Yesterday, the United State Supreme Court granted certiorari in Friedrichs v. California Teachers Association, and will consider whether public sector agency shop arrangements, also known as “fair share” contractual provisions, violate the First Amendment. The Supreme Court also will consider whether “opt-out” provisions for fair share fees violate the First Amendment by forcing non-union member employees to object to payments related to union political activity. This case presents the Court with an opportunity to overturn its 1977 decision in Abood v. Detroit Board of Education, in which it held that state laws may require public sector employees to pay fees for the non-political work that public sector unions perform on their behalf, including collective bargaining. Under Abood, unions and the courts have defended such provisions as a means to permit unions to prevent non-union members from “free-riding” on the unions’ efforts to improve employment benefits without sharing the costs incurred. If the Supreme Court overturns Abood, it could strike a major financial blow to public sector unions across the country. 

Friedrichs – The End of Abood?           

In Friedrichs, a group of teachers challenged the constitutionality of a California law requiring them to pay fees to the labor union representing their colleagues. Many states, including Illinois, permit unions to charge non-union member employees fees that represent their “fair share” – or rather, fees that are proportionate to the union’s costs associated with collective bargaining, contract administration and other activities germane to the union’s duties as the collective bargaining representative. Under California law, teachers may file for a rebate of that portion of union dues that are not attributable to the union’s cost of contract administration. The fee paid by objectors excludes all lobbying and other political expenses not specifically related to ratification or administration of the contract. 

The teachers maintain that even this “opt-out” provision constitutes coerced political speech. They argue that public sector collective bargaining is inherently “core political expression” because it requires “negotiating with public officials over often-controversial education policies and the expenditure of limited tax dollars,” and “many non-union teachers disagree with the unions’ political expression.” The teachers also argue that California’s “opt-out” system requires each non-union member employee to express affirmatively his or her objection to charges for activities wholly unrelated to collective bargaining on an annual basis, “no matter how many times that nonmember has previously exercised his established First Amendment right to not fund such activities.” The teachers requested that the Ninth Circuit Court of Appeals quickly rule against them so that they could immediately appeal to the Supreme Court. 

The Steady Erosion of Abood  

The Court’s decision to consider Friedrichs is the most recent signal of its increasing skepticism of “fair share” arrangements. In 1977, the Court ruled in Abood that, while a public sector union can charge non-union member employees for contract administration and other collective bargaining expenses, it could not require them to fund political projects, campaign spending or other activities that could be considered “compelled speech.” Later, inTeachers v. Hudson, the Court held that a union must provide written notice (referred to as a “Hudson notice”) to its non-union members on at least an annual basis, detailing the portion of their fees that will be spent on non-political activities. Until very recently, Abood and Hudson were considered stable, bedrock precedent; however, two recent decisions from the Court have caused many to question their continued viability. 

First, the Court’s 2012 decision in Knox v. SEIU Local 1000 raised the possibility that Abood may be called into question. In Knox, a labor union representing a group of California public sector employees sent its annual Hudsonnotice, which gave non-union member employees 30 days to object to full dues payments and request a rebate. Shortly thereafter, the governor called for a special election on two ballot propositions opposed by the SEIU, and the SEIU then sent a letter to union and non-union member employees alike, announcing a temporary 25% increase in dues to start a “Political Fight-Back Fund.” Non-union member employees were not given a choice as to whether they would pay into the fund, and brought suit challenging the maneuver. The SEIU argued the special assessment was an essential tool for preventing “free-riding” by non-union member employees. The Court instead held that the SEIU violated the First Amendment by failing to provide a new Hudson notice at the time of the assessment and by not giving non-union members the chance to opt-out. Justice Samuel Alito, writing for the 7-2 majority, largely criticized Abood, noting that the “free rider” argument raised by unions is “generally insufficient to overcome First Amendment objections,” and further noting that acceptance of that argument “represents something of an anomaly – one that we have found to be justified by the interest in furthering ‘labor peace.’” 

Last year, in Harris v. Quinn, the Court held that Illinois could not treat home health care personal assistants as public sector employees, and, as a result, could not subject them to compulsory union dues and “fair share fees.” These assistants, employed and supervised by third parties but paid by Illinois through Medicaid funds, were designated as “public employees” under the Illinois Public Labor Relations Act. The SEIU served as their exclusive representative, and as such, non-union member assistants were required to pay “fair share” fees to the union. The Court avoided directly overturning Abood, instead holding that Abood only applied to “full-fledged” public sector employees, and that the personal assistants could not be designated as “government employees” solely for the purposes of collective bargaining. 

Justice Alito, writing for a narrower 5-4 majority in Harris v. Quinn, expressed deep skepticism over Abood and its progeny. The Court held that Abood was rooted in a misunderstanding and misapplication of precedent that authorized closed-shop arrangements in the private sector. According to the Harris Court, “Abood failed to appreciate the conceptual difficulty of distinguishing in public-sector cases between union expenditures that are made for collective-bargaining purposes and those that are made to achieve political ends” because “in the public sector, both collective-bargaining and political advocacy and lobbying are directed at the government.” For example, because increased wages and benefits for home health care personal assistants would lead to a greater expenditure of Medicaid funds, the SEIU’s bargaining activities for which non-union members must pay fair share fees necessarily addresses matters of public concern. In other words, collective bargaining by public sector unions is inherently political activity, and forcing non-union members to fund such activities raises significant First Amendment concerns.  

Fair Share Fees Challenged Elsewhere 

Governor Bruce Rauner shares the Court’s recent views about fair share provisions. In February, he issued an Executive Order prohibiting the continued deduction of fair share fees from state employee paychecks. At the same time, he filed a federal lawsuit against AFSCME Council 31 and other state employee unions, requesting that the federal district court overrule Abood and find that fair share fees violate the First Amendment. According to the complaint, “[t]here is no justification, much less a compelling one, for mandating that the nonmembers support the [u]nions, which are some of the most powerful and politically active organizations in the State.” The Governor was dismissed from the lawsuit, but several state employees who subsequently joined in the lawsuit will pursue the claims, which likely will be resolved by the Court in Friedrichs.  

Meanwhile, the National Labor Relations Board (NLRB) recently agreed to examine whether private sector employees in right-to-work states who are not union members may be forced to pay grievance processing fees to the union if they work in a unionized workplace. In Buckeye Florida Corp., a union instituted a “Fair Share Policy,” requiring non-union member employees to pay a fee for processing a grievance. The NLRB’s long-standing precedent in Machinists, Local No. 697 (H.O. Canfield Rubber Co.), 223 N.L.R.B. 832 (1976), holds that such provisions, absent a union security agreement, constitute coercion under Section 8 of the National Labor Relations Act. The NLRB’s invitation for briefs in this case is largely viewed as a gateway to undermining right-to-work laws, which prohibit union security agreements in the first instance.