment. Those unconstitutional exactions cannot be allowed to continue...”

The U.S. Supreme Court’s decision in Janus affects 22 states and the District of Columbia, all of which have “fair share” laws on the books authorizing public-sector unions to collect agency fees from non-union employees who fall within the union’s collective bargaining unit. As a result of Janus, public-sector unions may no longer collect these agency fees absent clear and affirmative consent from the non-union employees. The decision will therefore immediately reduce revenues for public-sector unions without the apparent need for any action by non-union employees who have been paying such agency fees.

Less clear is the impact that Janus will have on public-sector union membership. While many public-sector employees who are currently union members may wish to end their union membership in order to avoid the fees now disallowed by Janus, the process for terminating membership can be complicated. Unions frequently require written notice, properly addressed, during a short window of time in a calendar year. In some cases, union members have as few as seven days in a year to revoke their membership. Employees interested in opting out of union membership will need to confirm whether their union has adopted specific procedures for terminating membership and follow that procedure.