Agency Fee Requirements Ruled Unconstitutional

Landmark U.S. Supreme Court Decision in Janus Rules Agency Fee Requirements Unconstitutional

By Kyle McClain

On June 27, 2018, the Supreme Court of the United States released its decision in Janus v. American Federation of State, County, and Municipal Employees, Council 31, 585 U.S. ____ (2018), a landmark labor law decision in which it held that governmental employers “may no longer extract agency fees from nonconsenting employees” because requiring the payment of such agency fees by those employees—so-called agency-shop arrangements—violates the First Amendment of the United States Constitution. More specifically, the decision declares unconstitutional the practice in many states, including Connecticut, of requiring public sector employees who are represented by a union, but are not members of that union, to pay service fees to the union for its representation of both union and non-union members.

The Supreme Court’s decision analyzed Illinois state labor law as applicable to the factual circumstances of the case, but such law is analogous to federal and other states’ labor laws, including Connecticut. Under well-settled labor law principles, public employees may unionize, and if the majority of the employees in a bargaining unit vote to be represented by a union, the union is designated the exclusive representative of all of the employees in the bargaining unit, even those that do not join, i.e., nonmembers. While union members agree to pay union dues for representation, nonmembers can be required to pay a percentage of those dues, commonly called an agency fee or service fee. As established by the Supreme Court in its decision in Abood v. Detroit Bd. of Ed., 431 U.S. 209 (1977), those agency fees may cover union expenses for collective bargaining activities, e.g., contract negotiations, grievance matters, etc., but may not cover political and ideological projects, e.g., lobbying. This is known as an “agency-shop” arrangement because all members of the bargaining unit are required to pay agency fees as a condition of employment, meaning that they can be terminated if they refuse to pay such fees.

In Janus, an Illinois state employee, Mark Janus, was a member of a bargaining unit represented by a union, but refused to join the union for personal and political reasons. Janus challenged the constitutionality of an Illinois state law authorizing agency fees. Janus’s claim was dismissed by the U.S. District Court for the District of Illinois, a decision which was affirmed by the Seventh Circuit Court of Appeals, and an appeal to the U.S. Supreme Court followed.

In its opinion, the Court, after briefly discussing a jurisdictional matter, considered whether the holding in Abood was consistent with standard First Amendment principles. The primary constitutional inquiry was whether requiring nonmembers to pay agency fees violates the First Amendment’s protection of freedom of speech by compelling such nonmembers to support the union’s speech. In holding that agency fees violate the First Amendment, the Court considered whether Abood’s authorization of agency fees, and subsequent infringement of First Amendment rights, was justified by important public policies, including serving the State’s interest in labor peace and the “free rider” problem of nonmembers enjoying the benefits of union membership without paying any of the costs, or any other justifications, including whether the First Amendment provides free speech protection to public employees (it does). The Court rejected all of those justifications and held that “public sector agency-shop arrangements violate the First Amendment, and Abood erred in concluding otherwise.” Finally, the court considered whether Abood should be explicitly overruled, with the argument against overturning it relying on the doctrine of stare decisis. Generally, under stare decisis, a past decision will not be overturned unless there are strong grounds for doing so. After extensive analysis, the Court held that “Abood was wrongly decided and is now overruled.”

In Connecticut, pursuant to collective bargaining agreements with unions, most public employers deduct union dues and agency fees from public employee paychecks on a regular basis as a condition of employment and remit those dues and fees to the union. The exact procedures for such payments, however, are dictated by the language of each collective bargaining agreement. If you are a public employer and have questions about the impact of Janus on your relationship with your employees and the deduction of agency or service fees, please contact Attorney Nicholas J. Grello or Attorney Kyle A. McClain.